Fixed Odds Betting Terminals (Lancashire)

Graham P Jones Excerpts

Wednesday 22nd January 2014 Westminster Hall

[Graham Jones (Hyndburn) (Lab)]

It is a pleasure to serve under your chairmanship on a matter of growing concern to the UK public, Mr Owen.

Fixed odds betting terminals have transformed betting shops into high street digital casinos. My right hon. Friend the Leader of the Opposition is as concerned as I am about the machines, which he described as “mini casinos.” He proposes that action be taken to limit the effect of fixed odds betting terminals and to give powers to local people to decide on their suitability. Such gaming machines are capable of taking bets of up to £100 every 20 seconds on touch-screen games such as roulette.

Roulette is a casino game that has, over hundreds of years, been refined to be as addictive and engaging as possible. That is why it has always been restricted to a highly regulated casino environment, until the bookmakers put it on a machine in 2001, increased the speed of play and turned it into a solitary activity. The availability of that form of gambling on the high street has had disastrous consequences in Lancashire. In my constituency of Hyndburn, in just 13 betting shops, nearly £1.8 million was lost on FOBTs alone in 2012.

There are real concerns with FOBTs in Lancashire, particularly in east Lancashire, the poorer areas of the county and Blackpool. My regional newspaper, the Lancashire Telegraph, has published numerous articles on the problems of FOBTs in east Lancashire over the past 14 months. Early last year, its concern led to a front page article titled, “East Lancashire punters spent more than £270m on gambling machines in 2012”. That highlighted the scale of the problem in east Lancashire, so much so that many people were simply staggered by that figure. The paper also carried a story about one gambling addict who revealed how he squanders hundreds of pounds in benefits on the virtual roulette machines.

[Mr David Nuttall (Bury North) (Con)]

Does the hon. Gentleman accept that the evidence of the most recent health survey for England shows that the number of people addicted to gambling has fallen since the introduction of these machines? One in 200 people are now addicted to gambling.

[Graham Jones]

I appreciate the hon. Gentleman’s comments. We have to look at all the evidence, as well as adopting the precautionary principle. We also have to take into account all the other surveys that contrast with that figure and show that these machines are highly addictive. The gambling prevalence survey shows that and, as the hon. Gentleman well knows, it was ended by his Government; the last one was done in 2010, so the lack of information is partly down to the Government. I know that Government Members signed early-day motion 1030 last year, complaining about the Government’s withdrawal of the survey, which would have provided an evidential base. It is important that we look at all the evidence and at how we arrive at the evidence, as well as using intelligence. We have to look forward, not just backwards.

I return to my story about the gambling addict covered in the Lancashire Telegraph. He revealed how he squanders hundreds of pounds in benefits on virtual roulette machines. The paper reported:

“Nearly every penny of Michael Waring’s benefits—a total of £845 a month—is lost at betting shops.”

Mr Waring said:

“When the machines came out I didn’t even know what roulette was. After three months playing them I was hooked. I took my wages into the bookies. I was convinced I could win and put all my money into a machine. I lost. When I left, the fresh air hit me and my guts were wrenching.”

He resorted to attacking a FOBT during a spree in which he again lost all his money after several trips to a cash machine. He said:

“I punched the machine several times, threw it onto the floor and left.”

My other local newspaper, the Accrington Observer, has also covered the issue of FOBTs and was concerned at the £51 million staked in 2013 on the 48 FOBT machines in Hyndburn. That is almost £l million a machine, which is a considerable amount.

I am not anti-gambling. I occasionally bet on horses and football. There is an element of judgment to such gambling. Odds rise and fall, and there is a significant period between the placing of such a bet and the conclusion of the event. FOBTs, however, are not so much gambling as gaming. As the name implies, there are fixed odds and an algorithm in the game designed to ensure that the player loses. The laws in the UK are weak. When Newham council defended its decision to oppose the opening of a Paddy Power bookmakers on the basis that FOBTs are gaming and not gambling, and so require a separate licence, the judge found with the bookmaker. That is wrong and my right hon. Friend the Leader of the Opposition is right to call for a separate use class.

