How will FOBT crackdown affect betting shop performance and strategy?

The government has been consulting on measures to clamp down on fixed-odds betting terminals (FOBTs) in a move that could severely dent your betting shop performance.  Here, we’ll take a closer look at the proposed measures and how you can adapt your strategy to maintain optimal profitability.

What action has the government taken on FOBTs?

 FOBTs are a staple of UK betting shops. Figures from the Gambling Commission put the total number of FOBTs in the UK at 33,611.  However, the Department for Digital, Culture, Media and Sport (DCMS) launched a consultation last October amid fears FOBTs were contributing to wider social problems.

The maximum permitted stake on controversial FOBTs will be cut from £100 to £2, the government has announced after ministers ignored pleas from bookmakers and branded the machines a “social blight”.

The DCMS opted for £2 after more than a year of furious argument between anti-FOBT groups and high street bookmakers, who derive over 50% of their revenue from the machines.

The change, subject to a parliamentary vote likely to take place in 2019, will reduce the government’s tax take from the machines but this will be paid for by an increase in duty applied to online gambling.

In the April 2016 – March 2017 period, betting shop companies yielded a total of £1.8bn from FOBTs therefore, any move to cut maximum bets by this amount will have a noticeable impact on profits.

This move by the DCMS has already had a potent effect on betting shop company values with some of the industry’s biggest players already seeing their share value fall by 10-12%.

 How to optimise betting shop performance in light of a crackdown on FOBT.

With more access to data-backed insights you can take steps to maintain betting shop performance despite the result of the FOBT consultation:

Selecting your products

  • FOBTs have shown themselves to be highly profitable. However, other gambling products can offer much greater returns for betting shops.

 

  • Diversifying your sports betting options further is a good place to start. No maximum stake is applied to sports bets, and they can still generate a healthy profit margin.

 

  • With a bet placed on the result of a sports match only, average profit margins are around 4.5%. However, when variables including scorers and order of goals are applied, this margin rises to 32.3%.

 Choosing your locations

To get closer to customers who are likely to watch sports and with there being less of a need to have a physical high-street presence, you should consider adapting your betting shop locations.

You need to move on from a one-dimensional appraisal of the centrality of a location. Instead, you should focus on working out how the broadest possible range of factors impact profitability, including:

  • Nearby venues showing sports events
  • Local competitors/businesses
  • Amenities and transport infrastructure

Use advanced location intelligence software to calculate all these variables and more quickly and accurately.

Honing your marketing

 The new regulations will apply to all betting shops (keeping you on a level playing field with your competitors) and FOBT users are likely to switch to an alternative product.  As such you might not experience as big a reduction in revenue as expected from this change although you may need to tweak your marketing message in order to ease the transition.

Adapting your marketing message and the locations in which you display it can help signpost FOBT users towards other services they might enjoy.

This approach can help bring in new customers to cover any shortfall as well.  However, to take this step you need to gain a clearer picture of who your customers are, where they’re based and what motivates them.

Use Periscope® to put these steps into action and optimise betting shop performance despite the outcome of the FOBT consultation.

Enhance your betting shop’s strategic capabilities and make advantageous decisions in light of industry changes with Periscope®