FOBT - pressure grows on the betting industry
Paddy Whur looks at the debate over fixed odds betting terminals and local authorities' room for manoeuvre.
In Parliament last month political pressure continued to grow against fixed odds betting terminals in betting shops.
These are the high payment Category B2 machines which are permitted to operate from betting shops on the high street. Each betting shop has the ability to site four fixed odds betting terminals in their shops and they have contributed significantly to the revenue to bookmakers.
Many London councils, and now Liverpool also, believe that there has been a significant increase in the number of betting shops purely as a driver for more fixed odds betting terminals. The London Borough of Newham are particularly concerned as they say this has led to the clustering of betting shops in three areas of high footfall within their borough.
So far, licensing authorities have been powerless to stop the increase in the number of such machines.
Newham in particular have attempted to refuse the grant of new betting shops, believing that the more that are granted in these cluster areas, the higher the relative spend will be on fixed odds betting terminals, as there is no increased demand for traditional over the counter betting business.
Fixed odds betting terminals were introduced under the old Betting, Gaming and Lotteries Act, well before the Gambling Act 2005 was enforced.
Bookmakers introduced them into their shops arguing that they were not regulated gaming machines at that stage but that the machine, through a random number generator, creating a fixed odds bet, rather than a gaming opportunity.
Not surprisingly the casino industry were concerned about how this would effect their business as at that stage there was a need to be registered with a casino and a 48-hour dampening down period after membership was granted before a player could go in to a casino.
As over 90% of the play is through automated roulette, the casino industry were hugely concerned that people would have the ability to walk in off the high street and use fixed odds betting terminals, rather than wait 48 hours to go in to a casino.
A High Court action was threatened by the casino trade body and at the last Parliament agreement was reached between the Association of British Bookmakers and the Casino Trade Body, in that they could be permitted to a maximum number of four in each shop and with restrictions on stakes and prizes.
When the Gambling Act became effective in 2005 this informal agreement was ratified by the categorisation of these machines as B2 machines allowing them to have stakes of up to £100 (in multiples of £10) and prizes of up to £500.
Many local authorities, and those charged with dealing with problem gambling, have dubbed these machines the ‘crack cocaine’ of gambling in that they can be played so quickly and losses generated in a very short period of time.
Last month saw the following exchange at a Prime Minister's Question Time session:
Edward Miliband (Doncaster North) (Lab):
Does the Prime Minister recognise the concern of families and communities about the impact of fixed odds betting terminals, gaming machines on which people can gamble up to £300 a minute on our high streets?
The Prime Minister:
I absolutely share the concern about that issue, and I welcome the fact that we shall be debating it in the House today. There are problems in the betting and gaming industry, and we need to look at them. I think it is worth listening to the advice of the right hon. Gentleman’s own shadow Minister who said “I accept the argument that empirical evidence is needed before making” any changes, “because it might just create another problem somewhere else”.—[Official Report, Eighth Delegated Legislation Committee, 27 November 2013; c. 8.]
However, this is a problem, and it does need to be looked at. We have a review under way. We are clearing up a situation that was put in place under the last Government, but I think that if we work together, we can probably sort it out.
Edward Miliband:
The Gambling Act 2005 limited the number of machines to four per betting shop, but it did not go nearly far enough. More action should have been taken. The Prime Minister asked about evidence. Local communities from Fareham to Liverpool are saying that these machines are causing problems for families and communities. Local communities believe that they already have the evidence. Should they not be given the power to decide whether or not they want these machines?
The Prime Minister:
The right hon. Gentleman has made a reasonable point, but let me first deal with the facts. The first fact is that fixed odds betting terminals were introduced in 2001 after the Labour Government had relaxed gambling regulations. The second fact is that there are fewer of these machines now than there were when Labour was in office. As for the right hon. Gentleman’s last point, councils already have powers to tackle the issue, and I believe that they should make full use of those powers. I am not arguing that that is “job done”—there may well be more to do— but we have a review under way. This is an issue for the Department for Culture, Media and Sport. If the right hon. Gentleman has ideas, I ask him to put them into the review, but, as I said earlier, he may want to listen to his own shadow Minister, who, as recently as November, said: “there is no evidence to support a change to stakes and prizes for FOBTs”. —[Official Report, Eighth Delegated Legislation Committee, 27 November 2013; c. 20.]
There seems to be something of a change here, but if the right hon. Gentleman has extra evidence, he should put it into our review, and I think that we can then sort the matter out.
Edward Miliband:
Our ideas are in today’s motion, and if the Prime Minister wants to vote for it, we would be very happy for him to do so. He says there are already powers in place, but the Mayor of London and the Conservative head of the Local Government Association have said that local authorities do not have the power to limit the number of machines. One in three calls to the gambling helpline are about these machines and they are clustered in deprived areas. For example, there are 348 in one of the most deprived boroughs in the country: Newham. Can the Prime Minister at least give us a timetable for when the Government will decide whether to act?
The Prime Minister:
We will be reporting in the spring as a result of the review that is under way, and I think it is important that we get to grips with this. There is something of a pattern. We had the problem of 24-hour drinking, and that needed to be changed and mitigated and we have done that. We have the problems created by the deregulation of betting and gaming, which the right hon. Gentleman is raising today and we need to sort that out. We have also had problems, of course, in the banking industry and elsewhere that we have sorted out, so, as I said, if he wants to—[Interruption.] As I said, if he wants to input ideas into that review, I think that is the right way forward.
Notwithstanding the political pressure, later that day the Government won a Commons vote by 314 to 232 defeating the Labour motion calling for local councilors to be given the power to limit the number of high stakes fruit machines.
However, this is only a temporary reprieve for fixed odds betting terminals in that there is an ongoing review of stakes and prizes and there seems to be cross party support for action. For example Zach Goldsmith, a Tory MP, tweeted “It is hard to disagree with Labour’s motion today to empower local authorities to decide re: betting machines/bookies. Localism, surely?”.
Even Tories who supported the Government warn that ministers may be waiting too long before acting against fixed odds betting terminals.
Tom Watson, the former Labour chairman, blogged that in 2010/2011 there were 32,832 machines and 33,209 at the end of March 2013. In that time the gross profit from fixed odds betting terminals rose from £1.3 billion to £1.5 billion with bookies clustering in poorer areas.
This hot topic is sure to continue.
Paddy Whur is a partner at Woods Whur. He can be contacted on 0113 234 3055 or This email address is being protected from spambots. You need JavaScript enabled to view it..