Gambling (Licensing and Advertising) Bill

Written evidence submitted by Campaign for Fairer Gambling (GB 09)

1. Summary regarding remote gambling advertising

2. It is the opinion of the Campaign for Fairer Gambling that the Gambling (Licensing and Advertising) Bill could be better drafted to ensure better compliance with the 2005 Gambling Act licensing objectives of "fair and open" gambling and the "prevention of harm to vulnerable persons" by placing greater control over advertising of offers, advertising in general and advertising through affiliates.

3. Background related to remote gambling advertising

4. Following thousands of conversations with attendees at the three major party political conferences there was a strong cross-party consensus that advertising of remote gambling was far too prominent on television.

5. Of an estimated worldwide market of around £21 billion remote gambling losses, nearly 10% of that, an estimated £2 billion, is lost by British gamblers. It is difficult to imagine that any other country has such a disproportionate share of remote gambling loss relative to its worldwide economic status [1].

6. Continued extensive and increasing operator spend on advertising is an indicator of an over-competitive, mature market. As some customers quit remote gambling due to dissatisfaction, changing circumstances or loss of available funds, operators seek to induce more new players and win back old customers. Operators buying gambling customer business ultimately leads to a race to the bottom. This is detrimental to gross margins and the reputation of the sector, as more vulnerable persons are drawn into remote gambling.

7. Advertising of offers

8. The standards applied to gambling advertising should exceed the standards applied to other forms of advertising as it should be in compliance with the "fair and open" licensing objective of the 2005 Gambling Act.

9. Compliance with the Advertising Standards Authority standards alone is inadequate. Bonus sign-ups, free offers and credits are all gambling offers which are virtually always accompanied by terms and conditions. These terms and conditions use turnover requirements to limit the ability of the consumer to withdraw funds.

10. These reduce the actual equity value of the offer considerably. For example, a £10 nominal value offer could be worth only £2 estimated equity after allowance for terms and conditions.

11. The consumer has no way of assessing the estimated equity value based on the terms and conditions. If these types of offers continue to be allowed than the extra controls should apply.

12. Recommendation

13. The estimated equity value should be displayed alongside the nominal value with the same degree of prominence.

14. Advertising in general

15. Remote gambling offers attract novice gamblers, poorer gamblers and vulnerable at-risk gamblers.

16. In order to comply with the prevention of harm to young and vulnerable persons licensing objective of the 2005 Gambling Act, the Gambling Commission guidance on vulnerable persons to Police should be taken into account. This guidance, which identifies for regulatory purposes that vulnerable persons include:

"people who gamble more than they want to; people who gamble beyond their means; and people who may not be able to make informed or balanced decisions about gambling due to a mental impairment, alcohol or drugs".

17. To protect "persons who gamble beyond their means" and "persons who lose more than they can afford", there should be far greater control over advertising.

18. Recommendation

19. All remote gambling to be advertised remotely only.

20. Advertising through affiliates

21. Some gambling offers are from affiliates associated with gambling sites. Customers at these affiliate sites can be steered to gambling sites without being informed that their losses could be shared with the affiliate site and that the affiliate share could be as high as 70% of losses.

22. This methodology should not be allowed as it is not in compliance with the "fair and open" objective.

23. Recommendation

24. If affiliate relationships continue to be allowed, then the common remote trade relationship of a minimal click-through fee should be applied.

25. Summary regarding remote licencing

26. Operators that transact business in countries where authorities say that activity is illegal are at risk of fines and bringing British licencing into disrepute. The culture of licensees should be of the highest integrity, rather than minimal compliance. With the pending change to point of consumption tax, there is no longer any justification for asserting that gambling is where the server is and not where the customer is located.

27. Transactions by jurisdiction

28. Operators have used paid legal opinions to justify transacting with consumers in jurisdictions where the authorities have asserted that this activity was not permitted. Operators engaged in such transactions are in breach of the prevention of association of gambling with crime objective if the activity is illegal.

29. Operators engaged in such transactions are also in breach of the fair and open objective as gamblers in those jurisdictions are being induced into gambling with the operator without being informed by the operator that the activity may be illegal.

30. Recommendation

31. Operators should be required to obtain and maintain a list of permissions to transact remote gambling with consumers in all jurisdictions that operators transact in.

32. The reputation of the British licenced sector will be better protected and there will be less risk to the licencing objectives by implementation of this recommendation.

33. Summary regarding licensing of betting shops

34. It is the opinion of the Campaign for Fairer Gambling that the Bill could be amended to ensure better compliance with the three licensing objectives, provide greater consumer protection and support localism in respect of betting shops.

