UK is enabling foreign online gaming fraudsters by proxy as new initiative recommends stake reduction to £2
“Go back to 2000 or so and they changed the way high street bookies charged tax to kill the nascent offshore industry, therefore this is the latest in a long line of attempts by government to control a market”
This morning, in a remarkably timely move, the fixed odds betting terminal (FOBT) all-party parliamentary group in Britain will publish the findings of its six month inquiry which will recommend there is a “prima facie” case to cut the maximum stake of £100 per spin. The report will advise that “at the very least, the stake should be reduced on FOBTs on a precautionary basis”.
The report, which has also been published in The Times states, that the study which is being chaired by Carolyn Harris MP and supported by at least some MPs from all major parliamentary parties, will claim that “from the evidence… the group sees a strong case for the stake being set at £2”. It is also stated that the report will recommend the government consider a reduction in machine numbers per shop and/or a reduction in the speed of spin of 20 seconds.
The reduction of FOBT maximum stakes to £2 would be considered by many to be the worst case scenario from the perspective of UK bookmakers. If the report today pushes for such a reduction, it will undoubtedly be seen as a negative for the sector.
However, the key decision on gaming machines will come from the Triennial Review which is currently underway and is expected to report in H1 next year. Given Ladbrokes and William Hill saw small recoveries in share prices yesterday this news could see them weaker today.
Why is this of interest to the FX industry in Britain?
A fixed odds betting terminal is an electromechanical device normally found in betting shops in the United Kingdom that allows players to bet on the outcome of various games and events with fixed odds. They were introduced to UK shops in 2001. These are commonplace, however with new rulings such as those proposed by the parliamentary group that limit them in their stake sizes, this could by proxy enable the nefarious online gaming firms that proliferate the internet, many of which are intrinsically linked to the binary options scams that come from Israel.
Today, as this news breaks, the entire online gaming industry is attending a conference in Tel Aviv called Go Gaming, which is being promoted as the 5th International Summit.
A quick glance over the attendee and sponsors list will reveal that the vast majority of those supporting and attending are binary options fraudsters and affiliate lead buying entities, as well as former owners and representatives of unregulated retail FX shops that have no connection to a prime brokerage and live from client losses. Essentially, the link between online gambling and the binary options business as well as the unregulated FX firms that are now the subject of investigation by French and Israeli police for their part in allegedly stealing millions by profiting from the losses of clients is absolutely concrete.
FinanceFeeds spoke to a regulatory expert in Britain today, who explained “I think the government have been doing a lot in this space to firmly control it in recent years. The e-poker machines in bookies are a particular matter of importance, but it has largely revolved around taxation.”
This particular regulatory expert explained “It seems a bit odd to me but I’m no expert on the (proper) gambling sector. However go back to 2000 or so and they changed the way high street bookies charged tax to kill the nascent offshore industry, therefore this is the latest in a long line of attempts by government to control a market.”
When asked whether if this will also put an end to the presence of the online entities, the regulatory expert actually explained that this may enable them further.
“On the contrary” he said. “I think online will flourish, which is a bit problematic because it means those with a real gambling problem can continue to lose money but the British government will collect no tax on it, therefore it is not part of their remit”.
“In order to stem this, they would need to ban advertising (like they have done with cigarettes) to have a meaningful impact here I think” stated the regulatory expert.
Nations that have laws against gambling have far more opportunity to stem this, however in Britain, the new government rulings may serve as counterproductive.