The Guardian – In the budget, George Osborne reduced the tax burden on land based bingo halls and raised it for betting shop fixed odds betting terminals (FOBTs). Two gambling sectors treated very differently. The basis of this tax hike on FOBTs, as Osborne put it, was to “bring their profitability more in line with other gaming machines on the high street.”
The chancellor has underestimated the disparity between FOBTs and other gaming machines. It is far bigger than a 5% tax adjustment can address. In 2013 FOBTs – or “B2” gaming machines as they are categorised – generated more than £1.5bn of gross revenue for the betting sector. This represents 51% of its entire profits, more than the sector made from its core business of racing and sports betting.
Yet, FOBTs are an ancillary product in “betting” shops, just as they are in bingo halls and casinos. Of all gaming machines operating across casinos, bingo halls and adult gaming centres in the UK last year, betting shop FOBTs accounted for 67% of all revenue. According to the Gambling Commissions’ 2012/13 annual report, FOBTs accounted for nearly £1 out of every £3 in profit generated by all UK land based gambling sectors.
After Osborne’s additional tax is deducted, a single FOBT will still generate £35,000 per year of profit for the bookmakers while a bingo hall gaming machine will gross just £5,394 after tax.
How does a single, touch screen, electronic gaming machine – in just 12 years – rise to these staggering levels of profitability, pushing traditional fruit machines and slot machines out of the way to dominate high street gambling?
The answer: take an addictive casino table game – roulette – put it into an electronic video format, speed it up to five times faster, site it in an easily accessible high street cash-orientated venue and you have, as the bookmakers have found, an easy and guaranteed revenue stream and one that continues to grow.
