The consultation on Britain’s gaming machine standards may have closed last week, but for Bacta president John Bollom, the battle is far from over.
For the uninitiated, the gaming machines standards that were the subject of the consultation will introduce a host of new rules designed to promote responsible gambling on gaming machines.
This will particularly impact Britain’s adult gaming centres and bingo halls, especially the smaller, independent operators. But despite this, very few operators are actually opposed to the proposed regulations.
What they do oppose is the retrospective manner in which the standards are threatened to be introduced, meaning that every operator would have to update every machine they own, or throw away the ones that can’t be upgraded.
This would be like introducing a new safety feature for cars and then saying that every car on the road has to install it, at significant expense, or be scrapped.
Bacta, the association representing the UK’s amusement and land-based low-stake gambling industry, warns that this will kill off smaller operators and lead to more emptied out high streets.
“What the Gambling Commission wants is honestly just not possible,” says John Bolom, president of Bacta. “Some of these machines are at least five or 10 years old, and some manufacturers either discontinued the technology or no longer exist.
“You can’t just go in and reprogram these old machines. In the worst case, this would mean that hundreds, if not thousands, of machines would be put on the scrap heap because they can’t comply with new requirements.
“Then you have to think of the cost of scrapping and replacing these machines, which could hit over £100 million for the industry,” warns Bollom. “While your bigger operators can shoulder these costs, your smaller operators will just cease to exist.”
This is a double-edged sword for small operators, as they are the ones that can least afford to make the changes, and also the ones with the oldest machines that would be the hardest to upgrade.
“The bigger companies operate probably the newest machines, which you would expect to be upgradeable in terms of the programs that are on there, it’s the smaller operators that tend to have the older equipment which will not be,” says Bollom. “They could be from manufacturers that no longer exist. There’s technology in those machines that no longer is supported. There are lots of reasons why it can’t be done.”
Rising costs
Then there is the question of how you pay to make the necessary upgrades. Contrary to popular belief, adult gaming centres are not cash cows.
“We are the one of the few businesses legally prohibited from putting their prices up and we’ve been stuck like that, in some cases for over 15 years,” says Bollom. “Name me another business that survives charging prices from 15 years ago, it’s crazy.”
The cost pressure faced by these land-based operators is reflected in the Gambling Commission’s own figures, which show that the number of AGCs has fallen by around 35 per cent since 2011.
Gaming Intelligence spoke to an independent AGC operator who told us: “Like many high-street businesses, we are under severe financial pressure from multiple fronts. Soaring inflation has driven up the cost of everything from energy to equipment to wages. Recent increases in employer National Insurance contributions and other staffing costs directly hit our businesses. Unlike most industries, however, we cannot adjust our pricing or offerings to compensate – our stakes and prize limits are fixed by law.”
Where a typical business might raise prices to cover rising costs, licensed AGC operators are legally prohibited from doing so. This means that every uptick in expenses, from inflation to tax increases, erodes the businesses further.
In the current economic climate, many small operators are at real risk of closing down.
Britain’s AGCs are subject to multiple taxes and levies, including business rates, machine games duty, employer national insurance contributions and corporate tax on profits. AGCs are also unable to reclaim VAT paid on purchases and expenses, making VAT a direct cost.
“We effectively pay taxation at multiple points – on revenue, on consumption, on property, on employees and on profit – all with no protection from inflation,” says the AGC operator.
“We employ people in the UK, we pay local taxes at every level and spend all of our costs here. We aren’t hiding out in Curacao or Costa Rica paying low wages, we are paying our landlords, buying our customers’ coffee at Tesco, and are part of the communities that we live in.”
In real terms, after nearly a decade of inflation and significant increases in the cost of living, today’s £1 or £2 stake limits and £100/£500 prize caps on the category B3 and C machines are far less compelling to customers than they once were, and far less useful to AGC operators when trying to cover costs.
And this is before the costs associated with the proposed gaming machines standards are factored in.
“Think of a small seaside family business that has six or eight of these machines that now have to be scrapped,” says Bollom (pictured right). “The replacement cost for each machine can be £14,000. It’s an investment they just can’t afford to make and it will drastically affect their business. Some of them, I believe, will not be able to survive it.”
The 80/20 rule
After over a decade of treading water, gaming machine operators were expecting to be thrown a lifeline by the previous Conservative government of Rishi Sunak, which looked set to amend the 80/20 rule.
The 80/20 rule limits operators to one B3 machine for every four category C machines, the latter having a lower £1 stake and £100 prize limit. Conversely, players prefer the B3 machines, which forces operators to host an unnecessarily high number of category C machines, just to have more of the machines that people actually want to play.
“I think the 80/20 rule needs to be changed,” says Bollom. “AGCs are being forced to operate a lot of machines that people don’t want to use, just to keep the numbers up for the more popular machines. This, I think, is no one’s best interest. Just from an environmental point of view, it isn’t very sensible to keep these machines on and running all day.”
Bollom is hopeful that the government will revisit the 80/20 rule later this year or early in 2026, and he hopes that they will use the opportunity to also introduce sensible stake and prize limit increases for both B3 and C machines.
By way of example, the retail price index has risen by 55 per cent since the last stake change in 2014. If operators had been permitted to keep up with inflation during that time, category B3 stakes would now be at £3.10, while the prize cap would be £775.
