UK Betting Market Shrinks Following FOBT Stake Cut
Figures are in from the British Gambling Commission which cover the financial year to March 31st, 2020, showing a downfall versus the previous year. The contraction comes from the cutting of maximum stakes on FOBT’s, or ‘fixed odds betting terminals’, to just £2 which came into force in April 2019.
FOBT’s Contribute to Overall Yield Fall
The fall in revenue reported from FOBT’s, otherwise known as B2 machines, has led to a downturn in overall gross gaming yield for the year. The yield fell 0.6% versus 2018/19 to £14.22 billion.
As well as the expected revenue fall from gaming machines, which were much-maligned in the media prior to the stakes cut, the final eleven days of trade saw COVID-19 take effect with land-based bookmakers and casinos forced to close their doors and lose revenue altogether.
Perhaps not surprisingly however, some of the slack was picked up by online gaming. As a category this includes online sports betting, casino games and bingo, and it saw a rise of some 8.1% in the financial period to eventually prove to be responsible for £5.68 billion of the yield.
Sports Betting and Casinos Still Leading the Way
The online gaming sector’s growth was driven mostly by a stronger than normal performance from sports betting. Revenue in this area grew to £2.33 billion, up 15.5% year-on-year, though the sports betting channel remains second in importance behind casino revenue.
The casino sector’s revenue grew to £3.1 billion during the year, an increase of 3.7%, with Bingo growing only slightly despite more new games hitting the market with a rise of 0.5% to some £176.8 million.
Big Falls in Land-Based Gambling Revenue
The least surprising result is the big downturn in revenue on gaming machines after the new law cutting maximum stakes on FOBT’s from £100 to £2 was introduced in this reporting period. The channel showed a huge 25.6% downturn versus the previous year, though still coming in at £2.09 billion overall.
In fact, the yield from gaming machines dropped a dramatic 99% year-on-year, but strangely that is not as bad as it seems despite high street bookmakers in particular blaming the stake cut for job losses.
Despite the percentages not looking at all healthy, the revenue from FOBT’s dropped to £12.1 million showing that its overall contribution wasn’t as big as many were led to believe. It was offset too in part by the growth in earnings for other machine categories.
B3 machines showed an increase, as did B1’s, with their larger £5 maximum stake still allowing for plenty of revenue from the channel although next year’s figures are expected to be a lot worse.
Betting Shops and Bingo Halls Continue to Struggle
While job losses are never a good thing, there had been a growing overreliance from bookmakers on FOBT machines in the recent past.
The stake cut led to an overall drop of 26.4% for betting shops to £2.4 billion, with less shops being opened during the year too.
Bingo premises have also shown a decline, revenue falling 5.7% to £636 million but a sharper decrease in cash terms came from land-based casinos whose revenue dropped by 4% to £1.02 billion.
The National Lottery grew its revenue by 13.3% to £611.6 million, but there are some disappointing anticipated figures for next year when the true cost of the coronavirus crisis is published for the industry.