The Gambling Act 2005, which legitimised FOBTs, has three objectives: gambling must be fair and open, it must not be associated with crime or disorder and it must not harm young or vulnerable people. It is clear that FOBTs are in breach of all three. The speed of play is more than five times faster than in a casino, so players will lose their cash much quicker than if they were playing live roulette. FOBTs also increase the accessibility of hard gambling, at up to £100 a spin, to a demographic that cannot afford to play casino games.

Last year, the Campaign for Fairer Gambling commissioned 2CV to poll more than 500 betting shop customers. It found that the average bet per spin was £17, and the poorest and those unemployed were gambling £19 a spin. It also found that the average amount of cash going into the machines was £55, and one in five was putting in more than £100 a time. That poll was taken in Newham, one of the most economically deprived boroughs in London, and provides an insight into why bookmakers are targeting the poorest areas. The results of that survey are not dissimilar to those that would be found in Lancashire, particularly the poorer parts of the county. There are 48 FOBTs in Hyndburn, but in the affluent Ribble valley—an area with twice the average income and many times more wealthy people—there are just 18. In Blackburn, there are 73 FOBTs, while in affluent Wyre there are just 29. There are 157 FOBTs in Blackpool.

As a demographic, poorer people are more likely to start gambling than any other, but they are the demographic that can least afford to lose, and the bookmakers aggressively market the most addictive gambling product to them. Customers will often go into betting shops in Lancashire to bet on racing or sports, only to be offered £20 free credit or the opportunity to participate in a tournament on the FOBTs, designed to get them hooked. 2CV’s polling found that nearly nine out of 10 FOBT users described the machines as addictive, more than two thirds had chased their losses, more than three quarters had spent more than they had planned to and 62% had gambled until all their money was gone.

That illustrates a problem with this particular gambling product, and empirical evidence based on the two most recent British gambling prevalence surveys shows that FOBTs are the most addictive form of gambling. Secondary research based on the 2007 British gambling prevalence survey found FOBTs to have a stronger association with problem gambling than any other gambling activity. Professor Jim Orford’s research, based on the 2010 British gambling prevalence survey, found that nearly a quarter of the profits from FOBTs came from people with gambling problems—and that stretches to 40% if at-risk gamblers are included.

The Government want to wait for research commissioned by the Responsible Gambling Trust before they restrict FOBTs, but NatCen, which has been commissioned to carry out the research, has said that the data alone will not provide conclusions that are an adequate basis for policy. The data will tell us what but not why, and it is the why that the Government are interested in.

Although there is enough research to justify a precautionary reduction in the maximum stake on the machines, the research that the Government are waiting for will tell them nothing about player behaviour. That raises questions about why the bookmakers did not give NatCen access to their premises when it was carrying out observational research into gaming machines from 2011 until last year or why the bookmakers have refused to donate a live terminal, with live data, to Cambridge university for research into player interaction.

It is not just addiction that is caused by FOBTs. Landman Economics analysed the impact of FOBTs, and concluded, because the machines were a non-labour-intensive form of consumer spending, that more jobs would be created in the wider economy if the money spent on them was spent elsewhere. Based on historical growth, losses on FOBTs in Hyndburn are predicted by Landman Economics to reach £4 million by 2023, putting 280 jobs at risk. Staff face dangerous working conditions with shifts to single staffing and threats of violence. The Guardian reported:

“According to an internal memo seen by Guardian Money, William Hill instructs staff not to contact the police when customers not already known to staff damage the machines…‘to reduce the number of reports to police’.”

One staff member in my constituency contacted me worried for her safety in an industry that employs a considerable number of untrained female staff in isolation. She told me that every night she had, on her own, to carry thousands of pounds in cash to the bank. She was gravely concerned about her safety. Betfred is now linking staff pay to FOBT turnover in a take-it-or-resign deal.

