AWP jackpots 'must increase' or 1000s of pubs could perish

A leading trade group has called for a radical review of pub fruit machine jackpots to ward off a trading threat to thousands of pubs.

Business In Sport and Leisure chief executive Bridgid Simmonds has warned the Government that a swathe of pubs could be at risk if the current £25 jackpot is not increased.

Simmonds claims pubs face a bleak future unless pay-outs rise to give players greater incentives to play the machines.

She estimates that some 40% of pubs could struggle if machine revenue did not increase through better pay-outs.

Licensee income from machines is already falling at the rate of 7% year on year, with figures for April and May 2006 seeing a 10% fall on the same period 12 months ago.

Machine "take" is likely to be hit still further following next summer's smoking ban in England and Wales. This is based on the experience in Scotland where a decline in machine revenue followed the introduction of the local smoking ban in March this year.

"This all points to a very bleak financial outlook for thousands of pubs and I believe it is an issue which has to be addressed as a matter of urgency," Simmonds said.

She has called on the Department for Culture, Media & Sport to increase jackpot payments as part of the new Gambling Act.

"The Government has indicated it will increase the maximum stake on plays but what is really needed is a review of pay-outs.

"Machine income is vital to a pub business and many would simply not be viable without sufficient revenue from these sources," she added.

Federation of Licensed Victuallers Associations chief executive Tony Payne said the decline in machine income for tenanted and leased operators was very worrying.

"In April and May the average net income from machines for licensees went down from £117 to £105 per week, a drop of around 10%. The year-on-year decrease is running at 7% so it is clear the decline is accelerating," Payne said.

"Machine income is vital revenue for a licensee and is often the only thing that keeps them above the viability line."

Payne said the duty differential between pub and club machines was disproportionate.

Duty on a pub machine with a £25 jackpot costs £680 per year as opposed to duty on a machine paying a £250 jackpot where duty is only £1,815.