Rt Hon Helen Grant MP House of Commons London SW1A 0AA 26

Rt Hon Helen Grant MP
House of Commons
London
SW1A 0AA
26 March 2014
Dear Helen Grant MP,
RE: FOBT research and the Responsible Gambling Trust and related matters
The Campaign for Fairer Gambling understands that DCMS will be reviewing Fixed Odds Betting
Terminals (FOBTs) prior to Easter. If at all possible both Campaign Consultants, Matt Zarb-Cousin
and Adrian Parkinson, would welcome the opportunity to meet with you and your staff prior to that
review being finished. The Campaign wishes to assist DCMS in taking on board the information in this
letter, the enclosed documents and further information that the Campaign will be going public with in
the near future.
The Campaign congratulates you on recognising the shortcomings of the initial Responsible Gambling
Trust (RGT) research and in encouraging the change of direction to enable specific FOBT research. It
is unfortunate that it has taken 18 months to reach this point, but that their research programme has
been comprehensively overhauled is a credit to you.
Please note the prejudice still exhibited by the RGT in their statement on the B2 Gaming Machines
Research Programme’s aims and objectives. It states:
"The challenge is ensuring that the balance of probability is sufficiently robust to (potentially) offer
some protection to those who may need it whilst minimizing burden on those who are less likely to be
experiencing harm"
This is a commercial consideration which should not be within the remit of the RGT, which purports to
be a charity for research, education and treatment regarding problem gambling. This is not a
reflection on the current trustees as such, but a reflection of the culture of complacency that allowed
voluntary funding combined with commissioning within one body and with significant industry
influence over that body.
Neil Goulden, who helped to set up this conflicted situation is still, irresponsibly, also the Chair of the
Association of British Bookmakers and has asserted that 70% of FOBT gamblers lose only £7.55 a
session and play less than once a month. These FOBT gamblers are not engaged enough in the
activity that any restrictions on FOBTs could be considered a "burden" on them.
Featurespace has been retained by the RGT as a substantial provider of core research. By reference
to the Featurespace website’s “Gaming” page they identify that gaming typically has 90% to 95% of
revenue provided by 10% to 5% of customers. This shows how irrelevant and distracting Mr
Goulden's comments are, and how incompatible they are with the purported role of the RGT.
Featurespace also offers a fraud detection software service. As the Campaign commented in its
Triennial Review submission, if data analysis can provide insight into problem gambling, then it can
also provide insight into money-laundering. If the RGT considers "minimising burdens" on nonengaged gamblers within its remit, then the Campaign does not see how the RGT could claim that
using the Featurespace systems and software to also obtain a money-laundering analysis would be
outside of their "social responsibility" remit.
However, should the RGT be unwilling to conduct this exercise then it falls to Government to do so,
particularly if Government supports the bookmakers’ request to be excluded from the 4th EU money
laundering directive. The Campaign would welcome the Government clarifying its position on this.
One reservation the Campaign has with Featurespace, is that the proprietary software aspect may
prevent full public scrutiny of the methodology. If so, then the Campaign advises your department
insists on adequate access to the methodology and the data, rather than relying on representations
by another party.
Another reservation relates to bookmakers’ confidence that they could get away with not allowing Nat
Cen access to betting shops for a qualitative assessment of FOBTs, despite bingo and arcade
operators agreeing to allow researchers access to their premises. It still looks as though that research
format will not be applied to FOBTs.
Excellent research by Exeter University has established the degree of connection between near-miss
and theta activity in certain profiles. This type of study could have been undertaken on FOBT
gamblers in situ if bookmakers had allowed researchers access.
A further reservation relates to the RGT still not facilitating a live terminal for Cambridge University, as
it appears Adrian Parke of Lincoln University has been engaged. You may not be aware but Adrian
Parke is the brother of Jonathan Parke, Director of Commissioning at the RGT. The Parke brothers
have already written a paper: “Does Size Matter: A review of the role of stakes and prizes in relation
to gambling-related harm". If size of stake was not relevant or had no impact on gambling related
harm, then there would be no need for a Triennial Review.
The RGT state that Adrian Parke will be looking to "...determine whether gambling at higher stakes
CAUSES a reduction in decision making ability.” Within the six page document "CAUSES" is the only
fully capitalised word and shows how much emphasis the RGT is placing on the ABB position that
evidence must be "causal". This is in total contradiction to the precautionary principle of "suspicion of
harm".