“A lot of our work since the general election result in July has been trying to get all these reforms back on track,” Bollom explains. “Twelve months ago, we were in a different place. We thought we were getting changes. The government had finished its white paper review and published a whole package of reforms on gambling. Then the government changed.
“Some of the reforms have since been cherry picked by the new minister, but it’s a shame, because they were agreed with the industry as a package altogether. And for some reason, the AGC reforms have been left out. That’s coincided very much with a very vociferous anti-AGC campaign.”
Lobbying and misinformation
“All of our members operate in a very socially responsible manner, and they operate some of the safest land-based gambling venues, I would say, in the country,” Bollom adds. “But we constantly have to fight myths and misconceptions.
“We don’t have access to the mainstream press, you know, The Mail or The Sun or what have you. A lot of these negative stories about AGCs have come from one source, The Guardian newspaper. It’s not the biggest newspaper out there, but these stories do get picked up by other publications and can grow from there. So that’s what we’re fighting in a way, in terms of the misinformation that they’re putting out there.”
One recent story in The Guardian claimed that gambling firms were flooding towns with 24-hour slot machines. But Bollom believes that this is just a recalibration of the high street, after the £100 per spin high-stake fixed-odds betting terminals (FOBTs) were removed from betting shops.
“We all operate the same B3 machines now and the number of betting shops has dropped dramatically since FOBTs were banned, and some of those premises have been taken up by AGCs,” he explains. “I think it’s a better offering. AGCs tend to be more comfortable, better staffed, more social places than perhaps the betting office, and people vote with their feet.”
“It was very easy for people to chase losses on FOBTs,” Bollom notes. “The machines we operate have a much slower pace. They’re only a maximum stake of £2 and that is a maximum. Most of them you can play on variable stakes of anything down to 20 pence and in fact, the statistics that we have gathered from a lot of operators shows that the average bet on a game is only just over £1. It’s very different to £100.”
But having successfully taken down FOBTs, the anti-gambling lobby has firmly set its sights on AGCs, putting at risk the livelihoods of both operators and their employees.
“If you look at our seaside towns, a large amusement arcade, which does have an AGC within it, is a key employer and business in that seafront,” says Bollom. “If they were to close, they would end up with boarded up frontages in Ramsgate, or South End, or elsewhere, which really is in nobody’s interest.
“My own family’s business is actually on a seaside pier. We have a pier down in a place called Mumbles near Swansea and a lot of the income that’s needed to keep that pier in repair and open is generated in the amusement arcade, and the machine income is crucial to keeping that going. So, you know, it has an impact in different areas.”
Bollom is also keen to dispel the anti-gambling lobby myth that AGCs are places where people sit alone staring blankly at a screen.
“Just walk in and watch people there,” Bollom suggests. “They are having a tea or coffee and a chat. The staff know them. We have been criticised a lot about the places that are open 24 hours. Yes, certain premises are open 24 hours, but we know from our own surveys that they also serve as safe havens late at night. They have connections with the police and people know they will be safe there.
“There is also a certain snobbery about working class gambling that also comes into play,” says Bollom. “We live in a 24-hour society in terms of hospitality workers, NHS staff, taxi drivers – millions of people on shift work around the clock. So why should they be denied the type of pleasure or pastime that other people can enjoy, just because they work a different shift pattern to everybody else?”
Fighting back
Bacta recently stepped up efforts to combat what it describes as an orchestrated campaign to delay or derail the introduction of land-based gaming reforms, with the effort led by Bacta vice president Joseph Cullis.
“Make no mistake, this is much more than simply a couple of inflammatory and salacious newspaper reports,” he says. “We are facing a highly motivated and well-funded campaign where the ultimate end game is to drive responsible gambling entertainment businesses, employing local people and sustaining supply chains of local business, off the high street.
“The media coverage, much of which is based on half-truths and misinformation, is feeding the briefing of politicians and policy makers, which we believe may explain the otherwise unfathomable delay in the implementation of the white paper reforms.”
Britain’s land-based gaming industry generates billions of pounds for the exchequer in tax revenue and employs tens of thousands of people across the country, providing entertainment to millions.
If the anti-gambling lobby get their way, they will further weaken the UK economy, but they won’t end gambling.
“I do think it’s important that land-based gaming is maintained and kept healthy, because if it’s not, there’s only one way it will go, and that is underground,” Bollom warns. “That cannot be in anybody’s interest, not for the player because they won’t have the protections, not for the government because they won’t have the revenue, and not for the high street because they won’t have shops with active businesses.
“We have seen it in Germany,” Bollom adds. “They brought in a series of restrictive new laws which curbed the number of arcades that could be in operation, and it led to the whole thing going underground.
“The government loses tax revenue, and these underground establishments are not worried about their social responsibility, player protection and all of the elements that our regulated industry has, so I worry it’s a very dangerous road we could be looking at here.”
Bollom was Bacta’s president back in the 1990’s and having been involved as an elder statesman with the association in recent years, he was pulled back into the role to lead the association through one of its most critical junctures.
Fighting the fake news and delivering meaningful reforms for his members will be no easy task for Bollom, but it will be key to ensuring the ongoing viability of the UK’s low-stakes land-based gaming industry.