By Mark Richards

There is mounting concern over Fixed Odds Betting Terminals and the amount of money some gamblers are losing. Now the Government is promising to take action – but what will that mean for bookmakers’ shops up and down the UK? And what will it ultimately mean for the High Street?

They have been called the ‘crack cocaine’ of gambling. Fixed Odds Betting Terminals (FOBTs, or ‘bots’ as they are commonly called) proliferate in bookmakers’ shops up and down the UK, often accounting for up to 50% of a shop’s takings.

The old days when everyone in a betting shop was betting on the 3:30 at Kempton – or filling in their fixed odds football coupon – are gone for good. Walk into a betting shop today and you will see people playing compulsively on the ‘Bots – which is why the Government is concerned.

What is a Fixed Odds Betting Terminal?

FOBTs were introduced to the UK in 2001: they are a type of electronic slot machine allowing players to bet on a variety of games and events – such as roulette, bingo and simulated horse racing and greyhound racing – which have fixed odds. The machines also have a theoretical return to the player percentage (RTP) which must be displayed by law: typically this will be between 90% and 94%, perhaps going as high as 97% on a game of roulette.

There are various limits imposed on maximum stakes and payouts with the maximum stake currently being £100. It is this that the Government is looking to reduce, as it is concerned about a problem with gambling.

Profits from gambling machines are on the rise

The high street bookmakers have made massive profits from FOBTs – very nearly £2bn in the year ending 2016. Add in the profit from the more traditional ‘slot’ machines – approaching £400m in the same period – and you can see why they are reluctant to change. But change is coming: in the face of mounting pressure from campaigners, the Department for Digital, Media, Culture and Sports has decided to act.

The limits should be reduced

You do not have to go far to find a gambling horror story linked to FOBTs – one reported in this week’s press concerned losses of £15,000 a day and life savings being wiped out. That takes some believing but with machines allowing you to bet up to £300 a minute on games like roulette and blackjack such losses are mathematically possible. Someone staking £300 a minute and playing for an hour will have total stakes of £18,000: a 5% built-in margin for the bookmakers gives a profit of £900 in that hour – which will easily eclipse the profits from the more traditional betting on horse racing, greyhound racing and football.

So what is now being proposed?

Following a consultation set up by the Department of Digital, Media, Culture and Sport the UK Gambling Commission – the people responsible for licencing and regulating gambling in the UK – has recommended that the maximum stake on FOBTs should be reduced to “£30 or less.” They have also recommended that the maximum stake on traditional ‘slot machines’ be capped at £2.

The logic behind this is to “protect vulnerable people from harm.” I have to say I find that a flimsy argument: the Gambling Commission says that reducing the limit will stop people losing a “substantial amount of money in a short time.” But if you can lose £15,000 in a day with stakes of £100 then simple maths suggests that you can still lose a significant amount of money with a maximum stake of £30.

A decision – which will ultimately be taken by the Department Minister, Karen Bradley, is expected in the next few weeks. Well, Mrs Bradley has a degree in Maths and has worked for an accountant, so you would hope she understands the odds – but she is certain to face plenty of counter-arguments from the bookmakers.

The bookies’ point of view

Government threatens to crack down on Fixed Odds Betting Terminals

The bookmakers will make one very obvious point – perhaps rather more subtly – that we do not close all the pubs on the high street because a very small number of people are, sadly, addicted to alcohol.

They are also making ominous noises about sports sponsorship. Ladbrokes Coral, for example, currently spend £8m a year on sponsoring sports events in the UK, with £3.5m of that dedicated to horse racing. The bookmaker also sponsors the Rugby League Challenge Cup and the Scottish Football League, as well as snooker and darts.

And then there is the UK High Street: reduce the stakes on FOBTs and bookmakers’ shops become unviable. You can see town centre managers up and down the UK shuddering. With the retail sector under pressure and the banks starting to close branches, there is every risk of our town centres becoming desolate places. Betting shops are often referred to as ‘dead frontage’ – they do not add anything to the town centre experience – but ‘dead frontage’ might be seen as preferable to no frontage.

The counter-argument

But whatever the problems of the town centres, surely they are nothing compared to the problems of gambling addiction? This is a problem being recognised worldwide – Australia has just banned all gambling ads during live sporting events and is restricting gambling promotions in train stations and near schools – and it is time the UK took action. Simply put, the human cost of gambling is too high.

But in the same way that problem drinkers can drink at home, so you can gamble at home – as every gambling ad in the middle of every football match points out. The UK gambling industry has unquestionably been a success – it employs over 100,000 people and last year contributed £2.8bn to the national coffers – but increasing numbers of people are now saying that society is paying too high a price for the bookmakers’ success.

The casino in your pocket

Action may well be taken against bookmakers’ shops and the FOBTs they contain, but mobile technology has improved so much that effectively we all now have a casino in our pocket – should we choose to download one of the oh-so-tempting apps. You can say one thing for betting shops – they close at night. If someone is addicted to gambling then mobile apps allow them to gamble all day, every day.

While the bookmakers continue to make ominous noises about sports sponsorships and desolate high streets, they should perhaps count themselves lucky: they have been able to replace a failing business model with high stakes gambling which would be illegal in many countries. They also seem to have escaped – until now – the legislation and scrutiny which has impacted other industries, including the financial services industry and – dare we say it – the short-term loans industry.