Further, this obfuscates the issue with FOBTs somewhat. FOBTs are an addictive gambling product,
and for a number of reasons. The game content is in itself addictive and compelling; the speed that
these casino games are played at discourages players from taking time to think about their next bet;
the solitary nature of the activity puts players in the zone and gaming machines, including FOBTs, are
designed to be addictive. A reduction in the maximum stake would be a measure to limit the harm
caused by an addictive product. The stake in itself is not what causes the product to be addictive, so
research that looks just at higher stakes only may not deliver comprehensive conclusions.
Additional reservations relate to the Markers of Harm consultation, based on a survey request from
Nat Cen containing a couple of questions about using data to identify harm. It shows how unreliable
the RGT is in not undertaking this investigation prior to promising to engage in "ground-breaking"
data-based research to inform government. It also shows how foolish DCMS would have looked,
ignoring our 2CV research and relying on the RGT, if you had not personally been more demanding.
Overall reservations must also apply as the RGT has identified the limitations and risks, with timing
being a factor. With the RGT track record of delays so far and the final date now projected as October
2014, it is looking as though the opportunity for action under this government will be limited.
In respect of the Code we are encouraged by a statement by the Minister, Maria Miller, expressing
concern that more could be done. The Campaign is already hearing of gamblers being abusive
towards staff and machines at the mandatory limits of 30 minutes or £250, showing that interactions
are ill-advised as they are both ineffective and put the member of staff at risk.
A comment by Liz Carter, a non-RGT funded therapist, explained in a BBC news item that the Code
"will not limit the cravings".
A letter to the Daily Telegraph by Dr Emanuel Moran, previously of the Royal College of Psychiatrists
explains that Code "will be ineffective".
Also, Jim Orford has spoken out strongly against the Code on his Gambling Watch site. Further, at
the conference ‘Reducing the Harm Associated with Problem Gambling: The Role of Local
Government’, attended by Matt Zarb-Cousin, Henrietta Bowden-Jones stated that FOBTs were
identified as a problem gambling activity by 61% of her clients at the NHS clinic.
The representations of the ABB, both in respect of the Code and the whole FOBT issue, must be
taken in the full context of the bookmakers’ behaviour. The Campaign anticipates that MPs will want
to question how bookmakers can claim credit for their Code when the historical lack of control issues
are still overhanging?
It is imperative that the Gambling Commission are required to make public the full details of the
Ladbrokes investigation and the full details of all such similar investigations into other bookmakers. A
FOBT conclusion by DCMS that is anything other a reduction to a £2 maximum should not be made
without full public disclosure of all the investigations.
The Campaign does not share government expectation that an ABB appointed Responsible Gambling
Committee will provide a transparent, robust and impartial review. The RGT and GamCare have
already spoken in favour of the Code. RGT control of funds to care providers, such as GamCare has
influence over care providers’ unwillingness to admit the degree of harm related to FOBTs.
One example is the continued misrepresentation in GamCare statistics, which categorises betting
shop fruit machines as a separate activity to FOBTs, resulting in an under-reporting of FOBT problem
gambling. Another example is that of Simon Perfitt, whose book on his problem gambling and care
experience at Gordon Moody was editing by Gordon Moody to exclude references to FOBTs.
Further the Campaign has no faith in the Gambling Commission. The lack of controls mentioned
above has seemingly occurred across the sector over a number of years under the noses of the
Commission. The Campaign’s view is disclosed in the final other comments section of a recent LCCP
consultation document which has not yet been made public.
A blog post by the RT Hon Graham Jones MP describes a conversation with the Commission in which
they disclosed that they do not support the Code as it is not evidence-based. We cannot trace the
Commission making any public statement to this effect. As DCMS has previously stated it relies on
the Commission for advice, we look forward to DCMS formally and publically agreeing with the
Commission that the Code is not supported.
Following the release of the Campaign’s 2013 FOBT data and methodology, which it intends to
continue on an annual basis, the ABB set out again to discredit the campaign. The Campaign replied
with some basic questions to which it awaits a response. The Campaign also takes the view that the
Gambling Commission must collate and publish more statistics on FOBTs, to prevent the ABB
continued misrepresentations.
