Government’s increase on FOBT tax won’t solve the problem

Posted on March 20, 2014 by admin
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The highly contentious roulette and casino gaming machines in betting shops that can take bets of up to £100 every 20 seconds caused controversy again this week, following Chancellor George Osborne’s announcement to increase tax on Fixed Odds Betting Terminals (FOBTs) to 25 percent.

Instead of using stakes and prizes to level the playing field by reducing the maximum stake from £100 to £2 – in line with all other gaming machines – as the Campaign for Fairer Gambling advocates, Osborne is using the tax system, which demonstrates that the Government has chosen instead to share in profits that have been derived from addicted gamblers.

In response, Tottenham MP David Lammy tweeted: “Rather than deal with FOBTs and proliferation of Betting Shops High Street Osborne says he wants to make more money from them.”

However, none of the revenue generated by the tax will be used to help problem gamblers. The voluntary levy, paid by the gambling industry to the Responsible Gambling Trust, stands at just 0.1% of their £5bn profits. Just £5m is set aside for research, education and treatment – enough to fund just one NHS-run clinic for problem gambling in Britain.

Adrian Parkinson, Consultant for the Campaign for Fairer Gambling, said: “A 25 per cent tax rate on FOBTs may well wipe £78 million off the bookmakers’ profits – but does little to protect those affected by problem gambling.

“It will be suggested that this move will slow down the proliferation of betting shops on high streets, but the addictive nature of FOBTs means the bookmakers will still be raking in huge sums. The Government should be looking at dealing with the root of the problem – the high stakes and high intensity play of FOBTs, rather than tax the losses of those addicted to them.”

Increasing the tax on FOBTs gives the Government a vested interest in FOBT proliferation, but in terms of revenue generation it is very short-sighted. The social and economic cost of problem gambling, and the economic impact of FOBTs on high streets will offset any benefits to the Treasury.

A report by Landman Economics found that because FOBTs are a very “labour un-intensive” form of consumer spending, for every £1bn spent on them 22,000 jobs are lost in the wider consumer economy. Betting shops that are clustering on high streets to facilitate more FOBTs are having a parasitic effect on some of our more deprived areas.

Research published by the Campaign for Fairer Gambling in conjunction with mapping carried out by Geofutures found that in the 55 most deprived boroughs in England, £13bn was gambled on FOBTs last year.

Last year, Chancellor George Osborne introduced Machine Gaming Duty (MGD) to replace Amusement Machine License Duty (AMLD). MGD is a 20 per cent profit-share tax on gaming machines, whereas AMLD was a fixed charge of £2,500 per machine. In this week’s budget statement, George Osborne increased only the tax on FOBTs to 25%. According to the Red Book, his reason for doing this was to “bring their profitability more into line with other gaming machines on the high street”.

Matt Zarb-Cousin, Consultant for the Campaign for Fairer Gambling, said: “Increasing the tax on FOBTs is only a solution if the Government are happy to ignore the social cost, want to encourage more people into gambling addiction and believe gambling addicts should pay off the deficit. A £2 per spin cap on FOBTs would bring about economic, social and commercial benefits and could be implemented today.”