35. The issues facing Local Authorities as a consequence of the 2005 Gambling Act (removal of use class, demand test and legitimisation of Fixed Odds Betting Terminals-FOBTs) have now culminated in a leading council voting unanimously to ban FOBTs and call on Government to give them greater powers to control betting shops [2]. This bill provides the opportunity to remedy these mistakes from the original Act.

36. Betting shops and economic impact

37. The Treasury Green Book containing guidance for appraisal and evaluation in Government says "new policies, programmes and projects, whether revenue, capital or regulatory, should be subject to comprehensive but proportionate assessment." [3]

38. This also requires policies to be assessed based on the economy as a whole; otherwise economic analysis is sector-serving [4]. Economic analysis to assess the impact of regulatory change applicable to FOBTs must consider "the wider effects on other areas of the economy".

39. The submission by the Association of British Bookmakers (ABB) to the Department for Culture Media and Sport (DCMS) in response to the triennial review consultation was sector serving only. This ABB submission does not explain where the £1.5 billion per year revenue currently lost by gamblers on FOBTs has been diverted from, so it is unrealistic to rely on ABB representations as to where that revenue would be diverted to in event of regulatory restrictions on FOBTs.

40. The Campaign for Fairer Gambling’s submission to DCMS included a report by Howard Reed of Landman Economics [5]. This report assesses the impact of FOBT spend on the economy as a whole and asks "what is the change in economic activity if consumer expenditure shifts from other goods and services to FOBTs?"

41. The Landman report determined that "an increase of £1bn in consumer spending on FOBTs destroys just over 13,000 jobs in the wider consumer economy." On current spend levels of £1.5 billion [5] 19,500 jobs could have been lost in the wider consumer economy. This is because FOBTs are a labour un-intensive form of consumer spending.

42. The projected growth in FOBT spending as shown page 12 table 2 [5] shows a projected future impact on jobs of up to 22,300 losses across the wider consumer economy.

43. The impact of the expansion of FOBTs in terms of reduced wage payments to people working in the local economies where FOBTs are established is to reduce the total wage bill in these areas by around £650 million by 2023/24. This is due to a combination of two factors:

(a) the reduction in the total number of jobs supported by consumer spending as a result of switching spending from other goods and services into FOBTs, and;

(b) the fact that jobs arising as a result of the expansion of FOBTs are relatively low-wage compared with jobs supported by other types of consumer spending.

44. Although the expansion in FOBTs over the period covered by the Triennial Review of Gaming Machine Stakes and Prizes is estimated to lead to increased revenue of around £80m, this is accompanied by a reduction in income tax and National Insurance Contribution revenue of around £50m and reduced VAT revenue of around £40m, meaning that total tax revenue decreases by £12m. By 2023/24, further expansion of FOBTs in line with current trends is projected to lead to a £50 million net loss for the Exchequer.

45. The Landman report [5] refers to the socio-economic costs of problem gambling related to FOBTs but does not quantify that, meaning that the total negative economic effect on local communities is far greater than identified in the report.

46. Betting shops and localism

47. Local authorities have a duty to work with police and the Gambling Commission in order to enforce the 2005 Gambling Act licensing objectives. In addition, they have duties to their communities to deliver public environments that have a positive social and economic impact.

48. Many local authorities chose not to apply for one of the special casino licenses of eight small and eight large casinos as were available under the 2005 Gambling Act. These same authorities are now faced with casino game content on FOBTs in easier access and less regulated betting shops, with far more gaming machines than the allocation of 80 or 150 slot machines allowed in such a casino.

49. However, Councils are inhibited by lack of powers, firstly, to maintain regulatory control over day to day compliance and enforcement of betting shop licences and secondly, to ensure a healthy mix of retail businesses in the communities they are responsible for.

50. This lack of control has resulted in numerous instances of Councils either legally challenging bookmakers, as with Newham Council [6], who tried to prevent the 82nd betting shop opening in their borough, or communities and councillors taking action aimed at sending a message to Government. FOBTs now account for over 50% of bookmakers’ profits and have therefore become their core business. This is certainly the case where betting shops have clustered to facilitate more FOBTs, as is the case on Green Street in Newham.

51. The London Borough of Barking and Dagenham recently completed a consultation on a draft Supplementary Planning Document and Article 4 Direction to withdraw permitted development rights for change of use of A3 (restaurants and cafes), A4 (drinking establishments) and A5 (hot food takeaways) to betting offices (class A2 use) in order to create or maintain mixed communities and to protect local amenity and the wellbeing of the area. However, due to the required notice period to avoid any cost impact, the bookmakers have subsequently applied to open shops before its introduction [7].

