Gambling: Fixed-odds Betting Machines

Lord Strasburger Excerpts

Tuesday 24th February 2015 Lords Chamber

[Lord Lipsey]

I will give the noble Lord a tip for next year’s Grand National and tell him which shop to place it in.

We have had a slightly testing afternoon, so I may risk a rather racy analogy which gives my view of FOBTs. I am not very fond of them. If betting on a horse race is the full sexual intercourse of betting and gambling, with foreplay when you select your horse and mounting excitement as the race goes on—we know what happens after that, when the result comes—then FOBTs are a form of onanism. You see sad-eyed blokes—it is always blokes—in front of porn-like machines, made very glittery and unrealistic, shoving in pounds for momentary pleasure. If FOBTs evaporated into the air tomorrow, I for one should be delighted but that does not mean that I would ban them. There are a lot of pastimes that I do not much like: fox hunting, shooting and, although the noble Baroness, Lady Golding, is beside me, I have to say also fishing. However, if others wish to practise them within the law—and of course on fox hunting there is a strict law—that is their affair. Perhaps more importantly, there is the matter of unforeseen consequences.

You do not have to go into a betting shop to place a bet. The online alternative is increasingly attractive, and I cannot see much advantage in forcing determined punters to do what they do in private rather than doing it in a betting shop, where at least there is some element of sociable atmosphere. I can also see some disadvantages. I quite take the point of the noble Lord, Lord Dubs, on this: there would be a threat to the jobs of the hard-working staff—some 45,276 of them nationwide—who work in these shops. There would be a loss of tax and the loss of betting levy revenues. Those have to be weighed against the arguments we hear. Having said that—which favours the bookmakers’ arguments—I cannot believe the hash that the bookmakers have made of arguing their case on this. I cannot believe it. They were legendary lobbyists once upon a time. If William Hill or Ladbrokes came through your door, you shivered with fear and slavered to do their will. But now their approach has been that of the tobacco industry at its very worst. First, they denied that there was a problem. Then they said more research was needed—an echo of the speech of the noble Lord, Lord Deben, in the debate we have just had; there is always more research needed—at the same time doing everything they could to obstruct that research by not making FOBTs available to researchers. Now, finally, their answer is to do more about problem gambling.

Of course, I welcome everything that is done about problem gambling. I applaud the work of the new Senet Group, including on gambling advertising in the windows of shops, but also more widely. I also tremendously welcome the appointment of Martin Cruddace as interim chief executive of the Association of British Bookmakers. Martin is a 21st-century man who has some possibility of helping us find a way through this difficult problem without catastrophic damage either to the betting industry or to the people of this country.

I said that the present answer of the bookmakers is to say, “We are going to fight problem gambling”. Of course I favour that very much, but I do not think it is any more likely to wash than the bookmakers’ previous defensive strategies. There is a lively academic debate about problem gambling. I will not go into it here: “Is there such a thing?”; “Is there a clear distinction between problem gambling and non-problem gambling?”; “How prevalent is it?”. I greatly applaud the noble Lord, Lord Clement-Jones, for getting this debate tonight, but the notion that one-third of those who play FOBTs are problem gamblers is not in line with the evidence.

We must do everything we can to stop the terrible affliction that genuine addictive problem gambling can do to people and their families. As far as I am concerned, it is not those who shove every penny they can get hold of into these damned machines who are the only people with a gambling problem. Anyone—anyone—who stuffs a hard-earned £100 into a slot has a gambling problem. You therefore have to tackle it across the board.

What should be done? The title of this debate refers to the growing number of FOBTs. Again, I am afraid that I have to disagree with the noble Lord, Lord Clement- Jones, who I much respect. The number of machines is not rising very much. It is nearly 40,000, actually—not the 9,000 he suggested—but it is rising at only about 2% a year. Indeed, I suspect, as we speak, that it has fallen because bookmakers are closing betting shops on quite a large scale now and there will be fewer machines. I give way to the noble Lord.

[Lord Strasburger (LD)]

I think the noble Lord will find that although the total numbers are not changing very much, they are migrating towards the poorest areas.

[Lord Lipsey]

Yes, but that does not relate to the point I was making that just controlling numbers is not enough. There may be a case for local controls in some areas. I will come back to that at the end of my speech, but I think that the numbers are probably falling now. However, if you really want to put money into an FOBT, you are not going to have much trouble finding a machine; there are plenty about.