The Campaign has obtained a copy of an ABB document "Gambling Machines in Betting Shops" and
understands this has been presented by the ABB to government, although it is not yet in the public
domain. A thorough review of this document has been conducted by the Campaign and is attached.
Also attached are papers to help provide further insights into markers of harm research and moneylaundering research which should be useful.
The Campaign hopes that you will not allow the failings of others to prevent you from taking
appropriate action. Of course your questions on this letter or attachments are most welcome.
Yours sincerely,
Derek Webb
Adrian Parkinson
Matt Zarb-Cousin
The Campaign for Fairer Gambling
www.fairergambling.org / www.stopthefobts.org
cc: Clive Efford MP
Gambling Machines in Betting Shops:
The Campaign for Fairer Gambling Fact Checks the Bookmakers
The Campaign for Fairer Gambling's explanation
The Campaign has obtained access to a document entitled "Gambling Machines in Betting Shops"
which it understands has been presented by bookmakers to government. The italicised text relates to
extracts from that document on a page by page basis. Each Campaign response is non-italicised.
Page 1: What are Fixed Odds Betting Terminals?
B2 - typically roulette or variants thereof ... accounts for 70% of FOBT gross win, in decline
B3 - typically slot games ... accounts for circa 30% of FOBT gross win, in strong growth
Faced with a choice of B2 and B3 games on the same cabinet, customers are choosing B3 over B2 in
increasing numbers, challenging claims that B2 games are highly addictive.
Campaign’s response
•
C games have been included in B3 games
•
There has been an increase in the maximum stake on B3 games from £1 to £2 in 2011
•
There has been in increase in the number of B3 and C games to over 40 games across both
Inspired and SG Gaming’s terminals
•
There has been a very strong growth in FOBT win including strong growth in B2 win
•
The 70% / 30% split does not represent a B2 decline, just a growth in B3
•
A trend towards B3 means that B2 restrictions would have less impact than the ABB claims
•
Gamblers choosing B3 may do so because they acknowledge B2 is addictive and potentially
more harmful because of the possibility to bet up to £100 a spin
•
Operators and suppliers are creating B3 content that moves seamlessly into B2 category
staking content. The games have the look and feel of B3 £2 per spin games but encourage
the player to stake up so the game becomes equivalent to B2 staking standards. However, it
is believed that the games are defined and recorded as B3 for accounting purposes
•
Is the ABB claiming that B3 games are more addictive than B2 games?
Page 2: It is a myth that problem gambling has increased since the introduction of FOBTs in betting
shops
There are circa 250k problem gamblers in the UK (2012 Health Survey)
Only around 10% of problem gamblers use FOBTs
Protection of the vulnerable demands a holistic approach (or the 90% will be ignored)
Requires informed debate on product versus person
Campaign’s response
•
The ABB quotes the Health Survey and ignores secondary research on British Gambling
Prevalence Surveys (BGPS)
•
All surveys are likely to underestimate all problem gambling
•
Health Survey less focused on gambling than BGPS and not a prevalence survey, so the
publication itself advises against comparisons with BGPS
•
Regular FOBT gambler profiles unlikely to be captured by survey methodologies
•
No evidence to support the ABB’s claim that only 10% of problem gamblers use FOBTs
•
According to the NHS Gambling Clinic, 61% of problem gamblers treated use FOBTs
•
Gamcare - over 40% of calls identify FOBT activity (including betting shop slot machines)
•
According to BGPS 2007 and 2010, problem gamblers as percentage of FOBT gamblers are
11% and 9%
•
Chair of the ABB Neil Goulden said on Radio 4 there are "around a million FOBT gamblers"
•
So therefore 100,000 FOBT problem gamblers (or more if one million is under-estimate)
•
Contrast with ABB 10% of 250K being 25,000 FOBT problem gamblers
•
ABB admitting the 90% could be vulnerable - so debate should not just be problem gambling
•
ABB provides no evidence to support their narrative that the product does not induce or
exacerbate problem gambling
Page 3: Its a myth that the industry is targeting poor locations
Shop distribution reflects all historical locations
Campaign’s response
•
ABB should be required to make public locations of all new shops since 2007
•
Campaign data shows the "co-incidence" of FOBT high revenues in more deprived areas
•
Paddy Power, the most significant sector entrant since 2007, operate 43% of their shops in
the most deprived population quartile of local authorities, compared to 7% of their shops in
the least deprived population quartile of local authorities
Page 4: Pubs have exactly the same distribution characteristics
Campaign’s response
•
Irrelevant to the FOBT debate, but it is the growth of FOBT revenue that has impacted Cat C
(AWP) revenue in pubs.
