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Following on from yesterday…

I went on Iain Dale’s LBC radio show yesterday on the back of my post about the Daily Mail’s headline, and doing so raised a number of points that I’d like to clarify.

First, although I forget the exact term that was used, I was introduced as a supporter of the gambling industry, in contrast to the majority of callers who wanted bookies closed down. I can understand why such a description would be many people’s first reaction, but it shows the extent to which all things are relative. It wasn’t very long ago that I was being accused by most in the gambling industry of doing an awful lot to destroy it.

In reality, I was not on to defend the gambling industry at all: I was there to attack the crass and over-dramatised way in which the Daily Mail trivialised a debate that ought to be had. My problem with people who rail against FOBTs, and High Street shops, and gambling in general is not with their concerns about any of them, but in the fact that they put those concerns with false metrics.

Iain Dale put it to me that “once the number is past a billion, it doesn’t really matter, does it?” – and that is precisely what I dispute. Whether the number is too big a number can surely only be debated if you start with the right one. £1.5 billion in punter loss on FOBTs (and therefore bookie revenue, from which they must remove taxation and licensing costs, as well as all other costs of business before being able to calculate their profit) may be too big, but have the debate around it. We don’t debate the speeding limit by saying “letting cars drive at 2,100mph on motorways is dangerous, and something should be done about it”, and yet in the debate about FOBTs we happily take a number which in the same way is thirty times the relevant one, and think it is reasonable to throw it into the mix. We assess whether the speed limit is too high or too low by starting with the fact that it is currently set at 70. The relevant number for punter loss on FOBTs is £1.5bn, and we should use it.

Second, I gave a slightly confused answer when asked whether the maximum stake on FOBTs should be reduced from £100 to £2. I was trying to explain that I suspect the basic issue is that people gamble until what they started with in their pockets has been spent, because that, I believe, is the nature of it; and therefore it doesn’t make a whole load of difference where you put the maximum stake. I expressed it poorly and I am not sure my point came across, but that is what I meant; and that is why, yesterday, I posted as I did in relation to the irritating and irrelevant turnover number, which goes up for the same spend if the margin is lower.

In any case, what I should have said (but didn’t) was the same answer I had put to the question before: I don’t know whether there is a case or not and I am not there to argue either way, but those who believe that there is should make it on relevant metrics. I return again and again to the basic point: if the case against FOBTs is so strong, don’t dress it up with histrionics. Argue it on the facts, and win. If you have to embellish it, it means you don’t think it’s a very good one in the first place.

Third, the person who followed on from my piece started by saying that I clearly knew nothing about FOBTs, and claimed to have laughed out loud when I said that for every £100 put in, on average they give something around £98 back (depending on exactly where their margin is set). Unfortunately for the caller, that is a statement of fact; unfortunately for the gambling industry, it is precisely because of the caller’s own personal experience that debating the issues is so difficult.

Policy should only ever be set on the basis of fact rather than anecdote, although I accept that to say that that is not always easy is wildly to understate the point (in any sphere). Health policy set in generalised terms, for example, will always look like a bad joke in the face of an individual personal example, where tragedy and pathos will make Ministers look like they have hearts of stone. But that doesn’t change the simple position that policy will be set not on the basis of the 5% who will call into radio programmes with examples of how something adversely affected their lives, or even on the 95% who don’t because doing exactly the same thing didn’t (if you follow…). It is set on the combined 100% of what would happen with  a product regulated to a given level, if that product were used sufficiently for the probabilities to revert to a statistical mean.

That there will always be exceptions that prove the rule is clear from the fact that the expression exists. But the fact remains that while looking at individual tragedies makes for good radio, it also makes for dreadful policy. It is important to note, in saying so, that that is not to suggest that the individual is irrelevant: nothing could be further from the truth. But it does mean that the policy has to be set for the general, while the individual needs to be dealt with – as the name suggests – on a case-by-case basis.

Fourth, it’s been suggested to me that I argue this point because it is in my commercial interests, so let me clarify the extent to which that simply isn’t true (rather, I argue it because I would like to see the debate conducted on sensible terms). My largest financial interest in gambling by some distance is in an online company (Betfair) which would probably benefit in some small way if High Street games didn’t exist; my second interest (Probability) is in being a non-Executive director and small shareholder in a company which provides mobile games, which certainly would get a fillip from the reduction in availability of games on the High Street; and I am not paid to advise anyone on FOBTs or High Street issues. My ‘bookie’ history is a decade of upsetting them all; a year advising BetFred on their acquisition of the Tote; and some consultancy work for Ladbrokes on the issues surrounding sports rights and sports governing bodies.

Which brings me finally back round to my original point about whether I am a supporter or a defender of the gambling industry… There was a part of me in yesterday’s debate (and I know I was not alone) that felt that the industry was being hoisted by its own petard. The last time I brought out my ‘piles of cash’ analogy to explain margin (and why it makes turnover an irrelevant metric), it was because adversaries of Betfair’s model were trying to get the company taxed and levied on the basis of its entirely irrelevant turnover figure – arguing to government that continual backing and laying, rather than the position of a punter’s net win or loss, was a metric of substance. It wasn’t, for the same reason as FOBT turnover isn’t. Those in the industry who are fighting to have the Daily Mail and others understand their numbers today have largely only themselves to blame for the fact that people don’t get it.



Posted in Betting industry, Gambling, Uncategorized.

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3 Responses

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  1. Richas says

    Nice article Mark but you have slipped up.

    You call the £1.5bn “profit” just as the Mail does – it is not profit – that is the gross revenue from these machines. From that there is 20% tax, 10% for the machine supplier, £2.5k a pop for the machine licence and then a series of not insignificant costs that the machines contribute towards – the shop licence, rent, rates, heat, light, shop fittings, TV feeds, staff wages, employers NI…..once those costs are paid then you are left with a profit figure.

  2. MD says

    You are quite right. Thanks. I have changed the article accordingly.

  3. colston says

    As Richas points out, the biggest winner in this scenario, for zero risk, is the government, and not even a Liberal government would see all these high earning outlets closed to be replaced by charity shops and boarded up shop fronts.

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