The more work I’ve been doing on this site the more I’ve been amazed about the ways in which the betting industry has been able to constantly re-invent itself. In the early days, bookmakers were little more than pitches on racecourses, taking bets on which horse would win a race. Then they expanded into the public forum, kept in dingy and unappealing locations in order to put as many people off entering them as possible. Soon they emerged from the darkness into the light, however, becoming mainstays of the British high street and ridding themselves of that negative image in favour of a more glossy and exciting look.
One of the biggest changes came with the development of the Internet and technology in general. Now customers didn’t need to go into a shop at all, regardless of how acceptable the veneer had been made to look. Instead, they could simply switch on their computer or mobile phone and place a bet from pretty much anywhere in the world. As computers became faster and more capable of dealing with complex algorithms, so too did betting evolve. In-Play markets allowed punters to bet in the most visceral way possible with markets, such as the next corner or number of throw-ins, opening up to them. The world of betting had completed its renaissance, going from something with seedy undertones to being part of the accepted establishment. Only not everything has been so readily welcomed, as I’m about to explain.
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What Are FOBTs?
Fixed Odds Betting Terminals, which are often referred to as FOBTs, are essentially electronic slot machines that are typically found inside betting shops. They give bettors the opportunity to have a flutter on events that have fixed odds, hence the name. It’s most common to find FOBTs offering Roulette to punters, with the game of chance being one of the most popular ones to play whether you’re in a casino in Monte Carlo or a William Hills in Uxbridge. Roulette isn’t the only game that you’ll find on offer, however, with the likes of simulated greyhound racing, simulated horse racing and bingo all on offer.
FOBTs have to, by law, display the theoretical percentage return to player on them. Usually shortened to RTP, this indicates how much money will be given back to the player during their time playing any given game. When it comes to Roulette, the RTP is typically 97.2%, seeing the bookmaker receive a return of 2.8%. That return percentage is based across a long amount of time, though, with most players only using them for short amounts of time. That, combined with the fact that players can play a larger number of goes within a short amount of time, means that any bookie that offers a Fixed Odds Betting Terminal in their shop will make a decent amount of profit over time.
On average, the Return to Player percentage of FOBTs is somewhere between 90% and 94%, with that number largely depending on the stake and the amount of time someone plays on them for. Normally, the minimum stake per spin is £1 and there’s a maximum payout amount of £500. Some Fixed Odds Betting Terminals offer standard slot machine type games, though the payouts and house edge are pretty much the same regardless of what it is that punters are playing on them. Knowing the odds that you’re going to get, as well as the possibility of an immediate payout are two of the things that make these machines so popular, with bettors sometimes reluctant to wait too long for a race to be run or a match to be played to place a normal bet with a bookmaker. That’s why they’re such a popular option to have in the shops.
Are They All the Same?
One question that you might be interested in the answer to is whether or not all of the FOBTs you’ll find in bookmakers’s shops are the same. Obviously, the design of the machines themselves, as well as the games you’ll be able to play, differ from one place to the next, though most chain of bookmakers will have the same ones on offer. The most important thing is the different levels of games that you’ll find on offer with the government allowing two different categories:
Maximum stake of £100 – Maximum prize of £500; only available at casinos, betting shops or at tracks with pool betting
Maximum stake of £2 – Maximum prize of £500; available in casinos, betting shops, tracks with pool betting, bingo halls or adult gaming centres
There are also Category C machines in some betting shops that have a maximum stake of £1, though these are obviously less popular because they won’t make bookies as much money.
They’re more commonly found in the likes of adult gaming centres, members’ clubs, miners’ welfare clubs, commercial clubs and also pubs. These are typically the sort of machines that you’ll use if you play quiz games, whilst you’re out having a pint, etc.
When Did They First Appear?
Betting shops in general have been accepting wagers on events that are essentially determined by the outcome of random number events since 1996, though they took different form to the new Fixed Odds Betting Terminals. As far as these newer automated betting terminals are concerned, some bookmakers have had them since as early as 1999. Back then the games were limited and had high margins. However, a change to gambling taxation in 2001 meant that bookies could bring in lower margin games, such as Roulette, to the various FOBTs that they had installed.