Page 5: Betting shop distribution is clearly weighted to more affluent areas
Because the most deprived areas yield the lowest profit per machine
Campaign’s response
•
Historical locations are irrelevant compared to new locations
•
ABB should be required to make public locations of all new shops since 2007
•
Paddy Power, newest entrant, has highest win per FOBT with almost half their shop estate
located in the 55 most deprived Local Authorities
•
Paddy Power shops focused mainly in deprived areas and mainly in London area
•
Campaign 2013 data contradicts ABB undated and anonymous information
•
Local authorities experiences from more deprived areas contradicts ABB information
Page 6: Its a myth that gamblers are poor
Campaign’s response
•
Does not specify demographic of FOBT gamblers so is irrelevant to FOBT debate
•
As the recent money laundering investigation in the north east showed, £900,000 of
laundered money generated £90,000 of income for the bookmaker involved
Page 7: The industry is already implementing a new code of practice
This new code was developed based on independent research from Professor Mark Griffiths
Campaign’s response
•
What industry funding did Professor Griffith’s receive to carry out this research?
•
This is the second code the industry has introduced in 10 years. Measures contained in the
original code in 2004 were over ridden by the bookmakers within two years of being
introduced
•
The code is not evidence based
Page 8: What more will / could be done?
Giving planning decisions back to local authorities
Campaign’s response
•
The big four bookmakers are happy to concede on planning
•
This ABB position is opposed by ABB member Paddy Power
•
The big four operators know the value of their estates will rise with new planning controls
•
Paddy Power knows that growth potential will be restricted by new planning controls
Page 9: Draconian action against FOBTs would have a devastating impact on betting shops and
racing
2,700 betting shops ... are currently at risk
- half of these shops are small independent family businesses
...closures of betting shops would lead to an irreversible decline in [horse racing and greyhound
racing]
There would almost certainly be an explosion of illegal gambling
- 160 illegal B2 machines were seized in the last 12 months
Donations to the Responsible Gambling Trust....would reduce dramatically
Campaign's response
•
There is no quantification of "at-risk"
•
There are only around 750 shops in small independent family businesses
•
These include five chains of around 50 or so shops
•
The ABB half of 2,700 is unsubstantiated
•
There is no evidence that betting shop closures would have a serious impact on betting on
racing
•
FOBTs have had an impact on betting on racing driving money away from horse racing and
therefore the levy
•
It is logical to expect that FOBT restrictions would be positive for racing, as revenue is
substituted back to over the counter
•
There was no evidence of a switch from illegal machine gambling to FOBTs
•
There is no evidence to support the theory of FOBT restrictions resulting in illegal gambling
•
It is disputable that the 160 machines are B2 machines and evidence indicates that no FOBT
similar machines have been found
•
DCMS aware of lack of information on categories of illegal machines
•
It would be preferable to have mandatory funding than funding reductions threatened by the
ABB, so a statutory levy at 0.5% should be implemented and the provision already exists
within the framework of the Gambling Act
•
Is the Responsible Gambling Trust (RGT) aware that funding could reduce with FOBT
restrictions?
•
This surely compromises the integrity and the objectivity of the RGT, who would surely have a
vested interest in maintaining the status quo
•
Neil Goulden is acting Chair of the ABB and is also Chair of RGT, so RGT must be
aware of this risk
Page 10: Summary
Bookmakers (ABB) text and Campaign’s Response on a line by line basis
ABB
Betting shops are in a precarious position
CR
False in general, but only of sector interest, not broader social and economic interest
ABB
Future of horse and greyhound racing ... linked to the future of betting shops
CR
Maybe, but better futures for horse and greyhound racing with FOBT restrictions
ABB
Misinformation on B2 machines is commonplace
CR
The Campaign exposes FOBT misinformation
ABB
High stakes B2 income is in decline
CR
The ABB should be required to prove this
The actual gross win amount on B2 games should be made public
Until 2012 this amount was increasing annually
ABB
The industry is not targeting deprived areas
CR
The ABB should be required to prove this
A list on new shop openings since 2007 should be made public
ABB
The industry understands political pressure
CR
Is this why this document was presented to government secretly?
