Glasgow City Council Sounding Board on the Impact of Fixed Odds Betting Terminals. Findings and Recommendations

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1 Glasgow City Council Sounding Board on the Impact of Fixed Odds Betting Terminals Findings and Recommendations June

2 Contents 1. Preface Page 3 2. Executive Summary Page 4 3. Introduction Page Context Page Fixed Odds Betting Terminals (FOBT) Page Clustering Page Problem Gambling and Fixed Odds Betting Terminals Page Regulation Page Betting Shop Staff Page Links to Criminal Activity Page Conclusions and Recommendations Page 31 Acknowledgements Page 34 Appendix A Maps and Images Page 35 Appendix B Games Manufacturers data Page 40 2

3 1. Preface 1.1 As chair of the cross-party Sounding Board, I am pleased to present its conclusions and recommendations. Given the diverse groups and individuals we approached to give evidence - along with the tight timescale we set ourselves to deliver this report - it has been an intense, challenging and productive process. We are grateful to those who gave evidence, either in person or by written submission, for their expertise, their views and their time. If any member carried with them assumptions about what would emerge from our hearings; it seems fair to suggest that some will have been confirmed and some will have been confounded. Perhaps most pressing, however, are the questions to which we could find no clear or satisfactory answers. I will happily concede that it is rare to emerge from any kind of investigation convinced that having unanswered questions is not only helpful, but maybe a particular strength. However, it has become apparent to me through this project that there are fundamental questions about Fixed Odds Betting Terminals that nobody appears to be able to answer - from the manufacturers and bookies, to regulators and campaigners who wish to have the machines banned. The lack of solid, independent research on the affect of high speed play, large prizes and variable stakes is as startling as the absence of any understanding of how those factors might influence problem gambling is disturbing. In a multi-billion-pound industry that is capable of generating almost endless, detailed data about how its products are being used; that is not good enough. My commitment to Glaswegians is to use these findings to challenge every part of the industry to do better - and to work with us to understand, manage and minimise problem gambling in our communities. Cllr Paul Rooney, City Treasurer June

4 2. Executive Summary 2.1 It has been widely reported in local and national media that Glasgow has one of the highest concentrations of betting shops anywhere in Britain and, based on those figures, a high number of Fixed Odds Betting Terminals (FOBTs) and associated losses. However, there has been little direct research or verified data published to confirm or challenge the latter assumptions. 2.2 Links between the use of FOBTs and payday loans were highlighted during the gathering of evidence for the council s Payday Lending Sounding Board in May In April 2014, Glasgow City Council unanimously agreed a motion proposed by City Treasurer Cllr Paul Rooney: Council notes with concern research that indicates Glasgow is one of the cities worst affected by the use of high-speed, high-stakes fixed odds betting terminals. Bearing in mind the anecdotal evidence of links between the use of fixed odds betting terminals and payday loans, established by our own research, Council agrees to reconvene the cross party Sounding Board to consider the impact on the city. Council continues to lobby the Scottish Government to investigate how planning legislation could be used to limit the concentration of gambling and payday lending premises in our communities. Council calls on the UK Government to reduce the maximum stakes on fixed odds betting terminals. The motion was seconded by Cllr Gerry Boyle and supported by Bailie Nina Baker, both of whom had participated in the initial Sounding Board. 2.4 A new cross-party Sounding Board was formed, with a membership of Councillor Rooney (chair), Councillor Dr Martin Bartos and Councillor Boyle. Between April and June, it gathered a range of views and opinions on the impact of Fixed Odds Betting Terminals through a series of evidence hearings. Whilst consideration was given to all problem gambling activity and the impacts across the city the focus was on FOBTs in particular. 2.5 Evidence was taken from a diverse range of individuals and organisations; ranging from Citizen s Advice, debt and money advice agencies, representatives of the gambling industry, the industry regulator, gambling lobby groups, planning specialists, academics, Police Scotland and specialist advice agencies providing support to problem gamblers. 2.6 Written evidence was also provided by the Association of British Bookmakers and the National Health Service Greater Glasgow and Clyde (NHSGGC). Expert advice was sought from various council services, in particular those dealing with planning and licensing. 2.7 Focus groups were held to capture the views and experiences of people who had experienced gambling addiction or periods of problem gambling. Members of the Sounding Board also undertook site visits to both observe FOBTs being used and take part in play. 4

