Is gambling out of control in Britain?

The issue of problem gambling has shot up the agenda, with the government considering a crackdown. A genuine problem or a moral panic? Matthew Partridge reports.

What's happened?

There is a growing controversy over fixed-odds betting terminals (FOBTs), which have become increasingly common since they were first introduced in 2001. FOBTs allow people to play computer versions of gambling games usually roulette for stakes of up to £100 each time. Current regulations allow for up to four machines per shop.

Critics say that the large stakes and rapid speeds (20 seconds per spin) allow gamblers to theoretically lose £18,000 an hour, and that they are particularly addictive. They also claim that the biggest losers tend to be those on lower incomes, with recent research from the Campaign for Fairer Gambling (CFG) suggesting that revenue from FOBTs tends to come from the most deprived parts of the UK. FOBTs are accused of encouraging crime, due to losing punters taking out their frustrations on staff and the equipment.

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Is the criticism fair?

Unsurprisingly, the Association of British Bookmakers (ABB) disagrees, claiming that the average spend is between £5 and £6, with most sessions lasting around ten minutes. They also claim that betting shops have lower average crime rates than most retail establishments.

What's more, focusing on the gross amount staked is misleading because punters are very unlikely to lose every time they bet, says Leighton Vaughan Williams, professor of economics and finance and director of the Betting Research Unit at Nottingham Business School. Indeed, the bookies' margins on FOBT games can be as low as 2.7% of the total staked.

However, catastrophic losses certainly occur from time to time, with the Gambling Commission finding that last year people lost more than £5,000 on 650 separate occasions.

What do campaigners want?

The CFG wants maximum stakes cut to £2, the spin frequency cut to one per minute, changes to the games to make them less attractive to punters and machines limited to only one per shop. In May, the All-Party Parliamentary Group on Gambling produced a report which largely agreed with these recommendations, as well as suggesting that councils be given greater powers to restrict the number of betting shops.

The bookies are resisting the proposals: such policies would "destroy over 20,000 jobs, close thousands of betting shops, cost millions of pounds in lost taxes for the government and end a popular activity for millions of people", claims the ABB. Certainly, limiting the maximum stake to £2 "would mean that bookies would be making an average of only 5p per spin, making them completely unviable", agrees Vaughan Williams.

What's likely to happen?

Labour and the Liberal Democrats both made explicit commitments to crack down on FOBTs in their manifestos, but the Conservatives only made a vague promise to review the area.

However, the government has promised that a review into FOBTs will report shortly. "It is now odds-on that the government will cut the maximum stake from £100," says Nils Pratley in The Guardian. "The only live question is whether the government reduces the maximum stake to about £25 orgrants campaigners their wishand settles on £2."

How will a ban affect the bookies?

FOBTs "form the cornerstone of bookmakers' business model", notes Vaughan Williams, so any restrictions would hurt them. Indeed, the ABB suggests that bookies get around half their revenue from the machines. It's also unlikely to stop punters gambling, since they can easily log onto any number of online casinos instead.

However, one bookie at least has broken ranks. "The issue has become so toxic that only a substantial reduction in FOBT stake limits to £10 or less will address societal concerns," says Paddy Power Betfair CEO Breon Corocan in a letter to the review. Paddy Power has relatively few betting shops, and Barclays suggests that a £10 limit would cost them only £32m, compared with £182m for William Hill and £276m for Ladbrokes Coral.

What about problem gambling?

It's not just FOBTs that are in the firing line. The latest Gambling Commission report suggests that there are an estimated 430,000 problem gamblers in the UK. It also recently fined the gambling firm 888 UK a record £7.8m for a series of failings.

At the recent Labour Party conference, deputy leader Tom Watson demanded further restrictions on advertising and floated the idea of an additional industry levy. Firms should meet their "obligation to help those whose lives have been blighted by addiction or wait for the next Labour government to do it" for them.

So firms should do more?

"The official definition of a problem gambler is very wide, so someone whose gambling affects their amount of leisure time is technically a problem gambler," counters Vaughan Williams. The industry "already voluntarily pays millions to support research into problem gambling on top of the large sums that they contribute in taxes".

Indeed, research has found that only around 0.5% of the population are problem gamblers, that "the number has been stable over the past 20 years and that there is no link between advertising and problem gambling".