They do not want the real truth about FOBTs to be exposed
ABB
The new Code is a significant change that should be given a chance
CR
The Code is already failing
FOBT suppliers are stating that measures should be introduced across all machines
The Code is not a reason to delay a maximum stake reduction to £2 per spin
ABB
Further action will follow including Code 2 and a Responsible Gambling awareness
campaign
CR
A stake reduction to £2 should apply regardless
If this is proven to be a step too far then that can be increased at a later date using the
Triennial Review framework
ABB
Planning controls (handing back powers to local authorities) represent an opportunity for
decisive precautionary action NOW
CR
Has no retrospective impact on existing FOBTs
Needs new legislation and sure to be legally challenged by at least Paddy Power
Best precautionary action is a stake reduction to £2
ABB
Inclusion within PHSE curriculum would help educate children on the dangers of gambling
too much
CR
Children should not be gambling at all
Betting shops still allowing under-18s to access FOBTs
Advertising by gambling companies associated with sports should be illegal
An addict gambles too much because they are addicted, and the product plays a
significant part of that. The most effective means of protecting people is not education
– as the tobacco industry have long argued – but controlling the product.
Page 11: Appendix - problem gambling rates around the world
Campaign’s response
•
International comparisons are difficult due to different methodologies and cultures
•
Total problem gambling rates are not reflective of actual FOBT problem gambling
Campaign’s conclusions
The bookmaker document is self-serving, containing many misleading and/or false impressions.
There should be transparency and accountability in the FOBT debate. Government should require
that the ABB provides evidence to support all of its claims. The evidence should be made available to
public scrutiny.
Use of data to identify money laundering on FOBTs
The Gambling Commission has stated that it is not interested in averages on Fixed Odds Betting
Terminals (FOBTs), it is interested in the extremes. This explains why it only obtained data related to
activity at £50 per spin or higher.
Trying to understand problem gambling on FOBTs, and the prevention of harm to young and
vulnerable people on FOBTs should take into consideration all levels of activity, not just the extreme.
However, there could be a significant bias in evidence at the extreme, if that activity contains a
significant portion of money-laundering activity, as has recently been publicised by national media.
Therefore this money laundering data analysis should be undertaken not just because of the
prevention of association with crime objective but also because of the prevention of harm objective.
Betting patterns
The obtained data may not identify betting patterns but there is still an evidence opportunity in
identifying payback percentages. Money launderers may gamble on opposing even money shots, with
a small bet on zero, to avoid any loss other than close to the minimum, resulting in payback of close
to 97.3% per spin. Other money launderers may take the risk that the zero comes up and just bet
even money shots, resulting in payback of usually 100%.
Cash inserted
Money launderers will be inserting at higher levels than the majority of normal players. Considering
insertions of say £250 or above could be a good starting point.
Turnover
An average estimate of turnover relative to cash insertions is around a multiple of five. This is
because cash per spin is usually far lower than cash inserted and some paybacks are usually regambled. Money launderers will have a far lower turnover closer to that of the amount of cash
inserted. Considering turnovers of 100% or less of cash inserted could be a good starting point.
Time on device
Money launderers could have a lower than average time on device, with high wagers, but low
turnover relative to cash.
Combing the data
The data will show a percentage of activity that combines all factors. Each factor would need to be
juggled somewhat from the starting points to construct the best modelling.
Extreme activity
Once the money laundering data has been obtained then that activity should be removed from the
extreme data to get a truer non-money laundering extreme data picture.
Geographic identification
Using the overall geographic spread of shops with money laundering activity could be used in
comparison with crime statistics related to cash crimes, particularly drug-dealing, to corroborate the
data.
Shop identification
Using the data on a shop by shop basis identifies which shops are most prone to money laundering
activity.
Time and day identification
Using data identified time and day analysis, the peak hours of money laundering activity could be pin
pointed which is likely to show Monday as the prime time for money laundering, following a weekend.
