Why banning FOBTs from shops will damage racing
William Hill CEO Ralph Topping’s comments in yesterday’s Racing Post have caused quite a stir (when do Mr Topping’s comments not cause a stir?).
One debate taking place on Twitter as I write concerns, among other aspects, the potential benefits to racing of FOBTs being removed from shops completely. I assume that this is on the presumption that much of that FOBT turnover will be transferred to horse racing.
I wouldn’t argue for a minute that betting on horse racing is not an essential attraction for regular betting shop punters. But its market share has been slipping for years. In the 1980s, horse racing made up more than 80% of turnover; I suspect it’s now closer to half that figure. The belief that dulling the attraction of FOBTs will boost horse racing turnover to any noticeable degree simply does not stand up, in my opinion.
Why would serious players move from a product that returns 98% of stakes to one that returns 84%? And, that second figure is only achievable, realistically, if you take the time to learn about racing. Betting shops are grossing around £900 a week per machine (source William Hill half year results, June 2012). The costs to bring racing into shops is onerous. FOBT profits are subsidising that cost, in some cases very heavily. If FOBT business collapses, experienced industry figures predict we will lose a minimum of half our betting shops meaning racing will lose at least half its media rights money.
Some will cry ‘Scaremongers’, but when FOBTs really started taking off with Roulette some years ago, I asked the MD of one of the major bookmakers in a private conversation, ‘What would happen if FOBTs were made illegal tomorrow?’
‘I’d close around 80% of my shops’ was the reply.
On the stats front, the Racing Post recently published an article on a survey done by a company called GamblingData. One of the areas covered was the cross-over or interplay, however you want to term it, between FOBT play and horse race betting. 43% of people who bet on FOBTs also bet on horse racing. What the report does not indicate is the level at which that takes place. A machine punter who also bets on horses might have one £5 bet a month. A horse player who also bets on machines might put just £5 a month into a machine – the figures are useless without further data.
The real bummer for supporters of the ‘ban FOBTs campaign’ is the stark fact that 57% of those playing FOBTs do not bet on horse racing.
Those who believe that smashing the FOBT market will re-direct most of the turnover to horse racing, or that it will encourage bookmakers to sell racing (a product with the tiniest of margins and in a number of cases, negative margins) well, the stats we have so far, plus anecdotal evidence, do not bear that out.
The proof of the pudding will only be found in the eating. It could turn out to be the most expensive dessert racing has ever sought.