Gambling machines known as B2s were introduced into UK betting shops in 2001, at which point they were referred to as Fixed Odds Betting Terminals (FOBTs). At that time UK betting shops were unregulated, and bookmakers avoided restrictions on gambling machines by claiming that FOBTs were used to "bet" on events occurring on software located outside the shop.
During the first decade of operation, the growth of FOBTs can best be described as explosive. From nothing ten years earlier, the amount won by FOBTs in the year 2010-11 rose to £1.3 billion, far surpassing the £0.8 billion won by UK casinos. This is indicative of the presence of addictive content. FOBTs have now become so lucrative that operators are opening multiple shops in single locations to saturate communities with these money-spinning machines.
FOBTs proved a major focus for the Select Committee Inquiry into the effectiveness of the 2005 Gambling Act, with Richard Caborn, a previous Department of Culture Media and Sport (DCMS) Minister, admitting: "something had to be done [about FOBTs] but the government was powerless [prior to 2005]." The UK Government had the power to ban FOBTs altogether (as the Irish authorities have) through the 2005 Gambling Act, but there were a few political hurdles preventing such action:
1. The Government wanted to sell the Tote betting shops, which were enjoying large profits from FOBTs
2. The Government was receiving high amounts of tax revenue from FOBT profits
3. The bookmaking lobby had, and still has, many influential friends in politics
Local authorities are required to "aim to permit" licensing of betting premises, with one licensing condition being that the primary activity be over-the-counter betting. Certain bookmaker’s accounts show only 20% of turnover in shops is now on betting, with 80% coming from FOBTs. This means that shops are in breach of their licenses, but The UK Gambling Commission (UKGC) is "comfortable" with this situation.
Breaking the Code
In November 2003, the DCMS, Gaming Board of Great Britain, and Association of British Bookmakers (representing around 85% of bookmakers in Great Britain) agreed a Code of Conduct as a theoretical control over FOBTs.
One stipulation of the new Code was that the only casino-type game allowed on FOBTs would be roulette. That rule was quickly broken, and
blackjack and other games soon started appearing on FOBTs. Now the operators want to move the Code’s goal posts again, this time by increasing
the number of machines allowed per shop from 4 to 6.
At that time the Code was agreed Tessa Jowell was in charge of the DCMS, and stated that FOBTs would be "on probation." The logical assumption
is that because the UKGC oversees licensing, it also has the role of monitoring FOBT probation. The UKGC position is, however, that: "whether the machines are on probation or not is a matter of DCMS policy".
During the drafting of the 2005 Gambling Act, FOBTs were reclassified as gaming (rather than betting) machines. This meant there was no need to maintain the illusion of "betting" on external events, and that result generating software could be located within the machine itself.
2005 Gambling Act Licensing Objective 1 - Prevention of Problem Gambling
At a recent hearing of the aforementioned Inquiry, a question about problem gambling related to FOBTs prompted the responsible Sectary of State, John Penrose, to ask for "firm evidence [that FOBTs cause problem gambling], not anecdote or concern". The Fairer Gambling campaign believes Mr Penrose should consider the following points :
1. If FOBTs are on probation, and the UKGC is responsible for enforcing the objective to prevent problem gambling; why is government and UKGC not already engaged in obtaining the evidence it needs? Surely there needs to be a method of assessing whether the objectives of the Act are being met?
2. If government wants proof "beyond reasonable doubt" and is of the opinion that academic research will not deliver this; is government implying
that no evidence level would be adequate?
3. The New Statesman has published a blog on the subject for a number of years, amassing thousands of posts. To take one recently publicised
case, David Armstrong of Norwich admitted that his FOBT addiction had cost him £100,000 over the past 4 years. Due to the sheer volume of these cases, they are not mere anecdotes - they are real people with real problems.
4. The British Gambling Prevalence Survey (BGPS) 2010 showed a 50% increase in problem gambling since the previous survey in 2007. It identified 18 gambling activities, and highlighted 5 activities as having the highest prevalence of problem gambling. Of those 5 activities, the one at which participants engaged in the least number of other gambling activities was FOBTs, showing that FOBTs are the primary driver of UK problem gambling.
5. Further, the BGPS showed that compared to the other 17 activities, FOBTS have:
a.) The joint highest ratio of use by 16 to 24 year old gamblers
b.) The second highest ratio of use by unemployed gamblers
c.) The highest ratio of use by the lowest income quintile gamblers
d.) The third highest ratio of at-risk high-time and high-spend gamblers
6. Astoundingly, the average win per FOBT per hour used (not per hour accessible) is over £30. However the BPGS identified gamblers losing only £7 per hour as high-spend gamblers. Put simply, the BGPS, whilst correctly identifying the trends, is only revealing a fraction of the reality of problem gambling.
7. For casino roulette, the amount the players lose as a percentage of the amount of player funds used (the retention percentage) is 15%. For FOBTs, the UKGC does not obtain the retention percentage and the bookmakers don't make it public. Given that roulette is the main game (over 90% of play) on FOBTs, FOBT roulette is over 3 times faster than casino roulette, and FOBT players have generally lower funds than casino players, the FOBT retention percentage could be as high as 50% or even 75%. A high retention percentage on a high volume activity is clear evidence of addictive content.
8. The Fairer Gambling Campaign made a written submission to the DCMS hearing referencing this evidence, but was not permitted to give oral evidence. This was not surprising, as a previous advert of the campaign had attracted one objection - from the politicians of the All-Party Betting and Gaming Committee.
2005 Gambling Act Licensing Objective 2 - Prevention of Crime Associated with Gambling
Operators are clustering betting shops in poorer areas simply to maximize FOBT profits. These premises are resourced with minimal staff on low wages, giving underage and non-sober gamblers easy access to the addictive content on FOBTs. There has been an escalation of crime in betting shops since the introduction of FOBTs. Robberies and assaults on staff are everyday occurrences and criminal damage on premises is often going unreported.
2005 Gambling Act Licensing Objective 3 - Fair and Open Gambling
An FOBT can take up to £100 per spin (every 20 seconds) compared to a £2 maximum on a slot machine in more highly taxed and heavily regulated casinos. FOBT players are not informed that the roulette result is determined before the virtual ball starts spinning or of the FOBT retention percentage. There is zero consideration of consumer protection.
Politicians seemingly apathetic attitude is motivated by a desire to protect the bookmakers and the tax revenue generated on the back of legally questionable FOBT profits from problem gamblers in poor communities.
This is not the Big Society, and it's not joined-up government. FOBTs are being operated in breach of all three licensing objectives. If the Government is not willing to solve the FOBT issue that it has itself created, how can it be trusted to solve anything?
More information available at www.FairerGambling.co.uk