There is also a negative impact in tourist areas such as Blackpool. Last year, £168 million was wagered on the machines in Blackpool, with the bookmakers making more than £5 million in profit. My hon. Friend the Member for York Central (Hugh Bayley) has said:

“I do not believe that the proliferation of high-street gambling in these tourist destinations is good for tourism.”

The effect has as much to do with the impact on other sectors as on the strong association with crime. The businesses involved are national chains with national profits, providing few jobs and draining tourist spending in those tourist destinations.

There is no requirement for age verification before people play on FOBTs, and no checks on where cash has come from, so the machines are used by criminals for money laundering. An investigation by The Guardian revealed that drug dealers will load cash into the machine, play with minimal risk—for example, they will put £48 on red, £48 on black and £4 on zero—and then cash out after a few spins. That “cleans” the money, as they can ask for a receipt and if they are stopped by the police they can say they won it at the bookies. Ladbrokes is now under investigation by the Gambling Commission with respect to its money laundering procedures, and Coral has recently been rebuked by the regulator for allowing £900,000 to be laundered through its machines by a drug dealer. It rewarded the perpetrator with a VIP trip to the races, as it saw him as a valued customer.

[Philip Davies (Shipley) (Con)]

I refer hon. Members to my entry in the Register of Members’ Financial Interests.

Surely the hon. Gentleman cannot have it both ways and say that the machines are so bad that people lose a lot of money in no time, but that they also give punters such a high return that they are used for money laundering. Which one is it? Do people lose money hand over fist on the machines, or do they get such a big rate of return that it is worth laundering money through them? It cannot be both.

[Graham Jones]

I am grateful for that intervention, because what I said is correct. There is a rate of return—a diminishing one. Those who want to launder money play for a short time and put as much in as they can, minimising the diminishing rate of return, but addicts, as I said earlier, play till all their money is gone. The diminishing return accumulates to the point where, as Michael in Blackburn said, there is nothing left. The diminishing rate of return is relevant when people are trying to clean money. Addicts will play to the end.

[Mr Nuttall]

Does the hon. Gentleman accept that addicts are much more likely to be spotted by staff in a shop? They are much more likely to get the help they need than addicts playing machines at home with no one watching their behaviour.

[Graham Jones]

In a word, no. I have not gone into staffing arrangements in great detail, but the changes to single staffing in most bookmakers, with young, vulnerable females behind a glass screen, do not lend themselves to identifying or helping problem gamblers—quite the reverse. People are drawn in, and the result is more gambling addicts. It is slightly more difficult to go online at home and register an account and become a gambler. As Michael said, someone can walk in off the high street not knowing anything about the machines. They might be in a bookmakers, perhaps betting on a horse or a football match, and suddenly they are addicted to a FOBT—so no, I do not agree with the hon. Gentleman. The reverse is true.

It is understood that more than 100 FOBT machines are smashed up in betting shops each week, and internal memos have revealed that shop managers have been instructed not to report those incidents to the police. Despite that, last year there were still an average of 165 incidents a week requiring police assistance in betting shops.

Has the Minister played one of the machines? The Government do not appear to be taking the problem seriously, and she does not seem to be aware of the machines. Councils in Lancashire are desperate for more powers to restrict FOBTs. Rossendale, Chorley, Preston and Hyndburn are all passing motions requesting the Government to act on the mounting evidence that high-speed casino gaming machines are a problem.

The plague of multi-mini casinos, with payday lenders and Cash Converters, has transformed UK high streets. Mary Portas, the Government’s high street tsar, said that

“the influx of betting shops, often in more deprived areas, is blighting our high streets”.

