Updated: 1st March 2021
Advice for bookmakers & betting shop owners facing financial distress
A proposed government clampdown on fixed odds betting terminals (FOBTs) is likely to cause serious financial distress for bookmakers and betting shop businesses in the UK. The maximum bet allowed on these terminals, currently £100, is set to be reduced to between £2 and £50, with a £2 maximum thought to be likely.
The resulting drop in revenue for betting shops and bookmakers brings into stark reality the prospect of widespread insolvency. With huge losses predicted in both revenue and jobs, the industry faces tough times.
Why is the government cutting the maximum bet on FOBTs?
Fixed odds betting terminals allow bets to be placed every 20 seconds. As the maximum bet is currently £100, there is significant risk to those placing bets of suffering huge financial losses.
In fact, the total Gross Gambling Yield (GGY) for the gambling industry in Great Britain between April 2016 and March 2017, was £13.8 billion - a 2% increase on the previous year. During the same period, the overall number of gaming machines in this country rose to 182,916, generating £1.8 billion GGY in their own right.
In reducing the maximum bet allowable, the government aims to protect gamblers, particularly younger people, those vulnerable to addiction, and those already addicted to gambling.
Professional advice if you’re a betting shop owner or bookmaker facing insolvency
The expected rise in financial distress in your industry is serious indeed, but there are steps you can take to protect your business from unmanageable debt. The first is to seek professional guidance and support from a licensed insolvency practitioner (IP), as they’ll ensure you receive reliable advice, and fully understand your options.
So what potential avenues might be available to you? Here are a few possibilities that could be suitable depending on your individual circumstances.
- HMRC Time to Pay Arrangement (TTP) - HMRC offers extended time to pay arrears of tax and National Insurance, to businesses that need a little support. If they believe your company’s financial problems can be overcome, a Time to Pay arrangement can offer up to 12 months’ additional time.
- Alternative finance - With such a wide range of alternative finance products now available, there may be an option suitable for your business. You could gain access to a cash lump sum to repay creditors, or regular working capital that helps you on a long-term basis.
- Company Voluntary Arrangement (CVA) - Company Voluntary Arrangements are formal insolvency procedures that help viable businesses escape insolvency, and trade profitably again in the future. This may involve restructuring your business, but ultimately allows you to regain control as a director.
- Company Administration - If creditors are hounding you for payment, company administration can provide the space needed to formulate a plan for recovery. An eight-week moratorium period prevents creditors from taking legal action, and freezes any additional interest and charges on existing debt.
- Creditors’ Voluntary Liquidation (CVL) - This is a formal liquidation process that can be instigated by company directors. If the situation is such that your company won’t recover, CVL typically represents a better option than compulsory liquidation, and can protect directors from allegations of misconduct.
If you’re a bookmaker or betting shop owner concerned about the viability of your business, Real Business Rescue will provide professional assistance. We’ll explain your options in full, ensure you understand the ramifications, and support you at every stage. For more information and to arrange a free same-day consultation, call our expert team – we operate from more than 100 offices around the country.
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