The crack cocaine of gambling?
The current gambling bogeyman is the ‘fixed-odds betting terminal’ (FOBT), a device that offers virtual casino games in licensed betting shops. These machines are routinely dubbed ‘the crack cocaine of gambling’ and it is claimed that players can lose £18,000 in an hour. They are blamed for a rise in problem gambling and it is said that Britons spend £42 billion on the machines every year. It is also claimed that betting shops have proliferated as they scramble to cash in on the popularity of the machines.
These accusations are repeated so frequently in the media that they have come to be taken as truisms and, as is often the way in 21st century Britain, a campaign is underway to ban them. A new IEA paper – The Crack Cocaine of Gambling? – assesses the claims made against this new variant of gambling machine and finds a familiar pattern of scare-mongering that owes more to folklore than evidence.
Tellingly, the ‘crack cocaine of gambling’ label has no verifiable source and has been used by anti-gambling activists to describe virtually every new gambling product since the 1980s. It is a memorable, but ultimately empty, phrase designed to attract attention to whichever form of gambling is currently regarded as suspect. Existing evidence does not support the suggestion that fixed odds betting terminals have led to a nationwide rise in problem gambling, nor do the data suggest that these machines are uniquely ‘addictive’ or seductive. Indeed, it is far from certain that there has been a rise in problem gambling at all, despite wider availability and greater advertising.
The claim that Britons spend £42 billion on FOBTs each year is based on a misleading definition of the word ‘spend’. It is true that £42 billion was put into these machines last year, but campaigners neglect to mention that 97 per cent of what is put in is returned in prizes. The actual spend (i.e. stakes minus prizes) is around £1.5 billion, which is similar to the amount spent on traditional over-the-counter betting.
As for the ‘dramatic proliferation’ of betting shops, their numbers began to decline in the late 1960s and reached an all-time low at the turn of the century. Since then, there has been only a slight resurgence, with numbers rising by 4.5 per cent between 2000 and 2012. This is not a dramatic proliferation by any stretch of the imagination, and, contrary to popular belief, the bookmaking industry’s gross gambling yield has fallen slightly in recent years. The popular perception of a booming bookmaking industry is probably due to betting shops moving out of the side streets and onto the high streets – thanks to lower rents in credit-crunch Britain – and therefore becoming more visible.
Finally, the idea that people can lose £18,000 an hour on these machines is based on the improbable scenario of a player feeding £100 into the machine every 20 seconds and losing every time. Leaving aside the practical obstacles involved in this feat, the chances of losing so many games in succession are billions to one. This kind of loss, or anything close to it, would simply never happen in reality.
None of this myth-busting proves that fixed-odds betting terminals are ‘safe’ or ‘harmless’ – like all forms of gambling, they are likely to attract some compulsive gamblers – but it does suggest that campaigners are resorting to exaggerated and misleading rhetoric in the absence of solid data. The reliance on anecdotal evidence and unsubstantiated claims is characteristic of similar previous panics which were subsequently abandoned when it became clear that the new activity was neither especially pernicious nor particularly contagious.
The existing evidence base is incomplete in the case of fixed-odds betting terminals, but we can say with confidence that the prohibition or over-regulation of these machines will close off an avenue of pleasure to a significant number of people who enjoy them, leading to players turning to the less regulated online market instead. It will also damage Britain’s bookmaking industry, which has worked hard to keep pace with changing tastes. It would have a detrimental impact on employment and would significantly reduce tax revenue paid by the gambling sector. Instead of clamping down on popular pastimes on the basis of hearsay, regulators should be encouraging innovation by British companies in a competitive global industry.