The 50 constituencies with the highest unemployment pump a staggering £5.6 billion into 4,454 FOBTs. We can compare those with the 50 constituencies with the lowest levels of unemployment, which spend £1.4 billion in 1,054 terminals. It is easy to see that the bookmakers target the poor. Hyndburn constituent Ben Smith wrote to me:

“I lost everything from family trust to my degree because of FOBT machines on Great Harwood high street. I know many others still in the clutches of them and I still get tempted to play them.”

If the Minister has met the bookmakers, why does she not meet the Campaign for Fairer Gambling? I believe she has not done so, but the organisation has for some time campaigned against FOBTs; it may provide some valuable insight into the betting industry. However, she seems unwilling to discuss the evidence it has found.

I ask the Minister not to be so naive as to take everything that the betting industry says at face value and to make a critical assessment of the credibility of its approach. When so much of its profit is derived from people with gambling problems, any harm minimisation measures it introduces will surely affect that profit. What reduction in bookmakers’ profits would satisfy her that the harm minimisation measures are working? There is enough evidence to justify a precautionary reduction in the maximum stake on FOBTs, and while the Government attempt to kick this issue into the long grass, it will not go away.

[The Parliamentary Under-Secretary of State for Culture, Media and Sport (Mrs Helen Grant)]

It is a pleasure to serve under your chairmanship, Mr Owen. I congratulate the hon. Member for Hyndburn (Graham Jones) on securing the debate, and I thank my hon. Friends the Members for Bury North (Mr Nuttall) and for Shipley (Philip Davies) for their interventions, which were, as ever, important and knowledgeable.

This debate on fixed odds betting terminals and their effect on communities has focused largely on Lancashire, but the Government recognise that many people throughout the country have concerns about the machines, and that some people have gone through considerable difficulties as a result of playing them. That is why the Government are working hard and rapidly to make them safer, especially to those at greatest risk. I have made the Government’s approach clear in various debates and answers to questions recently, but for the avoidance of doubt I shall set our position out again.

The Government conducted a review of gaming machine stakes and prize limits last year and as part of that we called for evidence that fixed odds betting terminals present an elevated risk of gambling-related harm. We received plenty of anecdotal evidence from people who have experienced problems similar to those outlined by the hon. Member for Hyndburn as a result of playing the machines. However, we also received formal advice from the Gambling Commission and the Responsible Gambling Strategy Board that a precautionary reduction in stake or prize limits was unsupported by evidence, and was unlikely to be effective in minimising harm, which is what the debate is all about. The Government concluded that the future of the machines is unresolved.

[Graham Jones]

The Minister makes a point about an evidence-based approach, but we must at some point adopt an intelligence-based approach that looks forward. Of course there is no evidence in the future; that is the basis of the precautionary principle. Does she accept that we need an approach that is not exclusively evidence-based, but also about intelligence in applying a precautionary principle?

[Mrs Grant]

Of course we must look at all the factors, and that is why I have had several meetings with various industry people. Someone from GamCare came to see me in my office yesterday, and I am prepared to consider everything relevant, to ensure that we do not just have a knee-jerk response and that if there is a need for regulation it will be proportionate and sensible, and will do the job of dealing with problem gambling.

[Graham Jones]

Has the Minister met representatives of the Campaign for Fairer Gambling?

[Mrs Grant]

No, I have not, but I believe that a round table meeting has been or is being arranged. If that organisation has not yet been invited, I am sure that it will be.

The Government fully acknowledge that fixed odds betting terminals cause problems for some people. That needs to be addressed—the Prime Minister was clear about that at Prime Minister’s questions on 8 January—but we have to be responsible and to take action likely to be effective. For that reason, the Government have demanded that the industry bring in precautionary player protection measures while we look at the evidence on how players can be protected most effectively in the longer term.

[Graham Jones]

Will the Minister give way?

[Mrs Grant]

I want to make a little headway, but I will then let the hon. Gentleman intervene.

