RE: FOBT research and the Responsible Gambling Trust and related matters

Transcription

1 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.

2 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.

3 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.

4 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.

5 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.

6 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 / cc: Clive Efford MP

7 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?

8 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

9 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

10 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

11 - 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 False in general, but only of sector interest, not broader social and economic interest

12 ABB Future of horse and greyhound racing... linked to the future of betting shops Maybe, but better futures for horse and greyhound racing with FOBT restrictions ABB Misinformation on B2 machines is commonplace The Campaign exposes FOBT misinformation ABB High stakes B2 income is in decline 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 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 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 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 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 Has no retrospective impact on existing FOBTs

13 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 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.

14 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.

15 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.

16 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 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.

17 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?

18 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.