52. Fourteen councils led by the London Borough of Hackney are putting together a proposal under the Sustainable Communities Act for betting shops to have a separate and specific use class to ensure that every planning application will be subject to the local authority’s individual planning policy to allow local circumstances to be taken into account [8].

53. The London Borough of Lambeth is considering introducing a local a local by-law to reduce maximum stakes on FOBTs to £2 per spin and reduce the speed of play.

54. Adding to the argument that this is not just a London-centric debate, Highland Council in Scotland recently rejected a proposed William Hill betting shop in the most deprived area of their borough, opposite an addiction treatment centre [9]. This application added to the existing 13 betting shops already located in the area [10].

55. Liverpool Council unanimously passed a motion [11] calling for a ban on FOBTs and greater provision of powers for local authorities over betting shops.

56. In Sheffield, the increasing prevalence of betting shops led local MP Paul Blomfield to say "In the current economic climate we’re seeing too many shopping streets dominated by betting shops, payday lenders and pawn brokers." [12]

57. In Leicester, the Deputy Mayor called for more localised powers to control betting shops [13].

58. Ealing and Acton MP Angie Bray, also currently has a poll running on her constituency website asking the question "are there too many betting shops on the high street and should local authorities have greater powers to limit the number?" So far the poll has attracted a "yes" response of 92% [14].

59. In Croydon, despite community opposition, another Paddy Power betting shop was allowed in March 2013 [15]

60. The Local Government Association (LGA), which represents the majority of councils in the UK, has itself put forward the case for more powers to be given to local authorities [16].

61. However, despite the groundswell of opinion on the issue, the responsible Minister at the Department for Communities and Local Government, Nick Boles MP, has indicated to bookmakers that he plans to make the opening of betting shops easier [17]. The Campaign for Fairer Gambling deplores any further relaxation of the powers available to Councillors in respect of betting shops and believe it is contradictory to the theme of government in promoting localism.

62. Medway Council has campaigned for a reduction in the maximum stake on FOBTs. This has led them to discussions with the Gambling Commission and the ABB about harm minimisation measures, which eventually led to a Responsible Gambling Code of Conduct.

63. However, Labour and Liberal Democrat Councillors do not believe the proposed measures go far enough [18] in terms of player protection, nor do they deal with the problem of clustering in deprived areas.

64. The landmark vote in Liverpool is set to be followed by other Councils across the country, including Manchester and Hackney. This localized action is becoming increasingly common in respect of betting shops and FOBTs.

65. The "fair and open" licensing objective and B2 machines (Fixed Odds Betting Terminals).

66. One specific licensing objective is that gambling should be fair and open. In an advice to Police Services document by the Gambling Commission in 2009, the glossary of definitions for "fair and open" is defined as:

67. "When the customer is given full information about the way in which the game is played (i.e. the rules of the game) or bet taken; about the odds of winning or losing in different scenarios; that changes to the rules or odds are fully flagged so that gamblers are not caught out".

68. A broad interpretation of this definition would mean that FOBT gamblers who do not know FOBT roulette is up to several times faster than the real casino table game of roulette and therefore results in several times greater losses on FOBTs, are being "caught out" and subsequently FOBTs are not "fair and open".

69. A narrow interpretation of this definition is that if the game is played according to the rules and payback, then this is "fair and open". Every lawyer will know that this interpretation is merely the minimum legal standard of the terms and conditions of the wager contract between the gambler and the operator. This would just make "fair and open" a tautology of legal and licensed gambling. Therefore this narrow interpretation cannot be correct as this cannot be an objective.

70. In respect of FOBTs there is no clear explanation that the 97.3% roulette payback is a percentage of the total amount staked. The bookmakers say that the total amount staked (the turnover) should not even be referred to for FOBTs (but use turnover to restrict the equity of their remote gambling offers).

71. The actual FOBT gambler experience is an average payback percentage of 82% of cash funds deposited. But this is on a per machine, single session, only basis. Re-using these funds after quitting, whether on the same machine, a different machine in the same shop, or in a different shop, results in an average payback experience of 82% of 82%. A third machine session results an average payback experience of 82% of 82% of 82% and so on.

72. The FOBT demographic includes an inexperienced novice gambler demographic. Many FOBT gamblers are immigrants or migrants who, in common with 18 year olds, have never had previous exposure to serious legal gambling.

73. Many of the first legal adult gambling experience of these people is placing a football bet in a betting shop, attracted by advertising probably funded by offshore remote entities. They are then introduced to FOBT gambling by the on-premises FOBT marketing of free plays and tournaments.

74. FOBT roulette at 180 spins per hour is 3.6 times faster than automated roulette in a casino at 50 spins per hour. Casinos also offer electronic roulette based on video terminals of the live roulette game at the same pace as the live game. Live game pace varies primarily according to table occupancy levels, but a reasonable average estimate could be on parity with automated roulette at 50 spins per hour. However, as more players participate, this slows the game down and the better average of a player experience is 45 spins per hour.