It is also true that there might be fewer betting shops on our high streets if there were a crackdown on the numbers of FOBTs. Again, with regard to unintended consequences, anyone who thinks that that would mean all the great shops and chains moving back on to the high street are deluding themselves; the only reason why there are so many betting shops on the high street is that no one else wants the premises, and they are therefore available. I would rather that our high streets consisted of well maintained betting shops than ill maintained, ramshackle, empty shops that are falling down.

So if we are not going to try to control numbers, what should we try? I think that the alternative, as has been referred to by the noble Lord, Lord Dubs, is the tool we already have: a limit on the amount that you can put into the machine at once. A hundred pounds is a very high limit, is it not? It means—in theory, at least—that the punter can lose a hell of a lot of money in no time at all. It is, incidentally, the bookmakers’ adamant refusal to take the counsel of their wiser friends and reduce that amount, a refusal that I think is motivated by sheer greed and the need to feed the maws of their shareholders, that has persuaded me that they simply do not get it or, at best, that their judgment has taken second place to the size of their bonuses. Had they voluntarily reduced the top stake by one-quarter, one-half or three-quarters when problems started to emerge, I suspect that we would not be here having this debate today.

Outside bookmaking, a consensus is emerging for reducing the maximum stake substantially; the figure of £2 seems to have emerged among campaigners at the right sort of level. Going back to sex, that would turn the porn machines into a sort of page 3—if that still exists; I get confused from day to day as to whether it does—that is, mild titillation rather than hardcore, and FOBTs into something more akin to entertainment-with-prizes machines, a bit of fun rather than a serious gambling product. In my view, it is a matter for serious further consideration whether such a limit should be imposed at the national level or decided by local decision by local government.

[Lord Strasburger]

My Lords, since confessions seem to be the fashion, I will admit to liking a little flutter myself. In this matter, there are many knowns and a few unknowns. We know that FOBTs are different from all other gambling machines on the high street because their maximum stake is 50 times higher, £100 as opposed to £2. This makes them suitable for addictive casino games, mainly roulette, and they turn betting shops into de facto casinos where a punter can lose £300 a minute but without the close supervision that casinos deploy.

We know that 70% of betting shop revenue now comes from FOBTs. We know that the big bookmakers target the poor and the financially vulnerable because the density of FOBTs in the most deprived areas is double that in the most well-off parts of the country. We know that the predictable income that FOBTs generate, not being dependent on the results of sporting events, is very attractive to the plc boards of the big gambling businesses. We know that betting shops employ fewer staff for FOBTs than if they had over-the-counter betting only, so the costs are reduced.

So we know that FOBTs are goldmines for the betting industry and that it will do all it can to keep them and their £100 maximum bet three times a minute, come what may. We also know that the Responsible Gambling Trust is funded by the gambling industry and its trustees and management are stuffed with betting industry figures, so the trust’s independence and impartiality are, at best, suspect.

Yet we also know that the Government rely on the Responsible Gambling Trust for its research on FOBTs. So it is hardly surprising that, despite indications given previously by the Government, the recent Responsible Gambling Trust research did not examine whether the special characteristics of FOBTs—namely very high stakes, casino games and very high-speed play—contribute to problem gambling and addiction, although we do know that research by Sydney University in 2005 found a link between high staking and problem gambling.

These omissions in the Responsible Gambling Trust’s research suit the gambling industry very nicely. Once again, action will be deferred on greatly reducing maximum stakes and game speed, and the big bookmakers can continue to profit handsomely from the poor and the addicted. We also know that fixed-odds betting terminals present a convenient route for small and large-scale money-laundering.

There are two things that we do not know. The first is very simple. Why on earth did anyone, apart from the bookmakers, think that it was a good idea to allow one category of gambling machine, freely accessible on high streets, to have a maximum stake 50 times higher than all the others? Perhaps my noble friend the Minister can tell the House why the Government still think that huge anomaly should persist. The other unknown is why the Government appear to be complicit in protecting the big bookmakers and their super-profits from FOBTs, at the expense of the most economically vulnerable and those addicted to gambling, their families and those in their community who suffer from the consequential crime. Could my noble friend the Minister explain why that is the case?