5 2.8 A number of academic studies have been considered. Particular consideration has been given to the major analytical studies on patterns and types of gambling in recent years; including the British Gambling Prevalence Survey of 2010 and the Scottish Health Survey of This has been supplemented by data provided by the Association of British Bookmakers (ABB), the Responsible Gambling Trust (RGT), the Gambling Commission, the Campaign for Fairer Gambling (CFG) and a number of respected academic studies carried out in recent years. 2.9 From the evidence provided, it is clear that the impact of Fixed Odds Betting Terminals across the city is varied and the issue of problem gambling is multifaceted Evidence gathered confirmed: FOBTs In Glasgow, gamblers put 201 million into betting shop FOBTs annually. They lose 31 million. Many of the most popular games on FOBTs are categorised as B2 casino content and are not subject to the same restrictions on stakes and prizes that are associated with other traditional slot machine games. Gambling on FOBTs does not involve any degree of skill. Winning or losing is entirely down to chance. The most popular game is roulette. It is possible to stake 100 on a single spin and the period between spins can be as brief as 20 seconds. In Glasgow gamblers bet on average on each spin of an FOBT and industry data suggests the average time between spins is 35 seconds. Stakes are limited to 100, but individual bets are also limited by the maximum prize of 500. For roulette, this means a maximum bet of 14 on any individual number however, multiple numbers can be played. Bookmakers quote a return to player of around 97%, resulting in a 3% loss, this can be misleading as it is based on a net loss after the session is finished, calculated against the sum total of all wagers made during the session. However, based on the ratio of cash put into the machine to cash paid out, gamblers lose on average 16% of their original stake. The FOBT machines are supplied, developed and maintained free of charge by the system manufacturers in exchange for a percentage of the profit. The suppliers pay for independent auditing of the machines to ensure they meet Gambling Commission standards. 5

6 All games are run and managed on central servers by the manufacturers. In the UK in 2012/2013 a Gross Gambling Yield (GGY) of billion was generated from just over 33,000 machines suggesting an average of around 47,000 in gross yield each year for each machine. Regulations restrict the number of FOBTs in any betting shop to 4. The industry states it is highly unusual for any shop to have fewer than 4, with a national average of around 3.67 per premises. There are currently around 800 FOBTs in more than 200 licensed betting shops in Glasgow. The popularity of FOBTs means significant sums leave the Glasgow economy each year. Findings from the focus group confirm the ability to gamble high stakes quickly is a contributory factor influencing problem gambling for some users. The promise of achieving large prizes from lower stakes is a key attraction for some gamblers. Former betting shop staff explained that customers gambling on horse racing would have to make a series of 3 or more winning bets at attractive prices in order to achieve the same value of winnings from the same stake. Clustering There is significant evidence to show a clustering of betting shops on many local high streets and other retail centres in Glasgow. Examples are provided on the maps in Appendix A. Bookmakers suggest this has come about through rival companies attempting to provide competition to established successful outlets. They also say the potential profits to be made have encouraged newer companies, not previously associated with the betting shop market, to establish a high street presence for the first time, compounding the clustering effect. Despite a period of unprecedented growth in on-line gambling, the number of betting shops has remained consistent and floor space is rising. There is evidence suggesting a correlation between gambling, the location of establishments and lower than average economic activity. Planning and licensing regulations limit the council s scope to rule on overprovision of betting shops. There is a correlation between betting shops and non-standard lending, with many examples across the city of shops located next door or in the same row. However, there is no evidence to support that this is as a result of any deliberate policy or strategy within the gambling industry. 6

7 Problem Gambling and FOBT The Scottish Health Survey suggests 0.7% of the population are problem gamblers. However, this includes large numbers of people who never or very rarely gamble. Evidence from the Scottish Health Survey suggests that as many as 1 in 20 betting shop customers may be problem gamblers. The gambling industry and the regulators approach to managing the issue is through manual voluntary self-exclusion and restriction schemes. There is no evidence to date that the gambling industry s self-exclusion approach is working. There were around 22,000 self-exclusions in 2012/13. More than 2/3rds of those who excluded cancelled the exclusion after the minimum period expired. The link between problem gambling and public health that has been established in some other countries does not currently exist in Scotland or the United Kingdom. Substantial independent research on the social and financial impacts of problem gambling is scarce. Problem gamblers believe the increased prevalence of gambling advertising and promotion is normalising the activity and making it increasingly difficult for those who do experience problems to break out of harmful patterns of gambling. There is a link between problem gambling and payday lending. Regulation Gambling regulation is a reserved matter managed by the Department for Culture, Media and Sport (DCMS). The current regulations were established in the Gambling Act The 2005 Act also created the Gambling Commission to regulate the gambling industry on behalf of DCMS. The regulatory arrangements can be viewed as controlling a leisure activity rather than protecting public health. In other countries such as New Zealand and Canada gambling is seen as a public health issue and regulated accordingly. There is no local authority Trading Standards or Gambling Commission inspection of the machines once they are on site. 7