More specifically, the industry will introduce strengthened player protection measures, which come into effect in just a few weeks’ time—from the end of next month. For the first time, all machines will introduce automatic pauses in play and the option for customers to set limits on both how long they play and how much money they spend. In addition, information on playing behaviour will be available to customers, and the industry will make it easier for players to self-exclude. Those measures are the most significant controls on gaming machines since the Gambling Act 2005. It has been made clear to the industry that if the measures are insufficient, a precautionary approach will be taken, which could include action on stakes and prizes, speed of play or any other appropriate measure.

However, I am not stopping there. I am meeting the chief executives of the five largest British bookmakers again next week when they will be presenting me with plans to link players with data in a way that allows us better to understand player behaviour and to assess the effectiveness of the harm mitigation measures being introduced. I have been clear that if I am not satisfied by the industry’s proposals, the case for prudential moves on stakes, prizes, availability of machines or anonymous play will be made significantly stronger.

In addition, the Responsible Gambling Trust is carrying out research that aims better to understand how people behave when playing gaming machines and what helps people to stay in control. I met the trust in December, pressed it to make progress with the research programme and emphasised the importance of obtaining tangible research outcomes by autumn 2014. I am absolutely clear that the industry must find a way to secure and examine data that links players with play, so that more effective player protection can be developed.

[Graham Jones]

The Minister has made some good points, and I accept that she is now beginning to move towards the precautionary principle, given her comments about the interventions on machines that will come in by the end of next month. Is that not a move from an evidence-based approach, under which nothing will be done until the evidence is gathered despite there being no evidence, to the acceptance that something should be done? We are now applying the precautionary principle and including splash screens on FOBTs to protect gamblers. Is that not a shift from an evidence-based approach to the precautionary principle? Is that not the right way forward?

[Mrs Grant]

No. I have been clear on the matter from the start, and I am quite surprised at what the hon. Gentleman says. The first time I stood up to discuss the issue at oral questions in the House, I said that the machines are a concern, that there is no green light for fixed odds betting machines and that their future is unresolved pending further work that has already begun. I have continued to send out that message.

Whether local authorities have sufficient powers is often raised in such debates, but I believe that their powers are sufficient to deal with concerns. Local authorities can reject an application for a gambling premises licence or grant one with additional conditions. They have the power to review a premises licence after it has been granted and can actually impose licence conditions after review. Many local authorities have already used those powers to good effect—I congratulate Newham, which used its powers in November—and the Government urge local authorities fully to utilise the powers at their disposal to tackle problem gambling in their communities.

[Graham Jones]

Will the Minister give way?

[Mrs Grant]

No, I want to make a little more progress.

Local authorities are also able to use article 4 directions to good effect. I am pleased to say that two authorities have brought forward directions in respect of betting shops. I congratulate the London boroughs of Barking and Dagenham and of Southwark for using powers when the amenity of their communities needs additional protection.

I want to pick up on three issues raised by the hon. Gentleman. First, he mentioned the scrapping of the annual prevalence survey, which was an expensive way of measuring problem gambling, with over £500,000 of taxpayer money being spent on each survey. The health surveys for England and Scotland now measure problem gambling rates, which is a much more cost-effective and efficient method of collecting data.

Secondly, the hon. Gentleman referred to a request made by the university of Cambridge for a FOBT for research purposes. I am willing to write to those concerned to assist in the resolution of that matter. Thirdly, the hon. Gentleman remarked on the link between the location of betting shops and deprivation, but I understand that such shops are located according to footfall. To back that up, no significant correlation exists between the indices of multiple deprivation and problem gambling rates. That was confirmed by the December 2013 health survey.

In conclusion, the Government are undertaking urgent work to ensure the safety of all users of fixed odds betting terminals. The industry will be reporting to me next week on its plans for targeted player protection measures for those at greatest risk. I do not rule out any action that may be necessary to make machines safer. If the player protection measures do not prove sufficient, or if the balance of evidence suggests that precautionary action on stakes and prizes or other measures is required, the Government will not hesitate to act.