LGA | Briefing on Fixed Odds Betting Terminals

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24 February 2015

LGA briefing: Fixed Odds Betting Terminals

Key Messages: 

  • Many councils have long held concerns about the impact of clustering of betting shops on their areas, as well as the associated numbers of Fixed Odds Betting Terminals (FOBTs).
  • In recent years, betting shops have increasingly moved into vacant premises in high street locations, thereby increasing their visibility. Many councils are concerned about the resulting clustering of betting shops, with the worst affected reporting having over 40 premises in close proximity to each other.
  • Councils are also concerned that vulnerable residents are losing money on high stakes betting machines. At £100, the stake for a FOBT machine is significantly higher than for other betting machines.
  • In 2014, the LGA set up a ‘Betting Commission’ to bring together councils, the Association of British Bookmakers (ABB) and the ‘Big Five’ firms (William Hill, Coral, BetFred, Ladbrokes and Paddy Power) to discuss council concerns about betting shops and FOBTs. This has led to a joint LGA-ABB framework to encourage closer engagement between councils and betting shops to address local concerns.
  • However, the LGA believes that fundamental changes are needed to enable councils to tackle betting shop clustering and the risk of harm posed by FOBTs.

Background 

Gambling Act 2005 
The Gambling Act 2005 (the Act) introduced a new system of governance for all types of gambling.

The Act requires local licensing authorities to “aim to permit” gambling, subject to licences complying with the three licensing objectives: keeping crime out of gambling, making sure gambling is fair and open and protecting children and vulnerable people.

In addition, the Act abolished the so-called “demand test”. This means that local authorities are now no longer allowed to base a decision on whether or not there is demand when considering an application for a betting shop. This is the case even where there local residents are opposed to the application or there are already a number of other betting shops in the immediate vicinity.

Clustering of betting shops
Figures suggest that the overall number of betting shops has remained largely unchanged since the introduction of the Act. However, there has been a shift in the location of premises, with betting shops increasingly moving into vacant stores in high street locations and in close proximity to each other, creating the clustering effect.

Oversaturation of any type of establishment on high streets and in town centres is a significant concern to local residents and can damage the long term sustainability of high streets / town centres by limiting the variety of shops and services available in the retail offer.

While many areas welcome the presence of branded betting shop premises on their high streets, others are extremely concerned about the overall number of betting shops. Additionally, there is concern that betting shops are clustering in deprived areas. This highlights the need for councils to have flexibility to respond to local circumstances when considering planning or licensing applications for betting shops and other types of premises.

 The number of betting shops in Islington has already doubled in the last decade to 72, while Newham has 81 betting shops. Tottenham High Road, in Haringey is home to 11 betting shops alone.
 Greater London Authority figures show a 13 per cent increase in betting shops in London’s town centres between January 2010 and December 2012.
 There are 39 licensed gambling premises in Stockport, including 33 betting shops. Twelve of these are located within the town Centre.

Type of betting activity – Fixed Odds Betting Terminals
Changes in technology have led to a change in the type of machines available in premises. In 2003 there were no FOBTs at all. Now each betting shop is permitted up to four FOBTs. There are concerns that FOBTs can be habit forming and that the size of stake and speed with which money can be accepted can make them a particularly addictive form of betting.

To establish if it is possible to identify harmful markers of play and whether FOBTs pose particular risks, the Responsible Gambling Trust commissioned the National Centre for Social Research to conduct research into play on FOBTs based data provided by the UK’s 5 main bookmakers.

The research* found:
 Key regional differences. Most bets were placed in London where there were the highest stake values and most money was lost.
 Those who play machines after 8pm have distinct patterns of play: stake sizes rose dramatically from 8pm, the proportion of sessions that reached the maximum stake doubled between 10pm and midnight.
 Machine play appears to be affected by major sporting events, with an increase in the number of bets placed when large sporting events occurred.

The numbers of FOBTs have not increased significantly over the past 6 years. However, according to the ABB, the percentage contribution of machine income to average betting shop profits was 39.9 per cent in 2008 and rose to 49.4 per cent in 2011.

The £100 maximum stake for a FOBT machine is significantly higher than other betting machines, and maximum pay-outs are proportionately much lower relative to the stakes involved. Additionally, play at casino tables is four times slower than is the case with FOBTs where £100 can be staked in 20 seconds.

The current £100 maximum stake should be brought in line with maximum stakes for other gambling machines allowed in betting shops (£2) and casinos (£5).

LGA position on betting shops / FOBTs
In April 2014, the Government announced a series of measures aimed at addressing concerns about betting shop clustering and FOBTs. Government chose not to adopt some of the tougher measures that they were considering (for example, giving councils the power to limit the number of FOBTs in a shop). Instead, key proposals included:
 A Department for Communities and Local Government consultation on proposals to put betting shops and payday loan shops in a separate use class. Therefore, planning permission would be required where a new betting shop represents a change of use.
 The requirement for new premises licence applications to demonstrate how betting shops will meet local social responsibility requirements.
 A new range of player protection measures that ‘end unsupervised high stakes play’, but there will be no reduction in the current maximum £100 stake. Customers wishing to stake more than £50 on FOBTs will need to pay over the counter in cash or use account based play, which track and monitor play.
 A range of work on gambling advertising including the implementation of a Think-25 initiative (as distinct from Think-21) in line with other age-restricted products.

The Government announcement is a step in the right direction. However, the proposals do not enable councils to tackle the problem. For example, they do not address the perpetuation of existing clustering. If an existing betting shop closes down, a different operator would be free to open a new betting shop as there would be no change of use.

Councils should be able to restrict the opening of any new betting shop (regardless of whether it constitutes a change of use) if they do not believe there is demand for the betting shop and / or there is evidence that it will be harmful to local economies, communities or individuals.
Alongside the proposal to amend use classes, the LGA is calling for the return of the demand test (or some consideration of cumulative impact) in the Gambling Act 2005, which would be the most appropriate and effective route for addressing clustering.

Betting Commission
In 2014, the LGA set up a Betting Commission to bring together councils, the ABB and the ‘Big Five’ firms (William Hill, Coral, BetFred, Ladbrokes and Paddy Power). This led to a joint LGA-ABB framework to encourage closer engagement between councils and betting shops to address local concerns. The Betting Commission was firmly of the view that there is significant scope for the framework to support and encourage joint working in many local areas and that a public commitment to a more collaborative approach would be helpful.

Additional powers for Scotland
Elsewhere in the UK, the Smith Commission has recommended the Scottish Parliament should have the power to “prevent the proliferation of FOBTs”. Clause 33 of the Draft Scotland Clauses 2015 will devolve legislative competence to Scotland to vary the number of FOBTs authorised by a new betting premises licence. Scottish Ministers will be given power to make an order following a debate in Parliament to vary the number of FOBTs and will therefore be able to influence how many gaming machines are available for use in Scotland. In light of this, the LGA would like the Government to clarify whether English councils will also be given the same powers as Scotland to vary the numbers of FOBTs.

* Responsible Gambling Trust: Patterns of play: analysis of data from machines in bookmakers [December 2014]

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