This morning, the Betfair share price opened down about 9%, and has since recovered from an 80pence fall to be down only 30p on the day. Something, it would seem, is afoot.

Quite what, is not absolutely clear. But I gather that in contrast to what is being said in public, the private briefing coming out of the company (and I should stress that I have spoken to no-one there, nor anyone involved in the bid) is that pace the CVC statement which suggested that the two sides could not agree financial terms, in reality it wasn’t price that was the issue: the sticking point was strategy.

On the basis that sellers are not usually concerned about what the strategy of a buyer is going forward, the natural conclusion must be that in some way, the CEO and management team were integral to the CVC bid. If, despite this, there was a disagreement on strategy, it must also mean that their being integral was not a CVC condition, but one put down by one (or a group) of the selling shareholders.

In other words, what it looks like has happened is this: CVC and Richard Koch have come to the table with a strategy perhaps not dissimilar to the Fantasy Betfair one that I outlined recently; and the CEO and his team said they preferred to run in the direction they have already set. At least one big shareholder must then have insisted that Breon Corcoran was part of the future make-up, and that unless he (Breon) were, he (the shareholder in question) wouldn’t agree to the deal. And as a result, everything fell apart.

If that’s right (and it would  explain why the share price has recovered as well as it has), it suggests that there’s a For Sale sign over the company, for better or worse. I’d be surprised, at any rate, if it turns out that this bid story is done.

I confess to being confused by the price at tonight’s close: £8.98. Indeed, with an hour of trading to go, the shares stood at £8.75, which was more confusing still. It suggests to me not just that the market doesn’t think that the deal will be done, but that they aren’t expecting a bid to be confirmed at all – a scenario I find unlikely, to say the least.

A great deal of focus has, unsurprisingly, been on the Founders’ view of the world, but in many respects, what they think is irrelevant to the immediate process. The Board’s decision as to whether to open their books to due diligence will depend not on what Ed and Bert (who I suspect would be offered shares in the newly-privatised company) want, but on what the Board considers fair value for people who would be carried out of the shares and have no further participation in the upside from the day the deal is done. Logic dictates that the number that excites them and the “interests of all shareholders” that they represent would therefore need to be significantly higher than one which might entice someone who will be carried into the deal and remain part of the future prospects.

As such, forget what any final price might be: CVC need to put a number on the table on Monday which prevents the Board from simply shutting up shop and not allowing the process to get anywhere near to a vote. That number surely now needs to be at least £9.50, because if it isn’t, it will be far too easy for the Board to reject. Why? Because a combination of the existence of the bid (with people knowing that a company like CVC, which requires a set return over a set period, sees value at or around the £8.80 mark) and  the update on Tuesday (which was followed by most analysts putting out ‘buy’ recommendations) have probably set a new floor on the shares at around (or slightly above) the £8 mark (certainly, at least, well above the £7 it was at before Mark Kleinman broke the news of private equity interest); and because the Board knows that even if the price crashed back down to that level, it has £168m with which it could, if it chose (and if the company strategy hasn’t delivered that £9.50 price itself by the third quarter), use to pay a special dividend of up to £1.50 before it had to face shareholders at a  Q4 AGM. (I know they said they were holding onto it for acquisitions, but I think their hand would be forced if they rejected a bid without referring it to shareholders, and then failed, by the time they had to face those shareholders, to deliver comparable value.)

All of which is why, as I say, tonight’s close makes no sense to me.  I can see that it’s somehow weighted 2/3rds-1/3rd between the floor of £8 and the potential (at the low-end) £9.50, but it seems to me that the probability of the latter is significantly greater, not to say extremely high. Monday must, in my view, see either the granting of an extension (which suggests both sides think a deal could be done, since (if I understand correctly) Betfair is the side which would have to apply for it); or a firm bid – which, self-evidently, CVC will not want to be dismissed out of hand. The alternative – that they walk away – would seem a very odd thing to have needed six days since Tuesday to decide.

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.