75. The theoretical roulette payback of 97.3% equates to a player loss of 2.7% per wager per spin. A casino table roulette player will lose an average 1.22 units per hour (unit being assumed as the same stake per spin). A B2 roulette player will lose an average 4.86 units per hour. Therefore FOBT roulette is not as fair as casino roulette in that FOBT roulette gamblers lose faster or more, or both.

76. In addition, the house advantage on casino roulette on the 1 to 1 payoffs is 1.35%, resulting in a 98.5% payback, so that equivalent FOBT bets are not as fair as casino bets.

77. There is no information provided to betting shop gamblers to advise them that the FOBT roulette gambler experience is very different to the casino roulette game.

78. This lack of transparency of the relative unfairness of FOBT roulette, considering the demographic of the betting shop gambler, is not compliant with a broad interpretation of the fair and open objective from a general consumer protection perspective

79. The vast majority of FOBT turnover is derived from roulette. B2/B3 machine data analysis submitted to DCMS by the Gambling Commission notes that 76% of 2012 revenue was achieved from B2 casino content.

80. Adrian Parkinson, Campaign for Fairer Gambling Consultant, who was in charge of FOBTs for the former state owned operator the Tote, has confirmed that over 90% of B2 revenue is derived from roulette. The 76% share for overall FOBT income has been reduced, not through activity, but a doubling of B3 stakes from £1 to £2 during the 2011/12 period [19]. Prior to this stake increase B2 revenue as a share of overall FOBT revenue would have been closer to 90%.

81. The prevention of association with crime licensing objective and B2 machines (FOBTs)

82. According to the Gambling Commission, there were 8,599 customer incidents in betting shops requiring Police assistance last year [20].

83. Information from a Ladbrokes whistle-blower on the scale of criminal acts against FOBTs in betting shops shows that they experience around 30 incidents per week. With Ladbrokes operating a quarter of all UK betting shops it is not inconceivable that in excess of 100 machines per week are being attacked across all betting shops.

84. However, the level of reporting of this type of incident is being dumbed down by the industry through instructions to staff not to report to the Police [21]. This is having serious repercussions for betting shop workers and has led to calls for working conditions to be reviewed and, in particular, the now industry-wide policy of lone staffing to end [22].

85. There has been a history of use of proceeds of crime and money laundering on FOBTs as evidenced by dyed notes from armed robberies being detected as far back as 2003, which was confirmed by our Campaign Consultant, Adrian Parkinson.

86. In recent months, investigations carried out by the Police have been publicized, the largest of which involved Coral bookmakers allowing £900,000 to be laundered through their shops [25]. This was preceded by a gang in the Midlands laundering stolen cash through FOBTs in up to 40 betting shops [26].

87. In respect of the laundering of dyed notes through FOBTs; bookmakers record and report this information to the Police, but only as a matter of procedure in order to claim back losses from the Bank of England. This deters prevention, as no loss can be incurred so there is no incentive to prevent criminal activity taking place.

88. In the Coral money laundering case, which the Campaign believes to be the largest of its kind in the betting sector, £90,000 profit was made by the bookmaker from the perpetrator. Even worse, he was treated as a valuable customer and awarded a free VIP trip to the races.

89. FOBTs represent an anonymous, low cost way of cleaning cash from the proceeds of crime. That this issue has been hidden under the radar for 10 years is quite surprising, given that both the bookmakers and their FOBT suppliers, having instant access to data, which could easily be analysed to detect the indicators of money laundering.

90. The extremes and extent of money laundering activity on FOBTs in betting shops has been publicized by the Guardian recently following investigative work [25].

91. In addition to the uncovering of money laundering in betting shops via FOBTs, it should be noted that the industry trade body is lobbying to be excluded [26] from the EU 4th Money Laundering Directive [27] which would introduce identification procedures for customers spending over £1,700.

92. Current procedures do not enable any central collation of information or dissemination of information to police or local authorities in respect of any of dyed notes transactions, machine damage and money laundering data indicators.

93. The prevention of "harm to young" licensing objective and B2s (FOBTs)

94. In an advice to Police Services document by the Gambling Commission in 2009, children are identified as being under the age of 16 and young persons as being under 18, as per the 2005 Gambling Act.

95. The licensing objective is: "protecting children and other vulnerable persons from being harmed or exploited by gambling."

96. It is very important to understand that the licensing objective of protecting children and the young does not apply to legal gambling catering to persons 18 or over. Unless 18 to 24 year olds are formally recognised as a vulnerable group, then persons in this age group are no more protected than over-25s.

