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What’s with the threatening letters?

I wrote a blog back in January asking whether anyone could fill me in as to who or what the Campaign for Fairer Gambling was, and whether what was driving it was a genuine concern that the fabric of society was being threatened by the existence of FOBTs.

To the great credit of those involved, a large number of commentators have been persuaded that this is exactly their motivation. Most notably, a writer for whom I have a great deal of time, Matthew Norman, yesterday wrote an astonishingly punchy piece in the Independent, having clearly been briefed by the CFG.  They are running an impressive campaign.

Given all that, imagine my surprise, last week, to receive this letter from their lawyers, objecting to my questioning back then whether, in addition to altruism, there might also be any commercial incentive for them to adopt their stance.

The letter is weird on a whole number of counts. First, why write it at all? Seriously: if your campaign is plain vanilla, does-what-it-says-on-the-tin, and it’s going well, then stick to it. Don’t send out threatening letters to people, trying to intimidate them into never questioning your motivation. It’s absolutely fair that anyone should be able to drill down into what is behind someone’s position, and that’s what I was doing. If there’s nothing in it, then make the case accordingly.

Second, how odd is it to state that “allegations or statements that, or which give the strong impression that, Prime Table Games UK and/or Mr. Webb have a commercial interest in the restriction of B2 gaming machines are false and defamatory” just two paragraphs above explaining that Galaxy Gaming, a US business, has a small UK operation, and that Mr. Webb has a “less than 5% shareholding“. I have no idea what that translates to in value, but it seems self-evident that it is not zero; and it equally seems self-evident that a world where one type of gambling is restricted is also likely to be one where other categories of gambling – be they online or in casinos – are likely in some way to benefit.

As the lawyers themselves say, “For Galaxy to benefit, FOBT gamblers would have to start gambling in casinos and gamble at the games that Galaxy offered“. This seems to me to be extremely likely, for some of them at least. The assertion that “There is no evidence that the demographic of the FOBT gambler is the same as the demographic of the casino gambler” is not supported by the NatCen Social research paper Examining machine gambling in the British Gambling Prevalence Study, which states (on page 38) that “the vast majority of bookmaker machine players had taken part in at least four or more gambling activities in the past year (91%, against 88% in 2007)” and that “this suggests that people who gamble on machines in bookmakers were very engaged in gambling generally and remained so across survey years“.  But it is, in any case, irrelevant: there needs only to be a minimal overlap, rather than a perfect correlation, for the question to become a relevant one to ask.

For absolute clarity, let me declare my own interests in case they are not already widely known. I have shareholdings in gambling companies, too: the largest of them is less than 2% – so, significantly lower than 5% – but I would say that it is material. I suspect, too, that in a very small way, it is possible that the non-existence of FOBTs would have  a positive impact on Betfair, the company to which that shareholding relates (in the same way, and for the same sort of reasons, as I suspect to be true of Prime Table Games). In addition, I advise or have previously advised other companies in the gambling space – some of which, I have no doubt, would benefit commercially from the restriction of FOBTs (Probability, where I am a non-executive director, and a shareholder); and others of which would unquestionably suffer (Ladbrokes or BetFred, for example, where I am neither).

So, my position on FOBTs is clear: whatever you think about the rights and wrongs of their existence, for me the important thing (as I said in my post in January) is that the discussion around them needs to be based on real numbers, rather than alarmist numbers, if the debate is to advance past unhelpful rhetoric. “The crack cocaine of gambling” works well as a phrase in the media, but sound-bites are generally not helpful to effective policy-making; and if, as the studies of gambling prevalence suggest, a figure in the high 90% of people enjoy the existence of machines as a leisure activity, then the peripheral but positive political impact (of jobs and tax) needs to be considered coldly and clinically, rather than emotionally.

Particularly, I would argue, if the side putting the emotional argument is so touchy about the ground it sits on that it feels the need to dish out threatening letters the moment anyone comes close to questioning its motivation.


Posted in Betting industry, Regulation.

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4 Responses

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  1. Richas says

    Fairer Gambling don’t seem to like playing fair. For what it is worth I suspect that Derek Webb’s campaign is driven by outrage that a FOBT used a version of 3 Card Poker as he feels that with his US patent he now owns all three card brag games. The trouble for Derek though is that he cannot sue the FOBT for using it, or crucially any of the other Galaxy Inc Casino games because in the EU you cannot patent games whereas in the US you can………………………………………………………There is a clear problem for Galaxy Gaming in protecting their IP in Europe because of this. Whilst they can negotiate with casino groups and get license fees via leveraging their US patent in Europe and this seems to be working for them now in reality the casinos could just deal the games so long as they did not use his copyrighted branding. As the FOBT suppliers are not shipping to the US they have no reason to pay Galaxy’s fees and could just copy all of their games and implement them on these B2 machines. Their lawyer saying they don’t do roulette and most B2 gaming is roulette is a distraction from the real commercial issues.

  2. Richas says

    You may find this 2009 advertising standards ruling against PTG interesting it shows the roots of the campaign in three card poker being used without permission on a FOBT………………………………………………….This yahoo link shows that the 2011 $23m acquisition included $800,000 in Galaxy shares, some 1,000,000 shares each issued to Derek Webb and Hannah O’Donnell. They trade at $0.27 each today so about $540k. The market cap is $9.4m with 38.3m shares issued so each had/has 5.22% of the firm

  3. Richas says The details of the promissory notes (one in USD and the other in GBP) show that Galaxy Gaming is paying Derek Webb substantial sums each month and will continue to do so for years.

  4. Richas says

    Galaxy Gaming is in a pile of trouble over in the US. California has refused them a licence and Nevada may follow.

    The backstory of their CEO is an entertaining romp through drunk driving, unpaid debts, dubious business practices, deception, a bankrupt casino that later got torched whilst uninsured and more…..

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