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Feature article - Impact of B2 stake change

As advised last month, from 1 April 2019 B2 gaming machines (Fixed Odds Betting Terminals (FOBTs)) will see their maximum stake per spin reduced from £100 to £2. 

The changes to stakes on B2 machines will be done via software updates, some of which will have been introduced during March in order to enable operators to test that the software works effectively.

There has been much reported in the press about the likely impact of these changes and it is inevitable that the industry will react to such a significant change in the market which is certain to impact on consumers and the look of our high streets.  

Figures from 2018 show that in £1.78 billion of high street betting operators revenue was generated via B2 machines, which represented 58% of their profits. 

It is highly likely that the number of licensed betting offices across Great Britain will reduce from the current 8,500.  Whilst the exact number of closures is unknown, we do estimate that premises numbers will reduce by 25% in the first year following the change.

LAs are encouraged to advise us of premises surrenders in a timely fashion so that we can keep track of closures.  Premises closures will also impact on annual fee income for LAs.

We have already seen Ladbrokes/Coral apply for an AGC operating licence and convert some betting premises into arcades and more operators may follow suit due the lower fixed costs involved, whilst others may look to offer limited sports betting in premises without the costs of showing horse/dog racing on TV.

Betting operators are likely to encourage customers to convert to playing B3 games or to access on line offerings which are currently unaffected by the stake reduction.

Similarly LAs may see an increase in the number of self service betting terminals (SSBTs) in betting shops as there are benefits with regard to staffing costs and the ability to offer additional markets particularly in-play betting. There is currently no restriction on the number of SSBTs that can be sited, however LAs have the power under s 181 of the Gambling Act to restrict their numbers by attaching a condition to the betting premises licence where there is evidence of risk to the licensing objectives.  When considering whether to impose such a condition on a particular premises, LAs, amongst other things should take into account the ability of employees to monitor the use of the machines by children and young persons or by vulnerable people.

Due to the well-advertised profitability of FOBTs there is a risk that criminals will seek to exploit this and so co regulators should be alert to the emergence of an illegal market.

We encourage LAs to work with us to monitor how the betting industry will react in the months ahead.  Please contact your local compliance manager if you have any queries about new offerings in LBOs or if you wish to undertake some joint visits to betting shops during the Institute of Licensing’s National Licensing Week 17-21 June, which the Commission is supporting again for the 3rd year running.

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