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Fixed Odds Betting Terminals: A Blight On The Industry?

Published on October 25, 2014, 4:32 pm

by Jeff Grant Twitter account Jeff Grant LinkedIn account

Remember 2005? Well, whether you do or don’t, 2005 was the year that the UK relaxed the regulations governing bookmakers and gambling related firms with the introduction of the ‘Gambling Act’. At the time, the fear was that every major town in the country would have its own ‘Super-Casino’ preying on the poor and vulnerable. This, as we know now, never happened.

The Rise of Fixed Odds Betting Terminals

However, what did happen was, in the view of an increasing number of people, politicians and activist groups, far, far worse. Instead of the predicted super-casinos, the high street bookmakers have been transformed by the introduction of Fixed Odds Betting Terminals. Commonly known by the acronym FOBTs, there are now 33,000 of these scattered throughout the nation. Rightly or wrongly, the FOBTs have become the cause celebre of the anti-gambling lobby.

Gross Gambling Yield from FOBTs will double over next 10 years
Gross Gambling Yield from FOBTs will double over next 10 years

FOBTs: A Definition

A Fixed Odds Betting Terminal is, in essence, a video table games machines. Players can bet on Roulette, Blackjack or even Virtual Racing at stakes up to an eye-watering £100 every 20 seconds. While there is a maximum win cap of £500 per spin, the rise of these machines has taken even the gambling industry by surprise. FOBTs now represent over £1 billion in profit and around 50% of the total profits of land based bookmakers. The vast majority of that amount comes from roulette.

Concerns and Pressure For More Regulation

Many commentators feel that roulette, in this form, is particularly pernicious as it appeals especially to vulnerable young adults, problem gamblers and those from socially deprived backgrounds. Indeed, Adrian Parkinson, formerly of the Tote and now the main behind the Campaign for Fairer Gambling, has commented that “We’ve taken the most dangerous form of gambling and placed it in the most accessible place”.

However, FOBTs were introduced to high street bookies way back in 2001, so why is it that it has become such a hot issue in recent months?

'Stop the FOBTs (campign for fairer gambling)
Stop the FOBTs (campign for fairer gambling)

Well, first off, pressure from groups like Stop the FOBTs has forced the issue to the top of the political agenda with the Labour opposition party tabling a motion to give local councils and communities more power in restricting the expansion of high street bookmakers and, potentially, in banning fixed odds terminals altogether.

Additionally, more statistical research has been done about the impact of FOBTs – both on the bottom line of the gambling companies and on the effect these machines have had on the habits of gamblers.

Money Laundering: A Side-Effect of Fixed Odds Terminals

Lastly, there is a more worrying side-effect to the presence of Fixed Odds Terminals on the high street. This is one that would definitely come under the heading of the ‘Law of Unintended Consequences’. After all, one of the stated aims of the original 2005 Act was "preventing gambling from being a source of crime or disorder, being associated with crime or disorder or being used to support crime". So, the use of FOBTs as a mechanism for money laundering is definitely something that no one foresaw and no one wants.

Chapter 19 of the gambling act 2005
Chapter 19 of the gambling act 2005

Because the transactions are still primarily cash based and largely anonymous, FOBTs are considered in the ‘high risk’ sector by the Gambling Commission. In fact, using these machines to launder money is as straightforward as betting on both Red, Black and zero on a virtual roulette machine. The drug dealers and other criminals in need of ‘clean’ money willingly take the 10% or so loss they will make on this activity in order to create a verifiable looking paper trail to show that the money was earned or, in this case, won legitimately.

The Social Impact Of FOBTs

The questions surrounding Fixed Odds Betting Terminals are certainly complex, not least because of issues regarding personal freedom and choice. What is certain, though, is that the expansion of land-based bookmakers in the United Kingdom has been driven largely by profits accrued from FOBTs. The fact that much of this expansion has taken place in Britain’s poorer areas does leave the UK’s leading bookmakers open to accusations that they are acting in a predatory manner and are targeting the unemployed and those on low wage cash-in-hand jobs.

Figures produced by Fairer Gambling using industry data indicate that profits for the 50 constituencies with the lowest unemployment were just £44million while the profits for the 50 constituencies with the highest unemployment were well over £170m in 2012. This certainly suggests that the people playing Fixed Odds Terminals are among those who can least afford to do so.

Whatever the outcome of the vote, the controversy over FOBTs looks certain to continue. One thing for certain is that bookmakers will not relinquish such as profitable source of income without a fight.


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