Fixed Odds Betting Terminals

David Nuttall Excerpts

Tuesday 26th April 2016 Westminster Hall

[Jim Shannon]

The hon. Lady is absolutely right. There is evidence of that, and I will give examples shortly. I am sure others will, too. Whenever there is misuse and a dirty laundering system, that has to be addressed.

More than half the UK population plays the national lottery, and they lost £7.2 billion last year. That compares with the less than 4% of the population who play FOBTs, who lost £1.6 billion. The unemployed are twice as likely to play the machines as someone in work. The demographic that bookmakers target with FOBTs are also the least likely to have access to bank accounts, debit cards and credit, and thus have restricted access to remote gambling sites. Bookmakers and the gambling associations are clearly targeting those who are vulnerable to start with, but who are perhaps in some difficulties with money, too.

Bookmakers are using the cover of account-based play, which was instigated by the Government, to provide cash top-up cards that facilitate access to their online sites; the hon. Member for Alyn and Deeside (Mark Tami) mentioned such sites in his intervention. The gambling lobby says that we need more evidence, but it is clear that the evidence is out there. It is comprehensive, and it consistently lines up on the right side of the argument: we need to protect the vulnerable and enact regulation. I hope that, arising from this debate, we will have a chance to enact regulation that will filter out from this House to the whole United Kingdom, including Scotland and Northern Ireland.

FOBTs are useful for money laundering, as the hon. Member for North Down (Lady Hermon) said. The machines have a few filters, but the money launderers know them and work within the limits. Supervision is low and closed circuit television is poor, so it is a safe way to money launder. Low-level drug dealers clean cash in case they are pulled over by the police. Generally, they are younger lads with smaller amounts of cash. In one West Yorkshire case, the police uncovered £18,000 of FOBT tickets being held by one drug dealer. The machines are used for underworld criminal activities by those whose thoughts are nothing but criminal and outside the law.

Using the proceeds of crime to fund a gambling addiction, or cleaning the cash obtained from a crime, is common. The most common use of FOBTs since they landed on the high street is for getting rid of dyed notes obtained during robberies on armoured vans, cash machines and so on. The notes are sprayed with an irremovable dye that is an immediate alert as to their origins. They are therefore not exchangeable. However, they are still identified as legitimate currency by note accepters on gaming machines. The machine with the highest cash transaction capability and ticket pay-out facility would be the preferred option for laundering, and that is the fixed odds betting terminal.

The bookies and the suppliers adapted the software controlling ticket pay-outs to identify where less than 40% of the cash put in is wagered—that is where people either put cash in a FOBT and then print a ticket straight out, or stake a minimal amount of the total cash inserted—so that staff are alerted when people cash those tickets. Launderers have adapted to that by using minimal-risk wagering. The bookies are now making it easier for criminals by allowing them to put cash winnings on to a pre-paid credit card. They are not just hiding the cash, but making it electronic. Never ever think that the criminals and evildoers have not got ideas as to how to get around the law, how to work it to their advantage and how to launder some of that dirty money.

Following on from weaknesses in money laundering policies at Ladbrokes in 2013, Paddy Power was recently the subject of a high-profile money laundering investigation. That investigation resulted in the Gambling Commission reprimanding Paddy Power and imposing a £280,000 penalty; there were also serious failures in social responsibility. The Government are considering including betting shops in the European Union’s fourth money laundering directive. That would require the identification of customers transacting over £1,500 in a 24-hour period. The bookmakers are lobbying to be excluded from that, despite recommendations that they should be included first being made in 2001 in the Budd report.

The lack of FOBT regulation is a huge issue that cannot be ignored, and I am keen to ensure that the debate highlights it. Gambling the world over has evolved into a consistent structure, with the hardest gambling reserved to highly regulated venues such as casinos, where customers go with the knowledge and expectation of experiencing a harder gambling environment. Casinos have very high levels of player supervision and therefore protection. Players tend to be occasional visitors, and the casinos tend to be viewed as a destination leisure venue with more than just gambling on offer.

The Gambling Act 1968 put in place a regulatory permit for gambling. This set out that high-stakes gambling should take place in highly regulated and highly supervised environments such as casinos, and low-supervision environments should have lower stakes and require lower levels of supervision. Those principles were reaffirmed in the Gambling Act 2005 by Sir Alan Budd. Other countries follow this model. The UK is alone in offering very-high-stakes gambling of £100 on Britain’s high streets in the low-supervision, easily accessible environment of a bookmaker. Little or no monitoring and little or no supervision means vulnerable people can be taken advantage of. The regulation of fixed odds betting terminals is out of kilter with the principles of gambling regulation. They offer very-high-stakes gambling in an unregulated environment.