8 The formal regulatory link between problem gambling and public health seen in other countries is not formally recognised in the United Kingdom. The regulatory links between planning and licensing are ineffective in preventing clustering or allowing consideration of over-provision. The Scottish Government have the power to create a planning class for betting shops that gives more powers to councils in countering over-provision. Betting Shop Staff With an increasing amount of betting shop activity associated with the use of FOBT, as opposed to traditional over-the-counter transactions, it is considered that bookmakers have taken the opportunity to reduce staffing. This has established a trend towards lone-working during less busy periods. Concerns were raised by a trade union representative that lone-working could present a health and safety issue for both staff and customers. A trade union representative described violence and verbal abuse of staff as a daily occurrence. The Sounding Board received anecdotal evidence that abuse and vandalism are under-reported and considered normal by many working in the industry. It is considered that some instances of abuse and violence are fuelled by frustration at losses on FOBTs. Both the focus group and the trade union provided anecdotal evidence that betting shop staff had become problem gamblers. The gamblers themselves linked their problem to the use of FOBTs. Links to Criminal Activity The Sounding Board heard evidence that FOBT machines have been used to launder cash in transit robbery funds and counterfeit notes and acknowledged that machines could be used to legitimise money from criminal activity. Gambling firms have, generally, good relationships with the police and are committed to tackling such behaviour. However, a significant number of stolen or forged notes returned to banks comes from bookmakers. 8

9 2.11 The Sounding Board recommends a number of actions for the council to take forward to make a positive impact on the position across the city. Regulation & Constraint To support a more effective regulatory regime and allow local authorities to better reflect citizens concerns about where betting shops are located, the Sounding Board recommends: The regulation of gambling should be approached from a public health perspective, as in a number of other countries, rather than solely as a leisure activity or entertainment. The advertising of gambling products should be evaluated from a public health perspective, as with tobacco and alcohol. Significant research is required to properly understand the impact of FOBT stakes, prizes and the duration and speed of play in terms of gambling behaviour, problem gambling, addiction, health and harm. Premises should not offer free-play FOBT tournaments or promotions. Casino-style gaming should be subject to casino-style regulation. The use of FOBTs should require a secure membership card. Promotional materials, including on-screen information, should make it clear to players that FOBTs are games of chance, requiring no skill; that gambling can be addictive and may cause harm to some. Player-set limits should be mandatory for all sessions. Time-outs should display the same promotional advice and should end, rather than pause, play. The council should continue to lobby the Scottish Government to reconsider its position on the use of planning legislation to limit further clustering of betting shops and payday lenders. Specifically, Ministers should take immediate steps to put betting shops in a new planning class; giving councils the opportunity to consider all new applications. Similar powers have already been promised to authorities in England and Wales. The 5% increase in the duty levied on FOBTs announced by the Chancellor in March 2014 should be wholly committed to support research, education and the treatment and prevention of problem gambling. 9

10 A robust inspection regime should be introduced to ensure FOBTs comply with all relevant regulations and licensing conditions both at the point of production and play. In order to address health and safety concerns and to ensure better identification and control of problem gambling, betting shops should not be single staffed. Promotion and Prevention To raise awareness and better understand the support requirements for those impacted by problem gamblers the council will: Work with partner organisations to promote awareness of problem gambling and its related social impacts. Ensure its relationship with the Glasgow Advice and Information Network helps to effectively measure financial issues related to problem gambling and supports those affected. Support existing advice, support and statutory agencies to better identify and record consequences of problem gambling. Increase awareness of problem gambling and available support throughout the council family. Setting the agenda To ensure the council promotes the well-being of Glasgow citizens and helps set the agenda for tackling the issues associated with FOBTs, the council will: Invite the Gambling Commission to work with the council to understand how existing and emerging regulations can be applied to support communities in developing a wider view of licensing and control of betting shops in the city Seek funding from the Responsible Gambling Trust to conduct an in-depth independent analysis of the social and financial problems associated with problem gambling, and in particular the use FOBTs, in Glasgow. Lobby bookmakers to undertake work in Glasgow focused on reducing the health, social and financial impacts of problem gambling including piloting an enhanced self-exclusion programme and the use of secure membership cards. 10