97. The Police Services document has three definitions of vulnerable persons being:

98. "people who may not be able to make informed decisions about gambling due to a mental impairment, alcohol or drugs";

99. "people who gamble more than they want to" and;

100. "people who gamble beyond their means"

101. The British Gambling Prevalence Surveys (BGPS) between 2007 and 2010 showed that for regular players of FOBTs the problem gambling rate was 13.3% - one of the highest rates.

102. The same surveys also highlighted that the greatest increase in play on FOBTs was among men aged 16-24 [28].

103. The Gambling Commission used to publish their underage test purchasing results, but when they came in for criticism from the bookmakers after the first round in 2009 showed 98% and 35% failure rates, they suddenly stopped [29]. So now the public does not know whether the bookmakers are any better or worse in preventing underage gambling.

104. Newham Council carried out its own test purchasing and found a William Hill shop allowed a 15 year old girl onto the premises and allowed her to play a FOBT. The limited powers available to the Council in order to act resulted in minor conditions being imposed on the operator, William Hill [30].

105. The revised method of allowing bookmakers to test internally, through third parties, without publishing the results will not satisfy public concern. Independent testers will not duplicate a typical situation where an underage gambler first gambles in a betting shop, by entering with over 18 year-old associates who are already regular gamblers. It is also questionable that internal checks would not be notified to shops in advance, therefore ensuring compliance.

106. All profits retained by bookmakers from underage gamblers have been obtained illegally and there is no record of any bookmaker losing a premise licence for accepting underage losses or having to pay back losses to underage gamblers, or of any financial penalties being imposed on them.

107. Campaign Consultant Matt Zarb-Cousin, a reformed FOBT addict, has given his personal story and view on why measures proposed by the industry to protect the vulnerable and help toward socially responsible gambling are likely to be ineffective [Appendix 1].

108. Polling on gamblers in Newham, carried out by 2CV, showed that three quarters of those aged 18-24 play FOBTs when in a betting shop. The same polling showed 87% of betting shop customers viewed FOBTs as addictive [31].

109. Professor John Grant has published research [32] showing that up until the age of 24 our brains are still developing, and one of the last brain functions to fully develop is the ability to assess risk. So we are allowing those with the least awareness of risk-reward functionality to take part in the most high-risk, high-stake electronic gaming in easily accessible locations.

110. The Daily Mail recently published this article noting the new awareness that full development of the brain functions is not complete until over the age of 24 [33].

111. In all likelihood, there will be one member of betting shop staff monitoring this and providing customer interaction as suggested by the new Code for Responsible Gambling.

112. The prevention of "harm to vulnerable" licencing objective and B2s (FOBTs)

113. The advice to Police Services document outlined above has three definitions of vulnerable persons, these being:

"people who may not be able to make informed decisions about gambling due to a mental impairment, alcohol or drugs";

"people who gamble more than they want to" and;

"people who gamble beyond their means"

114. Poorer persons are more vulnerable to becoming problem gamblers as was noted by the most recent Scottish Health Survey [34]; gamblers from poorer areas are seven times more likely to be problem gamblers than gamblers from wealthier areas.

115. The concentration of Licensed Betting Offices on primary high streets has aroused the concern of local authorities and their communities. As Harriet Harman’s "The Problem of Betting Shops Blighting High Streets and Communities in Low-Income Areas" report outlines:

116. "snapshot of local authority areas shows that an unintended consequence of the Gambling Act 2005 has been a dramatic proliferation of betting shops in deprived areas and a clear clustering of these shops in high street locations in these areas." [35]

117. In 2009, the Gambling Commission published the "Role of Social Factors in Gambling" and section 2.7 gives reference to earlier research in the USA and Australia showing causal links with area depravation, electronic gaming and problem gambling [36].

118. As noted previously, another vulnerable FOBT demographic is the 18 to 24 age group. Many in this age group are not in full-time work. Those in work are often part-time, temporary or on zero hours contracts. Many of course are unemployed or students with debts.

119. The BGPS 2010 clearly shows how dominant the poorer demographic is in FOBT gambling, compared to other gambling activities.

120. Table Category Group Group % All % Ratio Rank

3.1 Age 16-24 12 4 3.00 to 1 Joint highest

3.6 Employment Unemployed 12 4 3.00 to 1 Second highest

3.7 Income Lowest Quintile 7 4 1.75 to 1 Highest

121. The 2CV polling of betting shop customers in Newham showed that those aged 18-34 and in the DE groupings are more likely to only play casino games on FOBT [31]. 87% of FOBT users agreed the machines were addictive.

