Skip to content

FOBT news

Well, I’d almost forgotten my log-in. Too much time chasing clients, not enough time to reflect on issues, and certainly not sufficient hours to put pen to paper on any subject in a timely fashion, equals no blog for ages. I’m sure your life hasn’t felt empty.

The news in today’s Daily Mail that stakes on FOBTs may be cut to £2 has forced me back into the fray.

The announcement is significant for Don Foster, the Lib Dem MP for Bath, who has never liked FOBTs. I heard last week that he was telling people in Westminster that he had ‘won the argument’, and there is no doubt that for him and those who share his views, this is a big win. Equally, the biggest head-scratcher of the day is that both Ladbrokes’ and William Hill’s shares have risen, which can only suggest that no-one in the City wants to admit that they read the Mail. For Ladbrokes in particular, given how much of a march over their rivals they have stolen in this area (and this area alone), this strikes me as fairly calamitous news. According to Morgan Stanley, every £50 in gross win per machine per week is worth  around 9% to EPS.

Were the plans to go ahead, then notwithstanding the fact that DCMS appears to be largely in the dark about this announcement, there is no reason why they could not be implemented quickly. Unless I am missing something, the proposal doesn’t need any primary legislation, so if the Government is genuinely hell-bent on the policy’s introduction, we might expect it some time around April: perhaps a month for the new Secretary of State to get her feet under the desk to make a formal announcement, three months accepting evidence, a further three months considering it, and the deal is done. I am sure that is Mr. Foster’s hope, and given his long-standing view of this issue and the fact that he’s been given more than a crack of light, I’m not surprised he is going for it with his usual rumbustious and effective style.

That we actually finish there, though, pre-supposes a number of things.

First, while it is clear that the Quad at the centre of Government has been persuaded on the issue to date, I think it’s easy to persuade anyone that something is bad if you call it ‘the crack cocaine’ of any particular industry.  I’m not saying that there aren’t parallels, but neither am I saying that there are: I am saying that saying it is one (inadequate) thing, while backing it up with robust evidence is another (of far greater relevance). Or, to put it another way, will the Government be minded to introduce a dramatic change in policy on the basis of rhetoric, or will it actually commission the proper research that allows it to take a considered view?

If it really is true that FOBTs do what they say on the reformers’ tin, then the lobby to overturn this mooted policy will struggle. On the face of it, to read the Mail and to hear the soundbites, they do: with £100 at stake per spin, gamblers can wager £18,000 an hour, I read. Alarming, indeed.

But in reality, the roughly 32,000 machines that exist in this country take in for the bookies (and therefore take off the punters) £900 in a week. How many hours you want to ascribe to a gambling week is arguable (given sleep and opening hours), but if we are adopting the ‘every hour that God gives’ approach of today’s media, punters lose £5.37 an hour –  increasing to £8.03 if you sleep 8 hours a night, and £22.50 if you go by the European Working Directive. Meanwhile, the machines operate on around a 3% margin; so the fact that they take in £900 a week means that £30,000 is staked.

£30,000 wagered for £900 lost may be a lot; but by any calculation, it isn’t as much – or as alarming – as £18,000 an hour; while even £18,000 an hour isn’t itself nearly as alarming a figure as hearing that, were that maximum genuinely bet (which it isn’t, by multiple people playing tag on a single machine, let alone by one person sitting on one), then only £540 would be lost.

I say ‘only’… Again, it is arguable that these numbers in themselves are large: I am not judging either way. But my point is that clearly, they are not deemed large enough by those who want the stakes cut, because were they, they would have been used in the headlines. That they have not been demonstrates to me that the argument is being won (and clearly, it currently is being won, by some distance) on the basis of rhetoric more than evidence.

The second thing that is pre-supposed in relation to an early introduction for this policy is this: will the Treasury take the same social stance on this issue, once the numbers are analysed? If the loss (by punters) of £900 per week per machine delivers around £300million to Treasury coffers via Machine Gaming Duty at 20%, will the Treasury not want to be very careful indeed about what changes are made? I am not suggesting for a second that Treasury would take money off us at the expense of social policy – God forbid! But it does seem likely that they would need to be absolutely sure that these machines really are as bad as their press suggests; and that whatever problems they are found to cause cannot be mitigated in some way which does not involve killing the goose.

Luckily for the Government, it has in place the mechanisms to make a proper assessment. The Responsible Gambling Strategy Board, the Responsible Gambling Trust, and the Prevalence Study into gambling addiction, are all part of a framework already in existence which can assess whether it is genuinely true that these machines cause problems. Indeed, I believe that a study into Category B machines is either imminent, or already under way.

If a proper assessment uncovers real problems, then those who like the machines are on a trickier wicket than England in Trinidad in 1986. But a proper assessment is not a standard 3-month consultation: that would merely be an opinion-gathering exercise, with the gambling industry offering their own studies on one side, and the anti-FOBT campaigners their strongly-held beliefs on the other. Rather, the Government needs to look independently at the evidence that can be gathered, ignore the rhetoric, and only then decide which way it wants to throw the book.


Posted in Betting industry.

Tagged with , , , , , , , , , .

0 Responses

Stay in touch with the conversation, subscribe to the RSS feed for comments on this post.

You must be logged in to post a comment.