Money laundering identification
Using time and day analysis on a shop by shop basis could even identify who is engaged in money
laundering, to the level of which machine used. Inadequate training of shop staff in this area means
that most money laundering goes unidentified. The wagering strategy used by money launderers is
very distinct and with trained observation of the back office monitoring system combined with stricter
reporting procedures, it could easily be identified and reported.
Markers of harm – disordered FOBT gambling
Anyone looking at Fixed Odds Betting Terminals (FOBTs) should be looking at a spectrum of factors,
but primarily roulette, as this is the game content that has generated by far the most revenue. Whilst
originally roulette and variations of the game generated virtually 100% of all FOBT revenue, that
amount as a percentage has decreased to around 75% with the introduction of B3 slot games in 2006
and further reduced as a proportion of total revenue following the decision to double the stakes on B3
games from £1 to £2 in 2011. However, the actual amount lost on roulette has still been increasing
annually as the Gambling Commission confirmed in their advice note to the Department for Culture,
Media and Sport last year. There are now as many as 40 or more of these slot style games on
FOBTs.
Further, because no-one is proposing a reduction to a maximum stake of less than £2, the only
information to advise the staking aspect of the FOBT debate should relate solely to the content at
stakes in excess of £2. No-one disputes that this is virtually all roulette content.
Roulette is an addictive game in any format. However, the total amount lost by FOBT gamblers on
roulette is estimated to be at least double that of casino roulette gamblers, and closer to treble that of
casino roulette gamblers when excluding the six high-end London casinos that cater to international
visitors. It is estimated that FOBT roulette losses are around ten times greater than remote gambling
roulette losses.
This revenue generation from one game is all the more remarkable when you take into account that
there is not the same stake restriction on casino or remote roulette as there is on FOBTs. Clearly the
FOBT format is more engaging, or the FOBT demographic is more prone to be engaged, or both.
Recent research by Cambridge University identified two factors as being related to problem gambling,
namely near-miss and gambler fallacy. Additional research by Exeter University substantiated how
near-misses relate to certain areas in the brain, with different reactions by certain groups. Whilst the
near-miss research is on multi-symbol conventional content, it is very instructive to consider near-miss
from a roulette perspective.
Roulette has a fascination in that the numbers on the betting area – the layout – are in a sequence,
whereas the numbers on the wheel are not in that sequence. For the purpose of simplicity zero is
ignored in the following paragraph.
Betting on the layout selecting numbers 5, 14, 23 and 32 results in all numbers being adjacent to the
selected numbers, if diagonal corner contact is included. Betting on any 12 number sequence on the
wheel with two numbers between each number means that any number is only one-off.
Therefore any roulette gambler betting 25% to 33% of the numbers, a common pattern, will virtually
always have a perception of a miss by one number, using the combined layout and wheel
configuration to support this perception. The spin of the ball and the wheel also creates a perception
of likely results other than the final result. This is particularly so on the FOBT visual.
In respect of the gambler fallacy theory, this relates to gamblers incorrectly thinking that past events
influence future events in random chance games. Roulette incorporates a display of previous
numbers to help encourage this fallacy and increase engagement in the game.
Another fascinating aspect of roulette is that each extra number bet is a bet against the other bets. In
a horse race the majority of regular gamblers would only bet on one horse to win. But at roulette
virtually no-one ever bets just one number. Many regular roulette gamblers bet 19 or more of the 37
numbers. Whilst betting an even money shot of 18 numbers by choosing one of red/black or odd/even
or high/low is rational, it is irrational to select 19 or more individual numbers.
The following questions apply to roulette in any format, but the questions regarding faster pace are
very relevant to FOBTs, which operate several times faster than casino table game roulette.
1. Does roulette at any stake level induce near-miss perceptions?
2. Does roulette at any stake level encourage gambler fallacy perceptions?
3. Does a trade-up in the amount of numbers bet at roulette impact the near-miss perception?
4. Does a trade-up of increased roulette stakes impact the gambler fallacy perception?
5. Does a faster pace of roulette increase near-miss and gambler fallacy perceptions?
6. Does a faster pace combined with trade-ups multiply near-miss and gambler fallacy
perceptions?
Based on these insights, researchers could ask FOBT gamblers these questions, or questions based
on the above. There are additional behaviour questions that could be incorporated into FOBT
research. There is minimal likelihood of machine data being able to address many of these points.