The only material restriction is that bookmakers are allowed four fixed odds betting terminal machines per shop. The result of this is that bookmakers have opened multiple betting shop branches in close proximity. That is a concern. When we look at the streets of the United Kingdom of Great Britain and Northern Ireland, we sometimes wonder whether we are in a gambler’s paradise—if there is such a place—because betting shops seem to be prevalent everywhere.

The bookmaker Paddy Power has focused its branches in areas with high immigrant populations. We have seen a 43% increase nationally in the number of betting shops located in town centres.

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

On the number of machines allowed in each shop, is the hon. Gentleman arguing for fewer in each shop, or for more in a smaller number of shops?

[Jim Shannon]

I seek a lesser number in the shops, and fewer shops as well. We agree on many things, but we do not agree on this topic. The opinion that I express will win: ComRes did a survey of MPs seeking their opinion, and of the MPs who responded, seven out of 10 want FOBTs regulated. They want a reduction in the number of machines and shops. It was quite clear. If a private Member’s Bill is brought before the House—some in this Chamber are of a mind to do that—we can tackle the problem.

--- Later in debate ---

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

It is, as always, a pleasure to serve under your chairmanship this morning, Sir Alan.

Fixed odds betting terminals are entirely legal. Some claim that people become addicted to gambling but, unfortunately for those who advance the argument, that is simply not supported by the evidence. There is no objective evidence from gambling prevalence surveys or Government health surveys that the level of problem gambling in this country is rising. The inconvenient truth is that the level of problem gambling has remained constant at about 0.5% of the population for the past 13 years. Crucially, that level has not increased since the terminals were first introduced.

The FOBTs are already heavily regulated. Every aspect of their operation is controlled: they must be licensed; the maximum stake is controlled by Government; and the maximum pay-out is controlled. The fact is that gambling is available in many forms. There is no control over how much anyone may stake, say, on a five-furlong flat race, which is over in less than a minute. There is no control over how many scratchcards a 16-year-old may buy.

[Graham Jones]

The hon. Gentleman seems to be making a principled argument that we should not even have a £100 limit on FOBTs. He is asking why we should we have that—if someone can bet £1,000, or £10,000, on a horse race, or can walk into a casino and put x amount on whatever, what is the point in having a £100 maximum stake on a FOBT? Clearly, his argument is to remove the maximum stake and for people to have the freedom to stake as much as they want.

[Mr Nuttall]

The fact is that very few people bet £100 a stake—only about one in 100 customers even stake over £50. The average stake on a machine is £5.13.

As I was saying, there is no control over how many games of bingo someone may play, and there is no control over how much people may spend on betting on their mobile phone. Betting shops, arguably, are the safest place to gamble responsibly.

[Mark Field]

I have some sympathy with the nanny state argument. As my hon. Friend knows, we have had discussions about that in many different areas of public policy. Does he not recognise, however, that there is an element of responsibility here? Without doubt, no self-respecting newsagent would be selling dozens and dozens of scratchcards to a 16-year-old; the newsagent would take responsibility there and then. A lot of things are regulated, but in this sort of area the Government need to find a balance. As I said in my contribution, it seems to me that what is happening in many of our betting shops should be regulated at a higher level than might be expected for a seaside arcade.

[Mr Nuttall]

In answer to the point about scratchcards, there is nothing to stop people going into 10 different shops and buying as many scratchcards as they want. I am not suggesting that they would buy them all from the same shop.

I will make two final points. First, it is generally accepted, and it has been mentioned in the debate this morning, that the FOBT machines make a profit of about £1,000 a week—the figure given earlier was a little more than £800 a week. Given that the shops are open for about 90 hours a week, on average, that works out at a profit of about £11 an hour. So the question that those who want to control the machines further must answer is, do they think that such a level of hourly profit is fair? If not, what hourly rate do they think is fair?

Secondly, it is argued that the FOBTs are used for money laundering. That argument has been advanced again this morning. Unfortunately, however, it has been advanced by exactly the same people who argue that people are losing £300 a minute on the machines. Which is it? Are people losing £300 a minute, in which case that is not a good way to launder money, or are the machines being used for money-laundering purposes? Clearly, they cannot both be true.

We should protect the freedom of the individuals who want an occasional flutter, and allow them to do so.