Paddy Power Betfair plays long game on UK betting machines

Cantillon: Irish group challenges basis of KPMG report on fixed-odds machines

Paddy Power says the assumptions made by the Association of British Bookmakers for a report on fixed-odds betting terminals were unrealistic. Photograph: Matthew Lloyd/Bloomberg via Getty Images

Paddy Power says the assumptions made by the Association of British Bookmakers for a report on fixed-odds betting terminals were unrealistic. Photograph: Matthew Lloyd/Bloomberg via Getty Images

 

The row over plans to limit stakes in betting machines in British bookie shops is dragging on . . . and on. Earlier this year, the UK government said that it would cut the maximum that punters are allowed bet in the machines at any one time to £2 from £100. The move was a response to the risks that machines dubbed the “crack cocaine of gambling” pose to vulnerable individuals.

However, the UK’s chancellor of the exchequer, Philip Hammond, recently said that the he would not implement the cut until October 2019 to give bookmakers time to mitigate shop closures and job losses that they believe will result. His decision drew outcry from campaigners and led to British sports minister, Tracey Crouch, resigning.

Now, it appears that Hammond partly based his decision on a flawed report that the Association of British Bookmakers (ABB) commissioned from KPMG. That document’s authors themselves included a disclaimer warning that the industry body set the assumptions on which it was based.

One of those challenging the report’s findings is Irish group Paddy Power Betfair, which has calculated that the maximum stake cut could cost it £36 million to £46 million a year. The group says that the new regulation would not force it to close any of its 300 or so UK betting shops or cost it any jobs.

Paddy Power says that the ABB’s assumptions are unrealistic. It also questions the association’s assertion that just 50 per cent of of customers of a betting shop that closes as a result of the new regulation would go to another outlet. Instead the Irish bookmaker says the figure would be between 75 per cent to 90 per cent.

Power has always been out of step with rivals on this question. Its previous chief executive, Breon Corcoran, told the British government that it should cut the maximum stake to €10. Whatever its overall motivation, the Irish company recognises that the betting machine row is damaging its industry’s reputation.

Clearly it sees a longer-term benefit in taking the hit on maximum stakes and moving on. However, Hammond’s move means the controversy will simmer for yet another year at least.

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