That is likely the reason why 2001 is widely considered to be the year that Fixed Odds Betting Terminals were introduced across the country. Certainly the change in tax laws meant that bookies realised the potential of these new machines and they started to install as many of them as possible in as many places as possible. By April 2005, it was estimated that somewhere in the region of 20,000 FOBTs were in place around the UK. That was the year that the Gambling Act was introduced, yet it didn’t come into effect until 2007 and, by that point, another 10,000 terminals had been installed around the country according to research carried out by the Culture, Media and Sport Committee.
How Have They Affected the High Street?
For some of the more prudent members of society, bookmakers have long been seen as a ‘blight’ on the high street. This is mostly down to the general feeling around gambling as an activity, as opposed to what gamblers actually tend to do. For example, studies show that someone who visits a bookie is likely to spend around £20 in other shops that make up the high street. It’s also worth noting that the bookmaking side of the betting industry employs around 52,000 people, with each shop contributing over £120,000 in business rates and taxes to the economy. There’s also the fact that those who oppose bookmakers think that their customers will then go and spend their money in the local bakers or supermarket if betting shops are removed from the high street. Given the explosion in online betting, this strikes me as a naive assumption.
Still, one thing that seems logical is that the increased use of Fixed Odds Betting Terminals has seen a subsequent increase in the number of betting shops popping up around the country. This is because bookies are limited to just four terminals per shop and, given then large amount of money made by FOBTs, it would then be logical for a company to open more shops in order to accommodate them. One thing I can tell you is that between 2004 and 2012 the number of betting shops on high streets increased by nearly 50%. Obviously, there’s no way to know just how much of that is down to bookmakers wanting to install FOBTs, with the financial crash likely to play a big part in it, but the Fixed Odds Betting Terminals will have given bookies enough profit to mean that they could cope with the new overheads.
When the financial crash happened more and more high street shops began to struggle to stay open. When that sort of thing happens they are naturally going to be replaced by a service that can make ends meet, with bookmakers being one of the primary examples. It’s always likely to be difficult for a newspaper shop or butchers to stay open when people have less disposable income, yet Fixed Odds Betting Terminals alone bring in somewhere in the region of £50,000 profit each. Given most bookies have four on their premises, that’s £200,000 per year earned simply from the machines without even taking into account other bets made in the shops.
In reality, the number of bookmakers on high streets has remained stable at about 9000 for the past ten years or more. That means that bookies make up around four percent of all retail outlets throughout the country. Certainly the amount of betting shops on Britain’s high streets is as nothing compared to during the 1970s and 1980s. That was considered to be the peak years for bookmakers, with around 16,000 shops open around the United Kingdom. The perceived increase in bookies in shopping areas is likely to be down to the fact that the traditional shops have been forced to close and betting shops have moved from the side streets into more prime locations. Visibility is likely to be part of the reason why people think so many exist now when, in fact, there are less than there were in the past.
The Controversy Surrounding FOBTs
As I mentioned in my introduction, not everyone has seen the introduction of Fixed Odds Betting Terminals as a good thing. They have been referred to by some as the ‘crack cocaine’ of the gambling industry, which isn’t exactly a ringing endorsement. It’s part of the reason why the government spent 2017 considering new legislation around them. The amount of money made by FOBTs saw them overtake over-the-counter bets in terms of how much revenue they earned bookmakers in 2011-2012, despite the fact that only around 4% of the population actually use them. That gives you some indication of just how addictive they are considered to be by some, given the amount of money they can bring in.
The problem isn’t so much in how much users can bet, but more about how quickly they can bet it. Roulette games, for example, allow punters to place a bet every twenty seconds. With a £100 maximum bets that means that £300 can be bet in a minute, or £18,000 per hour. That’s an incredible amount of money to be able to enter into a machine a relatively small amount of time. According to Gambling Commission statistics published in November of 2017, the amount of money made in terms of the gross gambling yield from Category B2 machines was £1.8 billion between April 2016 and March of the following year. That’s a little more than a tenth of the £13.7 billion made by the entire gambling industry, including casinos, betting shops and lotteries.
A Guardian report from March of 2017 highlighted a case brought to attention by GambleAware of seven gamblers who lost over £10,000 a day using FOBTs. In one instance, a punter lost £13,777.90 over the course of about seven hours sat in front of one of the machines. Obviously, those sorts of losses aren’t typical, but they are certainly worrying and give an example of just how easy it would be for customers to lose large amounts of money in a small space of time. Staff working in bookies are supposed intervene if it seems as though someone might have developed a problem, but it’s not always easy to spot and intervention alone isn’t enough to guarantee that they’ll stop. After all, given the large number of betting shops on a street, it’s not beyond possible that a punter could just leave and go somewhere else.
