Phillip Blond is Director of ResPublica.
There is one kind of problem gambling that has managed to unify almost everyone against it, whatever their political stripes. This is the Fixed Odds Betting Terminal – or FOBT for short – a machine that is so addictive it has been likened to crack cocaine. Our new ResPublica report ‘Wheel of Misfortune outlines the case against these machines and calls for the elimination of their high stakes, high speed casino-like games.
FOBTs are found in betting shops across the country, and allow thousands of pounds to be poured into games like roulette. But this autumn, they may have now met their match, since the Government is about to publish a review of gaming machines, including FOBTs.
These are not like your old-school fruit machines. With FOBTs, a punter can spend £100 per spin, and do this every 20 seconds. There is nothing like them anywhere else in Europe. This toxic mix of high stakes and rapid spins is leaving an alarming amount of people with addiction and debt. The number of people using such machines is now estimated to have reached 1.5 million, with 43 per cent of those using these machines either ‘problem’ or ‘at risk gamblers.’ And the number of problem gamblers has surged from 280,000 in 2012 to 430,000 in 2015, an increase of over 50 per cent. Research shows that most of those people come from some of Britain’s poorest neighbourhoods, especially those with BME communities. For example, 61 per cent of shops of one leading bookmaker are located in areas with greater numbers of non-UK born citizens.
And these are lucrative bits of kit. According to the Gambling Commission, there are now 34,388 FOBTs in the UK, generating £1.8 billion for the industry in gross profit – that’s £52,000 per machine per year. And with four allowed in each shop, that pretty much explains the economic basis of betting shop expansion on our high streets.
The root of this problem was a botched piece of legislation by the Labour government in 2005. Their Gambling Act placed a limit of four FOBTs per shop. But this limit meant that firms opened more gambling shops, leading to a clustering effect on our high streets. The number of betting shops in town centres has increased by 47 per cent since the Act came into force. That is why in one street in the London Borough of Newham, there is now a betting shop for every 120 metres.
Harriet Harman has said that “if we had known then what we know now, we wouldn’t have allowed this, because it’s not just ruining the high street, it’s ruining people’s lives”. This kind of honesty about past mistakes should be welcomed. But she said those words five years ago. And the problem has, as we argue, become steadily worse.
This is why the proper regulation of FOBTs should be seen as a truly Conservative cause. it is clear that the spread of gambling machines has not been stopped by the measures introduced two years ago to limit destructive behaviour, which as Iain Duncan Smith has pointed out on this site, is largely because betting shops are often understaffed, and simply lack the capacity to engage with and help problem gamblers stop.
FOBTs also harm wider economic prosperity. Typically, the defence of these machines is that they bring economic benefits, in terms of revenue generated through taxation and the jobs that they create in shops. But FOBTs do not operate like other parts of the labour market. They are machines that generate financial returns, but they do not represent a productive function. Much of their cash gets funnelled elsewhere, and is not put back into the local economy. Economists such as Howard Reed have found that FOBTs divert expenditure from more productive parts of the economy, and have an overall negative effect on both employment and enterprise. For example, four per cent of Liverpool City Region’s GVA, some £1.2 billion, was put into FOTBs last year.
This is harming our most deprived communities. Places such as Glasgow, Birmingham and Liverpool have some of the highest total number of betting shops, and in each the unemployment rate and proportion of workless households far exceeds both regional and national levels. There are now twice as many betting shops in the poorest 55 boroughs as there are in the wealthiest 115. This is clearly a predatory practice enacted on those who can least afford its costs.
In other words, whichever type of Conservative you are, free market, One Nation or liberal, it doesn’t make sense to have these machines continue to operate as they are. Reform could be achieved with a single, targeted change to legislation. By reducing the maximum stake for Fixed Odds Betting Terminals from £100 to £2 per spin, individuals would have the freedom to gamble while the damage caused to people would be mitigated. Previous attempts to require customers to register in order to bet more than £50 a spin have not worked. Research shows comprehensively that only lower stakes, with fewer spins, can reduce the harm of problem gambling.
This is to argue for consistency. Such change would bring the regulation of FOBTs into line with other machines. It would bring Britain into line with other countries. And it would bring the Tories into line with other parties. More importantly, there is a reason why we tightly regulate casinos. We don’t want them on every high street, yet now they are there, via FOBTs. It is time to right this wrong.