Except, it didn’t. My long-ago pledge to run naked along High Holborn if Betfair lost its case (that its customers should not be liable for levy) – challenged again and again by William Hill, against all logic but at the behest of their lawyers at Olswang – was never going to lead to me stripping off. In the end, so resoundingly was the William Hill/Olswang case defeated that not only did they fail to get a single decision in their favour along the way (and they lost by a unanimous 3-nil in the Court of Appeal today), but they had the previous award of 25% of Betfair’s costs against them upheld, and they had 50% of Betfair’s costs for the latest round awarded against them as well. Betfair may have problems to address in other areas, but when it comes to comprehensive victories, they could still teach Bayern Munich a thing or two.

When you’ve argued something for as long as I’ve been arguing this one – either officially or through the channel of this blog – you probably shouldn’t crow when judgment comes down on your side . But I have to say in this instance that the statement put out by Olswang following the confirmation that for everyone other than them, this case was a colossal waste of money (north of £2m, I would guess), is comic in the Comical Ali sense: for all the world, you would think that they had not driven this process from start to finish, so straight is the way they have reported the fact that every argument they advanced over a ten-year period of collecting fees has been blown out of the water.

“None of the parties (or the Court),” they report, “was sure what was meant by “negotiating” even in the traditional bookmaker context so that the argument focused on the meaning and application of “receiving” a bet.  The Levy Board and Betfair maintained that it was the exchange itself which received the bet and not the parties to the bet; William Hill, following the judgment of the High Court, argued that both backer and layer were receiving the bet; with the effect that the key determining factor as to whether or not an exchange user is a “bookmaker” is whether or not that user is carrying on a business.”

I suspect they will now argue forevermore that this was a case of ‘everyone knows it is happening but we just can’t make it work in the law’, given that the Olswang summary goes on to report that the Court of Appeal ruled “without providing much in the way of detailed analysis” – as if that somehow means that their arguments were never addressed – and then (most hilariously of all) finishes with, “Moreover, the end result is that the Levy Board has succeeded in limiting the class of persons from whom it can collect Levy.” It seems to me that this is rather like saying of someone who declined to rob a bank at gunpoint because there was no legal basis on which he was allowed to do so that, “moreover, the individual has succeeded in limiting the ways in which he can add to his personal wealth.” The Levy Board didn’t limit anything: it just recognised what it could and couldn’t do, based on the legal position of a set of people whom Olswang wanted desperately to have categorised as something other than what they are.

No matter: the one thing in their statement we can agree with, with a glad heart, is that “this issue has now been put to bed” – as it should have been years ago. The only shame as the Fat Lady belts out is that there is almost no-one left at Betfair who will appreciate quite how sweet is her tune. But be under no doubt what a massive, massive victory this is for those who have fought it valiantly since it was first raised in 2002. All credit and many congratulations to Betfair’s legal director, Martin Cruddace, and his trusty sidekick David O’Reilly (who continued to act on this for the company even after he had left, on a freelance basis); as well as to their redoubtable QC Simon Mehigan and all those involved, for a job tenaciously stuck to and fabulously well done. It really is a wonderful and well-deserved piece of news, and I couldn’t be happier for any of them.

If you or any of your colleagues would like to take part then please contact the charity asap in order to guarantee a place. We have 15 places.

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This can be done quick and easily online: http://sportsaidnews.org.uk/A69-CZ8/s.aspx

LAST WEEK’S SUCCESSFUL FLOTATION OF BETTING EXCHANGE BETFAIR IS GOOD NEWS FOR IRISH QUOTED BOOKMAKER PADDY POWER, which now does over half of its business online, Ireland’s Sunday Independent reports.  Demand for the shares was strong, with the price jumping from £13 to £15, valuing the whole company at €1.6 billion. The paper points out that for that money you could buy the whole of Paddy Power and still have more than €400m to spare.

Market cap of Paddy Power today? €3.1bn.

It seems to me, with the very obvious caveat that I know nothing about the process behind this stuff, that it is a curious level at which to have bid.

The price was £6.90 a week ago last Friday, so you’d be right to argue that it’s a long way up from there.