The Campaign to Stop FOBTs
As you’d imagine with such a controversial topic, a campaign has been running for some time to put pressure on the government to reduce the influence of Fixed Odds Betting Terminals. Stop the FOBTs was set up with the aim of reducing the maximum spin on the machines from £100 to £2.
It’s an offshoot of the Campaign for Fairer Gambling, which wants gambling regulation to be set up in order to protect gamblers themselves rather then betting industry. They are the countrywide campaigns that have been set up, with individual areas coming up with their own campaigns to help protect locals. The News, a local paper in Portsmouth, decided to launch its own campaign in July of 2017, for example.
Reducing the Stake
The various campaigns led to the government announcing in October of 2017 that it would indeed introduce a restriction on the amount of money players could stake in one go on Fixed Odds Betting Terminals. They chose to enter a twelve week consultation period regarding the best way forward, with the main options being £50, £30, £20, or £2. This lead to the Mayor of Newham, Sir Robin Wales, being extremely critical of the government’s decision. He said, “The government has bottled it, run away from the decision it should make. The fact they haven’t said their favoured option is £2 … they should be ashamed of themselves”. Sir Wales is concerned because Newham has eighty-one bookies within its boundaries. That doesn’t compare favourably with the fifty-six at Wandsworth in south-west London, in spite of the fact that both neighbourhoods have a similar population.
Bookmakers are opposed to the idea of reducing the stake, offering numerous different reasons for their opposition. In the past, members of the industry have suggested that cutting the stake down to £2 might lead to as many as 20,000 job losses. That in turn could lead to shops having to be closed and the government losing tax revenue. According to some in the industry the FOBTs alone brought in £400 million in tax in 2016 alone. The Chief Executive of the British Amusement Catering Trade Association, John White, isn’t convinced that things will be that dramatic. He said, “If there is a reduction…they’ll adapt and survive as good businesses do”.
Will They Be Banned Altogether in the Future?
The Association of British Bookmakers disagree with the critics of Fixed Odds Betting Terminals, as you might expect. They said, “As with all forms of gambling there will be winners and losers and the research also shows a customer won over £13,000 in four hours on a gaming machine. In both cases there is no reason to believe that the individuals could not afford their stakes. Losses in other forms of gambling can be significantly higher than the exceptional loss cited here”. Still, the reality of their objection is far more likely to be based on finances. After all, any bookmaker in the world could have a bad day if all of the favourites at a horse race meeting win or all of the big Premier League teams get victories in the same weekend. Yet no machine on any high street in any shop will have a prolonged period of losses because of the way they are set up to work.
Perhaps the most telling thing when it comes to Fixed Odds Betting Terminals is some of the dissenting voices that have come out publicly against them. Adrian Parkinson was the man who helped to introduce FOBTs to Ladbrokes in the first place, but he then joined the Campaign for Fairer Gambling and gave them information on how they work. He said, “These averages are in my view misleading and understate the scale of losses many FOBT players are actually suffering…During the 10 years I was responsible for FOBTs I saw…a former headmaster in Bradford who went through £8,000 in a single session”.
Another person who believed that the industry should do more to curb the excesses of the machines was the outgoing Chief Executive of Paddy Power Betfair, Breon Corcoran. In a letter to Tracey Crouch, the minister at the Department for Culture, Media and Sport said, “We now believe that the issue has become so toxic that only a substantial reduction in FOBT stake limits to £10 or less will address societal concerns. I am confident we could operate our retail business successfully and profitably under such circumstances. Other well-run operators should be able to do the same”. Paddy Power only represents about 4% of the UK bookmaking real estate, however, and that led rival bookies to say that the company would be able to cope with the loss of the machines better than others would.
The future of Fixed Odds Betting Terminals remains uncertain, though the government’s decision to remove the £100 option from its consideration of stake amounts will likely mean that there will be at least a slight curb in profits for the bookmakers and losses for the bettors. Whether it will go far enough remains to be seen, with the Campaign for Fairer Gambling unlikely to let the matter rest until the stake is reduced to £2 as a maximum. The government has to balance the tax revenue it will lose if the stake is reduced too far with the welfare of people who are likely to find themselves struggling with an addiction, as well as the objections of the gambling industry. Regardless, this one looks set to run and run.