--- Later in debate ---

[Lord Bourne of Aberystwyth (Con)]

My Lords, this has been an extremely interesting and thought-provoking debate. I thank my noble friend Lord Clement-Jones for tabling this debate and presenting his case with such aplomb, not least because it offers the Government an opportunity to highlight existing measures in this area and to provide reassurances on what is, after all, a very important subject. Let me state categorically at the outset that the Government understand the public’s concerns and those of noble Lords around fixed-odds betting terminals. We have made it clear that we consider the future of their regulation to be unresolved.

I turn first to the submission supported by Newham Council and others. The Government understand the deep concerns held in this area of law in relation both to the perceived impact on the face of the high street of clustering—about which I will say something later—and to the claimed impact on problem gambling of the category B2 or the fixed-odds betting terminals that we are talking about. That is why, last April, we announced action in this area. I believe this was the first action announced under the Gambling Act, which, after all, came in in 2005, so there was ample opportunity for the previous Government to do things in the five-year period before the 2010 election. However, I accept that we all have concerns about this issue, so I am approaching it on that basis.

We announced a whole suite of new gambling controls, on track to come into force in April this year. I believe that my noble friend Lord Gardiner covered that in answer to a Question asked by my noble friend Lord Clement-Jones. The measures that we are seeking to introduce are to give more powers to local communities by requiring planning applications to be submitted to local authorities for new betting shops, and they will now be in a separate category. At the moment, they are in the same category as financial advisers and so on, so a change of use within that category would not require planning permission. After April, it will need separate planning permission unless it is within a now very limited category. I think that they share the same category as payday lenders and that they are the only two types of business that will find themselves in this new planning category. We have also brought in measures—which I will outline and expand on later—to restrict unsupervised high-stake play.

I do not claim to be able to predict what the precise impact of these measures will be—I do not think any of us can know that—but as the Secretary of State, Sajid Javid, said at the Culture, Media and Sport Committee on 20 January:

“These measures, particularly regarding FOBTs”—

[Lord Strasburger]

I thank my noble friend for giving way. He says that he cannot predict the effect of these changes. Let me help him. Changing the planning law will have no effect on the existing betting shops.

[Lord Bourne of Aberystwyth]

I actually said that I could not predict the precise impact of these measures. That comment was meant in a global sense; I was not referring to a particular instance. However, I am very grateful to my noble friend for that helpful intervention.

As I was saying, the Secretary of State said:

“These measures, particularly regarding FOBTs, will make a difference but I think, rather than for us to jump now and say, ‘We should move even further’, I would like to see these bed in and then look at the evidence and see if there is a need for any further action at all or if what we have done is enough”.

To my mind this is a sensible approach and balances the Government’s commitment to reduce problem gambling and protect the vulnerable while at the same time protecting what is an enjoyable leisure activity for the vast majority of customers who visit bookmakers’ premises. We will review the impact of these measures—or have committed to do so—in 2016 to see how effective they have been.

It is perhaps worth reminding ourselves what powers exist at the moment. Bookmakers have a responsibility to assist gamblers who display signs of problematic behaviour. The betting industry introduced new measures under its code of conduct from 1 March 2014—just a year ago. While this is a step in the right direction, we believe that measures should be toughened and made mandatory. That is why the Gambling Commission recently announced in its response to consultation on the social responsibility provisions in its licence conditions and codes of practice proposals for a mandatory code which will come in in May this year, with the sanction ultimately of taking a licence away if a bookmaker does not fulfil those conditions. I believe that that is a further step in the right direction.

We believe that the measures we are taking are sufficient to improve player protection. These moves, combined with the measures outlined in the Gambling Commission’s response to consultation on the social responsibility provisions in its licence conditions and codes of practice, are justified on a precautionary basis.

I should like to add that what is significant here is that the level of contact between customer and betting shop operator has increased, either via human or electronic interaction. Recent research has shown that interaction of this sort can give customers pause for thought, an opportunity to take stock of where they are and to assess their situation in a dispassionate manner. This is something that we have not seen before and it is part of the reason why other countries are looking to the UK as a pioneer in reducing gambling-related harm. I am not complacent about this because one would hope that we could have no problem gamblers but, to put this in context, research demonstrates that they represent under 1% of our adult population. The figure is higher in the US, Australia and South Africa, which have comparable systems. I am not suggesting that we can be complacent but we need to keep a sense of balance.