But if you’ve got to get the long-term shareholders to sell, and they’ve held on all this time (from the £8.70 that it was at the end of the lock-up, through the horrid period where it seemed to be heading for zero, back up to £9  year ago) – they’re surely aren’t going to go for a number that doesn’t even offer them a 13-month high, are they?

They could have sold above that price at any time over a 2-month period from 1st Feb 2012. If they had lost faith in the company after its price had plunged from a high of £16 down to a low of £5.71, wouldn’t they have done it then? Why would they want to be getting out at that level now that 650-heads-worth of costs have been taken out?

There would have been a frisson of excitement among some shareholders if they’d pitched it in the corridor of uncertainty this morning. But £8.80 is a leg-side long-hop: too easy for the Board to dispatch. If they don’t hit it out of the park, serious questions should be asked.

My guess is that the bidders will be back after the publication of Betfair’s defence on 7th May with a higher offer.

They’ll have warmed up by then, and I’d bet that the second time, it’ll be a perfect length ball, just around off stump – perhaps with a bit of out-swing.

Much trickier to know how to play.

Nowadays, when you land on Betfair for the first time, you see a sportsbook, not an exchange. The need to simplify the product in a way which takes it to a broader audience has seen it focus on fixed odds to the extent that as a new Betfair customer, if you don’t know the exchange exists, you aren’t likely to find it. It’s just a small button in the top-left hand corner.

The reasons for this perfectly valid strategy are fairly obvious. The company has had a lot of problems, and the lustre has rubbed off. Last week I had to explain to someone with only five years’ experience in the gambling industry why Betfair should be of any interest to anyone: he asked why some people make a fuss about a company which, to his eyes, was just a mid-tier betting business with nothing particularly exciting about it. As I said in my last post, even some from the company’s very early days believe that it could never re-create the magic even if it wanted to – and in any case, current management doesn’t. So that’s that.

But you can indulge me, just for a little, as the exchange evangelist that I am; as someone who remembers that somewhere lost in the midsts of time, we changed the world. It was a small corner of our own little world, perhaps, but who cares? We changed it, and it has never changed back. So much of what you see as standard in the gambling industry today first appeared, for one reason or another, as a result of Betfair: football shirt sponsorships by betting companies, in-play betting, the level of transparency, the sharing of information, the tracking of funds… None of it existed when we arrived to tell people – laughable as it now sounds – that we were ‘bringing financial markets best-practice to the sports betting market’. The betting industry today is a different place because of Betfair – and specifically because of the exchange.

The exchange was not perfect, by any means: it raised questions, it brought challenges, and – most of all – it was too complicated. But in the context of the CVC bid, and bearing in mind Richard Koch’s book The Star Principle which I touched on in my last post, I think it is interesting to challenge the idea that it is the exchange at heart that is where the company has gone off the boil: is conventional wisdom right when it says that the difficulty of getting the exchange into markets, of explaining the exchange to a wider audience, of getting the exchange simply to deliver a single price to the uninitiated, meant that the business would never be as scalable as it first looked?

Away from the mechanics of the product, what made Betfair work was that every important stakeholder group thought it was the greatest thing since sliced bread: its staff were all its best salesmen, down to Rita the cleaner; its customers felt so much part of it that they called themselves Betfairians; the media thought the business could do no wrong; the City was desperate for a piece of it; and the Government saw it bringing ideas and solutions to what had been regarded as an opaque and difficult world. That is not to say that it didn’t have its detractors – of course it did – or even that everyone bought all the points just made, because they didn’t. But the people that mattered, sold it. ‘Join the revolution’ was one of our adverts: if you weren’t on it, your friends were asking you why.

One by one those key stakeholder groups fell away, to the extent that only one remains. The staff became unhappy; the customers got up in arms; the analysts and the media went from thinking that the company could do no wrong to thinking it could do no right. Only the Government, basing its view largely on initiatives taken a decade ago, continues to see the business as industry-leading in the areas that matter to it (like problem gambling, for example). The viral nature of Betfair, where its marketing spend was reinforced – not to say subsidised – by its huge army of advocates, ceased to exist. The cost of acquisition no longer benefitted from a network effect, and the company got into a cycle where its marketing spend grew, every year, in parallel with the growth of its top line.