122. Whilst BGPS and the Scottish Health Survey will tick the boxes in terms of getting the overall demographics representatively, it will not adequately encompass FOBT gamblers. The methodologies used of landline telephone contact or head of household contact will exclude many young adults, persons with limited command of the English language, persons in accommodation in student halls, half-way houses and institutions. Certain types of tenants would be excluded as would homeless persons. Therefore all BGPS estimates and statistics must be understood to be under-evaluations of FOBT problem gambling.

123. Furthermore, the representation that problem gamblers are less than 1% is a fallacy. Survey questions relate to the year of survey activity. As some persons can drift in and out of problem gambling, the percentage of persons who experience problem gambling at some stage of their lives could easily be as high as in the 10% range. It will take another 40 years before the impact of problem gambling as a result of FOBTs and remote gambling can be fully assessed.

124. Analysis of GamCare data for the year 2011/12 identifies that 40% of gambling activities referenced on problem gambler calls relate to FOBTs [37]. In the same report 66% of all callers are under the age of 35 whilst 33% of all callers under the age of 25.

125. The two most prominent gambling locations for problem gambling activity calls to Gamcare are betting shops (46%) and internet (34%). These statistics show post 2007, the 2005 Gambling Act has failed to deliver the licensing objective in respect of the vulnerable.

126. Doctor Henrietta Bowden-Jones, who runs the UK’s only NHS problem gambling clinic, has carried out studies on the relationship between problem gambling and crime; this showed that 86% of problem gambling respondents had carried out illegal acts to fund their gambling [38]. Half of the clinic’s patients named FOBTs as a problem [39].

127. The volume of gambler losses on FOBTs at over £ 1.5 billion per year is nearly twice that of casino gambling at over £800 million per year. This has happened in only 10 years. Casino content is the core product in a casino, whilst FOBTs are ancillary to the core business of over the counter betting.

128. It is logical to understand that that the only explanation for this disparity is that FOBT gambling is too easily accessible to an addiction–prone demographic, attracted by the addictive FOBT features.

129. The social cost of problem gambling can result in multiple local services being utilised at a cost to the local community. Some problem demographics are likely to have a higher social cost than others. The highest social cost of gambling addiction is likely to be realised by poorer young males in the 18 to 24 age group, exactly the FOBT demographic.

130. Overall recommendations

131. The following points where applicable and appropriate should be incorporated into the Bill by amendment:

(a) Removal of the "aim to permit" clause for betting shops

(b) Removal of casino table game content from B2s

(c) Requirement for no lone staffing of betting shops with B2s

(d) Requirement for stricter thresholds for possible suspicious activity on B2s

(e) Removal of free plays, credits or demo plays from B2s

(f) Requirement for hours of opening to be restricted to a relationship with live British racing

(g) Local and centrally collated reporting with access by local authority and police of each of:

(h) All property damage in shops

(i) All dyed notes through B2s

(j) All acts and threats of violence to staff

(k) All suspicious over threshold activity on B2s

(l) Police and local authority on demand access to B2 data on shop by shop basis

132. In the event that a recommendation is not incorporated into the Bill, then the power to implement and enforce the recommendation, without fear of legal action by bookmakers, should be devolved to local authorities.

133. In the event that a recommendation is neither incorporated into the Bill nor devolved to local authorities then it should be adapted into the Gambling Commission Licensing Conditions and Codes of Practice.

134. DCMS should advise the Gambling Commission that there must be far greater emphasis placed on delivering the licensing objectives rather than delivering the failed light touch regulation.

135. Conclusion

136. The recommendations made within this submission are designed to help achieve the licensing objectives, protect consumers and create a more responsible and viable sector. These recommendations are therefore in the interests of government to implement.

November 2013








































Appendi x


A. Addiction to FOBTs, problem gambling and the bookmakers Code of Conduct – An anecdotal observation and personal account from Campaign Consultant and reformed FOBT addict, Matt Zarb-Cousin

B. "My scepticism of the Association of British Bookmakers’ Code for Responsible Gambling is not derived solely from evidence that illustrates why problem gamblers are an important source of profit to them. My own experiences inform my perspective on how problem gamblers behave, their psychology and ultimately, what causes problem gambling or – at the very least – exacerbates any predisposition, either genetic or environmental.

C. With this perspective, I can confidently assert that the newly introduced Code of Conduct will do nothing to prevent problem gambling. It is not for me to speculate on the motives behind producing a vacuous Code, however I do think it important to view its inevitable ineffectiveness in the context of the proportion of profits derived from problem gamblers.