11 3. Introduction 3.1 The Sounding Board was convened in April The board was made up of the City Treasurer Councillor Paul Rooney (chair), Councillor Dr. Martin Bartos and Councillor Gerry Boyle. The board was assisted by officers of the council. A series of Evidence Hearings was convened during May and June 2014 and written evidence was taken from relevant sources. Details of those who provided evidence at the hearings is contained in the Acknowledgments section of this report. 3.2 This report outlines the process for conducting the Sounding Boards, presents findings and makes recommendations. 11

12 4. Context 4.1 The Betting and Gaming Act 1960 allowed off-course gambling in the UK for the first time in over 100 years. This was intended to curb illegal off-course gambling that was widespread across the country and facilitated the appearance of licensed bookmakers. 4.2 Off-course gambling was now permitted. However, the Act also brought about tight regulation and restricted the activities that could take place in betting shops The Gambling Act 2005 significantly changed the way gambling in the UK was regulated and gave much more freedom to UK bookmakers in the style and type of gambling they could offer. The Act also resulted in the creation of a new regulatory body, the Gambling Commission It is often stated that FOBTs were introduced to the UK following the 2005 Act, but this is a myth. The machines first appeared earlier in the decade and substantial numbers were already in place before the Act was passed. However, the rise in the popularity of such machines in the UK has been, by most accounts, an unintended result of separate reforms in taxation and gambling. Traditionally, relatively low-margin games like roulette had not been considered viable in betting shops; however, the abolition of betting duty in favour of a tax on profits in 2001 made them attractive to the trade for the first time. Operators cannot host physical casino-style games because of a long-standing rule that prevents betting on events that take place on their premises. However, bookmakers successfully argued that, when playing a FOBT, the event the generation of a random number - takes place not in the betting shop, but on a computer server, off site. While the gambling industry admits that FOBTs were present, unregulated, in bookmakers from around 2002, it was the 2005 Act that saw the machines classified as B2 gaming machines with high stakes and high prizes. The gaming machine categories are noted in Table 1 over-leaf 3. 1 The Gambling Act 2005: A bet worth taking? Culture, Media and Sport Committee 2 The Gambling Commission Who Are We and What Do We Do. 3 Gambling Commission Industry Statistics April 2008 to March

13 4.5 While the 2005 Act restricted the number of machines in each premises for the first time, it failed to limit the proliferation of FOBTs because it also removed the established demand test for new licences - meaning it became easier to open betting shops. It is estimated that from a few hundred machines in 2002 there are now in excess of 33,000 4 machines in the UK with around in Glasgow s betting shops alone. 4.6 The British Gambling Prevalence Survey (BGPS) of 2010 noted that 73% of UK adults had participated in some sort of gambling activity over the previous year. The following graphic shows the activities by gender. 4 Gambling Commission Industry Statistics April 2008 to March Number of premises in Glasgow multiplied by average density of machines per shop from Gambling Commission Industry Statistics April 2008 to March Premises described as betting offices on the Valuation Roll 13

14 4.7 While this demonstrates that a significant number of people enjoy gambling responsibly, the BGPS also estimated that between 0.7% and 0.9% of adults in the UK are problem gamblers. This equates to around 400,000 people. The BGPS also estimated that a further 7% of adults or 4.5 million people were 'at risk' of experiencing harm from their gambling. 4.8 The Scottish Health Survey (SHS) of 2012 noted 8 distinct groups (1 non-gambler and 7 gambler groups): Non-gamblers (31% of adults) National Lottery only gamblers (25% of adults) Minimal interest gamblers - lotteries and one other gambling activity (16% of adults) Minimal interest gamblers - other gambling activity, not lottery (9% of adults) Moderate interest gamblers - lotteries and more than one other gambling activity (12% of adults) Moderate interest gamblers - mainly bettors and machine players (6% of adults) 14