That costs accelerated as money and people were thrown at problems is, I think, widely recognised: that’s why there have been the mass redundancies that have recently occurred. What (I think) is not so well understood is this falling away of the stakeholder groups, and the impact it has had on the business. For me, getting those stakeholder groups back is the key piece to returning the company to where it was – the lead player in a fast-growing niche – and in my opinion, that should not be an insurmountable task. After all, it is possible to identify, in each case, mistakes which drove them away.

Take the premium charge, for example. Someone mailed to ask me about it yesterday, and pointed out that I was quoted, when we introduced it, as saying that it was needed, because without it the cost of acquisition was not matched by the lifetime value of a customer: too much of the money taken from a customer who would then churn away went directly into the pocket of a small number of other clients. I said then that any business that got to where we were would have to introduce the same thing, because otherwise the revenue gained didn’t match the cost of acquiring the customer – and that was an obvious road to the poorhouse.

All that was true. But what my comments, and our strategy, probably didn’t take fully into account was why the cost of acquisition (which was so much lower than other gambling businesses) was rising (or why the network effects were diminishing); or the fact that a consequent drop in the number of advocates meant in turn that the cost of acquisition would go up at the same time as liquidity went down – creating a spiral which was going the wrong way. Replacing lost revenue means increasing tax on the people who are making the money, which in turn means more of them fall away, and the cycle continues. Observers of the broader economy will recognise the pattern.

Before long, the talk became that Betfair had saturated its audience of possible exchange customers, which explained the slowing growth. But I think that view needs challenging, even if just on the basis of anecdotal evidence. I know scores, if not hundreds, of decent-sized, sophisticated punters who don’t use Betfair, which suggests to me that far from saturating its audience, it has barely scratched the surface (and that’s just in the UK). I went to the Open Championship last year with six big gamblers who didn’t have a Betfair account between them.

And I suspect that neither, now, will they ever get one, because there’s no viral effect that will persuade them to join. Betfair is not the company that it was – not in the “those were the days” sense, but in the Star Principle sense: it is not a market leader in a fast-growth area, with advocates everywhere you look. Most think that it was always inevitable that it could not be one for ever, and the fact that it no longer is can never be changed back. But in my opinion two things are true: first, it could so easily still be one, had we made a few decisions differently. And second, pace the person I dined with on Thursday, it would not be impossible to get back to what it had and where it was.

All of which brings me to my point, in the context of mooted private equity bids for the business, which is this: there’s a path that says “the exchange could never break through to the mass market: make the most of what it created, but aggressively build a largely new business on the back of its most successful parts”; and there’s another one that says, “the stellar nature of this business has never been quite fulfilled for various reasons, but the fact is that the exchange still makes the business what it is, even if some past mistakes make it appear otherwise”. That latter case does not mean that there is no place for fixed odds: there certainly is. It just has a different focus on what is the primary product.

Plenty will think the second view a fantasy, and because of the difficulty, and risk, and short-term effect on numbers that pursuing it would have (vastly reducing – or perhaps even abolishing – the premium charge, for example), it certainly is in a public-market environment. But I happen to subscribe to it in principle; and as a private company, I think it would be entirely possible in practice.

Betfair might go private with the same strategy that it has recently chosen, or it might stay public and continue down that path, to great success. As I have said before, I think the shares are a buy at this level even with a strategy which, for the purists, makes it not Betfair in anything but name. With costs stripped out, it’s a very decent cash cow of a business even as a me-too, and good luck to it. But boy, would it be exciting and a lot of fun to see it return to being a star.

The background

Richard Koch, who is behind the bid, owns about 6.5% of the company by virtue of the fact that he was an investor in the third round, late in 2000 (if my memory serves). He made a seven-figure investment at that point, with the share price effectively at 25p (it was actually £2.50, but there has been a 10:1 share split since); and joined the Board for a couple of years. A straight-talking South African, he has always been a huge evangelist about the company, as his focus on it in his book The Star Principle demonstrates. In that, he categorises businesses as stars, cash-cows, dogs, and (I think the fourth category is) question marks – a model which I believe was first adopted by the Boston Consulting Group. He had Betfair down as a star business right from the word go, and believed it would (or should) be worth tens of billions of pounds.