D. A secondary analysis of the most recent British Gambling Prevalence Survey in 2010, carried out by Professor Jim Orford, found that 23% of the profits from Fixed Odds Betting Terminals – or FOBTs – come from people with gambling problems. If those considered "at risk" are factored in, that figure is as high as 41% [1]. Professor Orford has said himself: "The idea that the gambling industry will impose some kind of self-regulation is absurd. They’d be undermining some of their most loyal customers." [2]

E. I first entered a betting shop just before I turned 16. It was to put a bet on Arsenal vs. Manchester United at Highbury. I remember putting £5 on Henry scoring 1-0 and £2 in what was often referred to as the "roulette machine", which I had noticed as I walked in. On my first go, I got up to £10 placing £1 bets on red or black and cashed out.

F. As I sat through the Arsenal match, the difference between gambling on FOBTs and betting on the football was easily discernible, and significant. It took me 90 minutes to find out that I had lost my football bet whereas, on FOBTs, it takes the player 20 seconds.

G. The speed of play, the ability to control when the event takes place, the solitary nature of machine gambling, the sounds, the lights, the graphics and the interface all contribute to the addictive nature of FOBTs. Casino table games are known to be more dangerous than other forms of gambling, which is why they had always been permitted only in a highly regulated casino environment. It is illogical, in the interests of player protection – which the 2005 Gambling Act states is one of its objectives – to take those already addictive games, speed them up and place them on every high street.

H. On the high street, these games become accessible to a much poorer and also – crucially in terms of problem gambling – younger demographic. My first experience of FOBTs was just before I turned 16, and this experience is not irregular. The propensity for underage people to gamble in betting shops is corroborated by both the Gambling Commission test purchases in 2009, which showed a 98% failure rate for age verification [3], and a recent story that appeared in the Guardian newspaper that highlighted the extent to which Ladbrokes went to conceal children gambling in their shops [4].

I. This is an issue of particular concern as Professor John E. Grant has stated that young people are more likely to develop a problem with gambling [5].

J. My wagers on FOBTs started low, but progressed slowly. I won a significant amount – around £700 – within my first weeks of playing. However, that was lost very soon after. By this point I was developing a problem with gambling, but did not care to admit that to myself.

K. Before I turned 17, I had a part-time job whilst in sixth form that paid me around £700 a month, however by this point I was betting £30 to £40 per spin, which was more than I made in a shift.

L. By 18 I had developed a severe problem, often missing sixth form to go and gamble in the bookies. I had achieved grades A,B,B at AS Level and it was thought that I had underachieved. Having secured an offer from UCL, I needed to match the grades at A2, but ended up with BCC. Despite the offer being ABB, my second choice university nevertheless accepted my application, so I went to Birmingham.

M. I cannot equate the adrenaline rush and the feeling of total escapism that one feels when engaged with a FOBT. It is nothing like anything that I have otherwise experienced. I once waited an hour outside for the bookies to open and didn’t even buy myself a drink from a nearby coffee shop because I would rather have waited and instead gambled that money.

N. On another occasion, whilst living in Birmingham, I went into the William Hill situated near campus on my way to a 9am lecture and ended up staying in there until I had gambled all of the money I could get my hands on. Aware, by this point, that I had a problem with gambling, I had cut the debit card that my student loan was paid into, and had access to only a current account which had a direct debit from the account the student loan was paid into, so just enough was in my current account each week to cover my living expenses.

O. I very quickly lost all of the money in my current account, and felt I had to win it back, otherwise I would be behind. So I walked to a branch of my bank on campus, produced ID and withdrew £250. I thought I would give myself a large enough bankroll to win back what I had lost and then I would cash out. After a few hours of being up and then down, I eventually lost that £250 before making another trip to the bank. This time, £400 down, I decided to withdraw £500. My first spin was £100, and gambled until the £500 was gone before making another trip to the bank and withdrawing £600. I continued gambling like this until it was around 6pm and I had lost £2500. I had not eaten or had a drink all day, and powered only by the adrenaline surging around my body I had decided the only responsible thing I could do in this situation was self-exclude.

P. The numbers I used to bet were always the same: 0, 1, 2, 3, 4, 5, 17, 21, 25, 26, 29, 32. My average hit frequency would therefore be just over one in three, but I had the maximum amount you can bet on a single number on number 2. Whilst gambling, the fabrication of ideals drives the desire to press repeat bet. In reality, walking out a winner becomes less likely as play continues, but a problem gambler will tell oneself that the number that will win it all back is coming next, and it is the speed of play on FOBTs that feeds into such a fallacy. A problem gambler will do their utmost to rationalise the irrational continuation of their gambling as they are feeding an addiction. When all the money has gone, they do not think that they should no longer gamble, but that they were unlucky and that next time they will win. "If only 2 came in a few more times, it was often so close," is what I remember saying to myself as I walked out of William Hill that afternoon.

