Gambling: fixed odds betting terminals

Where are they?

FOBTs first appeared in betting shops in 1999, and their numbers increased dramatically after October 2001, as a result of changes to the taxation of gambling that made lower margin games, such as roulette, profitable for machine owners.

Initially, FOBTs were not classed as 'gaming machines', meaning they were largely unregulated, and there were no limits on where they could be placed and in what numbers.

Since the Gambling Act 2005 came into force in September 2007, they have been classified as 'B2 gaming machines', and restricted to betting shops, tracks and casinos.

The vast majority are located in betting shops, which are allowed no more than four in each premises. The maximum stake on a single bet on a B2 machine is currently £100; the maximum prize is £500.

Chart 1: Number of Fixed Odds Betting Terminals

Number of Fixed Odds Betting Terminals, thousands, 2005–13 (average across financial years from 2008).

Why are they controversial?

The  introduction of FOBTs to betting shops was initially criticised for bringing "casino-style" betting into a bookmaking environment, the crucial distinction being that the outcome of FOBT games is governed by the laws of probability (‘fixed odds'), rather than the outcome of a real-world event.

Now that the presence of FOBTs in betting shops is legally sanctioned under the Gambling Act, this distinction has become blurred, and criticism has focused on the addictive potential of FOBTs, and their role in "problem gambling".

What is the evidence?

The evidence on the exact role of FOBTs in problem gambling is inconclusive.

On the one hand, there are anecdotal reports from charities and campaign groups about the destructive consequences of FOBTs.

On the other, empirical studies have not yet clearly identified features of FOBTs that could cause some players to develop problems with their gambling, and what steps could be taken to help those potentially at risk.

Pleas for further research into the social impacts of gambling are not new: the 1933 Royal Commission bemoaned the absence of "public statistics dealing with the causes of the types of social evil of which gambling is said to be a frequent cause".

More recently, the Responsible Gambling Strategy Board (a body advising the Gambling Commission) has said that there is a complex relationship between gaming machines, gambling and problem gambling and that the "correlations and associations" between gaming machines and gambling-related harm are "poorly understood".

The available survey evidence indicates that the prevalence of "problem gambling" among users of FOBTs is relatively high.

Chart 2: Gambling by activity

The prevalence of "problem gambling" among FOBT users is comparatively high. Prevalence of problem gambling by activity (percent); percentage figures in brackets represent the proportion of the general population taking part in each activity.

But this result should be interpreted with caution: the Gambling Commission points out that "while rates of problem gambling may be higher amongst gamblers who participate in certain activities, this does not necessarily mean that the type of gambling in question causes people to develop problems to a greater extent than other forms of gambling."

Its interpretation highlights a key problem with establishing an evidence base on the impact of FOBTs; namely, the difficulties of reliably establishing whether their use is a cause or merely a symptom of problem gambling.

What are the policy options?

The policy options range from lighter touch measures, such as providing gamblers with more information about their session, including accumulated losses, through to reducing the maximum stake on FOBTs, or the maximum number of FOBTs in betting shops, or even banning them completely.

There are also proposals to give local authorities more power to reject applications for new betting shops.

More generally, the controversy over FOBTs exemplifies the "regulatory dilemma" over how far the state should intervene to prevent people from harming themselves, particularly when doing so may impinge on the enjoyment of others and their right to spend their money as they see fit. It is a question that has been addressed very differently by Governments over time.

Changing times: how far should the state intervene to prevent harm from gambling?

"Roulette, craps, black jack, chemin de fer and the rest, are not provided as an innocent flutter. This is gaming of a serious kind which will always be potentially dangerous. The choice here is between outright suppression and a most rigorous control".
James Callaghan, then Home Secretary, Second Reading, Gaming Bill, 13 February 1968

"Neither this debate nor the British people are served by the kind of patronising attitude that doubts people's ability to make choices about how to spend their marginal income or leisure time".
Tessa Jowell, then Secretary of State for Culture, Media and Sport, Second Reading, Gambling Bill, 1 November 2004

Key Statistics

• 70%–80% – proportion of FOBT sessions that result in a net loss for the player
• The average (median) loss per session is £5, but 10% of sessions result in a loss of more than £60.
• The average (median) time of a session is 3 minutes 54 seconds, but 10% of sessions last longer than 22 minutes
• Approximately 8.2 billion bets were placed on FOBTs in the five major bookmakers in the 12 months to June 2014. Around 22% were placed on machines in London.

Party Lines

• Labour: allow communities to review betting shop licences and reduce FOBT in existing shops or ban them completely
• Liberal democrats: provide LA's with the powers to reduce the maximum stakes for FOBT
• UKIP: limit the maximum stake to £2