As one of the core 14 shareholders (indeed, the largest individual shareholder after the two founders), he was locked in at the time of the float in October 2010. He would have had to sign an irrevocable undertaking to sell 20% of his shares at the float price (which was £13), in order to get the deal done; and the balance, he would not have been able to sell until April 2011. Whether he would have sold at that point had the price held up, I have no idea; but it’s academic, because by the end of the lock-up period, the shares were just under £9.

I believe I am right in saying that Richard never wanted the business to go public, and has wanted to take it private again since the first day it came to market.  What makes things interesting is what price is he likely to bid, and why now?

Bid price

The share price has not been above £9 since the lock-up ended, and dived to £5.71 back in August 2011. On average, it has been around £8, just as it is today after a week of speculation. Initial unattributed comments to the media clearly came from the potential buyers, in that the idea that the (then) £7.50 level already represented a ‘full’ price were laughable – if not on the basis of your view of value, then on the basis that if shareholders wanted to get out at that level, they could have done so at more or less any stage since the float.  It was me quoted in the Guardian last week as saying that “if they think Ed and Bert will sell at that price, they’re dreaming”, and I stand by that point of view.

Where people might sell, I can of course only speculate: I don’t know Ed or Bert’s view, and if I did, I wouldn’t be publishing it anyway.  I can’t see long-term shareholders wanting to get out of everything below £10 – not for any reason about what that says about the market cap, but because of the psychology of the number – but what will be very interesting, in the event of a £10 bid, is what the Board recommends to its shareholders.

It is, after all, less than three years since the business was brought to the market at £13, so advising that £10 is a good price will raise some eyebrows – particularly in a context of the wider market being up significantly, and other players in the gambling space being up 100%. The Chairman, who is new since the float, and the CEO (ditto), may feel it is possible to argue that £10 represents a 25-30% premium since their arrival. But they will need to keep a straight face.

Suggesting such a bid is rejected, though, will raise equally difficult questions: if the price falls back to the £7 it was at before this story broke, there will be some very unhappy shareholders out there. One would think that the £145m that is sitting on the balance sheet, plus the total absence of debt in the business, will be combined to deliver a bumper special dividend to cheer people up.

The timing and rationale

What price the bid is (and I am assuming that speculation will indeed culminate in a bid, as I think it will) will tell us an awful lot about the rationale. This might sound like a statement of the obvious, but it is particularly true of a business which generates radically opposing opinions.

There is an argument that the bid is simply speculative: that is, it’s designed to take advantage of the fact that the company has seen significant change in the last six months since the arrival of Breon Corcoran as Chief Executive, without there being any upward movement in the share price. This view is supported by the fact that the bid team apparently wants to retain current management, and in many ways it makes sense: despite the fact that there have been hundreds of redundancies, a complete restructuring and change in geographical focus, and the introduction of vast amounts of fresh blood, the stock price was (prior to the bid speculation) down about 10% since Mr. Corcoan’s arrival. As I have written before, there are good reasons to be optimistic about the direction the share price is headed. Picking the company up near enough to the current price should bring the buyer a decent turn.

But there could be a lot more to it than that. The complete change of strategy – focusing on fixed odds bookmaking and sidelining the exchange – seem to be aimed at making the business another Paddy Power. No disgrace in that: it could make shareholders a lot of money, if, like Paddy (and indeed William Hill), the company then doubles its share price in a year. But if he is consistent with the comments he used to make, it is a strategy which might fill Mr. Koch with horror. His definition of what makes a star business is that it must be in a fast-growing niche, and be the leader in its field. Betfair as a traditional bookmaker is neither: it’s a me-too operation in a crowded market, and as such becomes a cash cow (by the Star Principle definition). It doesn’t seem to me to fit in with what I have always understood to be Richard’s view of the world.