Q. Despite self-excluding, and adhering fully to the protocol of handing in passport photos, I was allowed to gamble in the same William Hill shop soon after and, unsurprisingly, my financial situation quickly deteriorated to such an extent that I had effectively gambled all the money I had, and all the money I could borrow. By this point I was suicidal and needed serious help, as I feared I may not be able to continue at university and had, through addiction to FOBTs, effectively thrown my life away. I had lost my girlfriend, my friends, my personality had changed – everything became insignificant compared to FOBTs.

R. Having tried GamCare and Gamblers’ Anonymous and not found them particularly helpful, I was sceptical about the effectiveness of any treatment. At the insistence and with the help of my parents, I was fortunate enough to receive cognitive behavioural therapy privately, which did not cure me but it did help considerably. Sixth months later, a day before I turned 20, I gave up gambling.

S. There is only one NHS Clinic for Problem Gambling in the country, which offers the best treatment for problem gamblers. Over half of the first 100 patients at the clinic had a problem with gambling derived from FOBTs. It is clear that what is causing people to develop problems with gambling is FOBTs, so a Code of Conduct will not help problem gamblers if it does not include restrictions on stakes or content.

T. Having experienced addiction to FOBTs, I feel able to critically assess the Code of Conduct that has been co-ordinated by the Association of British Bookmakers, and which claims to contribute to harm minimisation [6]. The first player protection measure in the Code is a voluntary monetary limit. Those who have or are at risk of developing a problem with gambling do not set out to lose, and are often convinced they are going to win. To justify gambling, it is not uncommon to convince oneself that winning next time is a certainty. If a player has to set a loss limit, they are a developing a problem associated with the product and should not play it at all, although it does not state in the Code that staff will recommend self-exclusion to the customer once such an alert flashes up.

U. For a problem gambler, voluntary monetary limits – if they are used at all – will merely serve as a reminder of how much they are down and therefore how much they need to win back. The only monetary limit that might have an impact is compulsory pre-commitment, which would take into consideration the addictive nature of FOBTs and require every player to state how much they are prepared to lose before they start playing. This would have to be implemented across the industry as a whole, possibly through a uniform opt-in membership card. Similarly, voluntary time limits would have a negligible impact and are not likely to be utilised by problem gamblers.

V. These solutions betray a lack of understanding of the addiction. Problem gamblers spend too much time and money gambling because they are addicted to gambling. They are conscious of the time, and of the money they have lost or are winning, but make split second decisions each time they hit "repeat bet" to carry on gambling. The nature of the addiction is not that it removes a person’s consciousness, as the Code’s solutions appear to imply. It is not a solution to suggest that problem gamblers must be woken up by staff and told to snap out of it. The addiction is powerful and physiologically similar to drug addiction.

W. A problem gambler is therefore unlikely to enlist voluntary limits, and will override any mandatory money or time-based reminders. Even if the reminders were to have an impact, setting a reminder when a player has lost £250 is far too much for the demographic that tends to gamble on FOBTs. Once that reminder has come up the money has already been lost, and – if they cannot afford to lose that amount of money – the person has already started to develop a problem with gambling. A mandatory time-based reminder is unusual when some might wish to gamble all day, and some for five minutes.

X. It is those for gamble for longer than they planned that are developing the problem. If someone plans to gamble for an hour, they do not need a reminder at 30 minutes. But again, if someone plans to gamble for five minutes, then by the time the 30 minute reminder has come up they have already started to show signs of developing a problem. This does not stop the product being addictive, and whilst the Code states these reminders will present "opportunities for customer interaction", it does not say that is necessarily going to happen every time.

Y. With many bookmakers now opting for a single member of staff, it is unlikely many shops will have the capacity to ensure those that are clearly experiencing problems engage with a member of staff. If staff do manage to engage with them, they are not trained counsellors, nor would they be able to convince an addict to stop gambling. Equally, an addict does not make rational decisions, and so they cannot be "forced to make individual decisions about each £20 denomination to be used as stakes." It is not possible to "force" a problem gambler to make "a number of conscious decisions", and gaming machines are designed to distort cognitive function.

Z. The player protection measures proposed in the Code of Conduct will not make FOBTs less addictive, only remind people that they are already addicted. Like telling someone they have had 20 cigarettes today, they only describe rather than prescribe the addiction. The only meaningful solution is to stop people becoming addicts in the first place. This would entail the betting industry acknowledging that FOBTs are an addictive product, and that problem gambling can be induced or exacerbated by a certain features that are prevalent on FOBTs. A stake reduction to £2 per spin, to bring FOBTs into line with all other Category B gaming machines in Britain, and / or removal of casino game content would ensure improved prevention of harm."









Prepared 19th November 2013