Like Koch, I am an exchange evangelist. Not that I have anything against traditional bookmaking – far from it – but for me, that’s not what Betfair is about. In fact – again, probably a statement of the obvious - I’m a bit of a Betfair tragic: despite where the company is today, I still cling to the belief that it could be returned to its former glory. I know I hold a minority view, not  even shared by every large long-term holder of the stock, let alone the wider public: only on Thursday, one told me over dinner that he thinks the company has gone too far from where it was ever to recover. If that is the opinion of former founder management, it is unsurprising that many in the wider world share it.

The recent change in direction to build a different sort of betting business from the one that Betfair started with (or, to put it another way, the same type as everyone else’s) is grounded in this second view. Perhaps that is what CVC and Koch are buying into. Or perhaps they are playing at Fantasy Betfair – a game which, given the length of this piece already, requires a separate blogpost altogether.

The Crausby EDM, I posted yesterday; as I did the report which the ABB published. But in addition to that, Ann McIntosh MP put out a press release about the Offshore Gambling Bill; today, Jim Cunningham MP has tabled a load of questions about stakes and prizes, clustering, and “what evidence the DCMS has received to suggest that electronic gaming machines are addictive”; and yesterday the Labour MP Graham Jones asked a question of Local Communities Minister Eric Pickles. The question was: “The Government talk about localism, but they still set the caps for the licensing of various shops in town centres, including bookmakers and sex shops. Will they consider abolishing those caps and allowing local people and local authorities to set the levels?” The reply:  ’That is an interesting and brave request, and I will consider it’.

I suspect that much of this sudden activity is the result of behind-the-scenes action from the Campaign for Fairer Gambling, which, doing a lobbying job at which it has so far proved very adept, will be seeking as many supporters for its position as it can find. My last post on this organisation yielded a number of interesting e-mails from people, some more credible than others. The facts appear to be that it is backed by Derbyshire-based businessman called Derek Webb, who made three donations of £12,500 to the Lib Dems in an 12-month period to September 2012. Whatever his other interests, he is the inventor of a poker-related game called 3 Card poker, for which he has registered a patent, and he sold the assets of his company Prime table games to Galaxy Gaming in Las Vegas in October 2011 in a deal which appears to leave him with some kind of equity stake.

Make of all that what you will. It isn’t the obvious CV of someone who believes that gambling per se is wrong, but whatever the motivation, the CFFG’s campaign against FOBTs continues apace. From my side, I remain keen that the arguments should stick to numbers that are relevant, rather than ones that aren’t. Take this, for example, from the aforementioned Graham Jones’s website: “If each of a potential 22 betting shops in Hyndburn had the maximum of 4 terminals, then collectively they have the capacity to take in £1,080,000 per hour.” Indeed, Graham: but that would require not just someone to play twice as quickly as the average, but – more importantly – to complete 180 consecutive losing spins, the odds of which are the same as winning the Lottery three weeks on the trot. So, not terribly useful as an argument.

The Gambling Commission commissioned a report which was published earlier this month which examines machine gambling in the Prevalence Study. I have yet to read it all, but from the Executive Summary I can tell you that while 12% of young men (aged 16-34) played slot machines in 1999, only 5% did in 2010; while in contrast the proportion in the same age group playing FOBTs grew from 9% in 2007 to 14% by 2010.  People who play FOBTs are wont to do so more often: 35% of those who play do so at least once a week, while with only 21% was this true of slots.

It seems clear from that, then, that they are played more often; but does that make them more addictive, or just more fun? There’s the rub, of course: and the answer is different for different types of people. For the vast majority, the greater interaction of this modernised leisure activity provides a better distraction from other daily angsts than its forebear; for a small proportion, they’re a disaster.

All the lobbying that takes place around the subject, though, fails to appreciate that this latter category is no more desirable to the bookies than it is to anti-gambling campaigners. With emotive language and statistics so unrepresentative as to be irrelevant to proper debate, they then encourage willing MPs who can use individual case studies to good PR effect to badger the Government into changes which the Government knows make no sense on the basis of the more detailed evidence. The result? An argument, and no progress; when there’s plenty of progress that could be made by harnessing some obvious technological solutions, and no real need to argue in order to secure it.