15 Multiple interest gamblers - engaged in 8 or more activities (1% of adults). The following graphic outlines the activities: 4.9 The SHS further suggests that the number of problem gamblers in Scotland is 0.7%, or around 30,000 people, rising to 1.1% if they had gambled in the previous year. However it is also estimated there are a further 175,000 Scots with a low or moderate risk of harm from gambling Given an adult population of just under 500,000 in Glasgow the number of problem gamblers can be estimated at 3,500 with a further 20,000 at low or moderate risk of harm from gambling The survey also found that of those gamblers interested in multiple types of gambling (8 or more activities) 71% played machines in bookmakers During the council s investigations into the impact of payday lending in the city, a number of respondents cited problem gambling, particularly on FOBT, to be a driver for accessing non-standard lending. The proximity of betting shops and payday lenders on our high streets was noted as a particular issue. 15

16 5. Fixed Odds Betting Terminals (FOBT) 5.1 Fixed Odds Betting Terminals (FOBTs) allow versions of casino-style games such as roulette to be played on an electronic gaming machine. The casino games are class B2 in terms of gambling regulation although the machines also offer B3 traditional slot style games. In the casino-style content, limits on the amount of money that can be gambled in each transaction are more relaxed than in the traditional slot machines games that are capped at 2 per spin. There is little need for human interaction while playing and the machines can be played by inserting cash, by voucher or by payment using a debit card over the counter. 5.2 The maximum FOBT stake is 100 for casino style content with a maximum prize of 500. The most popular casino style game is roulette which offers maximum fixed odds of 35 to 1 limiting the bet on a single number to 14. Multiple numbers can be played in a single spin. A bet can be made in 20 seconds but industry figures suggest that the average is every 35 seconds 7. Losses can quickly accumulate. It is recognised that stakes are limited by maximum prizes and recently bookmakers have begun to require human interaction with staff members prior to placing regular large sum bets or when a player session reaches fixed durations. 5.3 Detailed analysis provided by the games manufacturers suggests that, in Glasgow, the average stake on each spin is The Gambling Commission publishes figures on Gross Gambling Yield (GGY) for the various betting activities. The annual GGY is calculated in accordance with the following formula - A + B C 9. where: A) is the total of any amounts that will be paid to the licensee by way of stakes in the relevant period in connection with the activities authorised by the licence B) is the total of any amounts (exclusive of value added tax) that will otherwise accrue to the licensee in the relevant period directly in connection with the activities authorised by the licence C) is the total of any amounts that will be deducted by the licensee in respect of the provision of prizes or winnings in the relevant period in connection with the activities authorised by the licence 5.5 In the UK the GGY from just over 33,000 B2 machines was billion 10. This suggests that on average each machine generates around 47,000 in gross profit each year. 7 Inspired Gaming 8 Inspired Gaming Player Protection and Responsible Gambling June 2014 See Appendix B 9 Gambling Commission 10 Gambling Commission Industry Statistics April 2008 to March

17 5.6 The following tables outline the 2013/13 annual turnover and GGY for other gambling activity as detailed in the Gambling Commission Industry Statistics April 2008 to March Sports betting Activity Turnover Gross Gambling Yield (GGY) Horse Racing billion million Dog Racing 1.32 billion million Football billion million Casino table games Activity Drop* Win** American Roulette billion million Blackjack 846 million million 3 Card Poker million million * Money exchanged for chips ** Retained by the casino Traditional slot machine play Activity Traditional slots (bookmakers) Traditional slots (bingo halls) Traditional slots (casino) Gross Gambling Yield (GGY) 4.38 million million million Other traditional slot machine play (Arcades) Activity Traditional slots (adult gaming centres) Traditional slots (family entertainment centres) Gross Gambling Yield (GGY) million million It is worth noting that the billion GGY from FOBT is: Greater than the GGY for horse racing, dog racing and football betting combined More than 4 times greater than the casino win for traditional table roulette More than 3 times greater than the combined GGY of other traditional slot types of machine gambling at betting shops, bingo halls and casinos More than 4 times the combined GGY of Adult Gaming Centres and Family Entertainment Centres 5.7 While it has been argued that the return to player is around 97% from FOBTs, resulting in a 3% loss on average for the player, this can be misleading as it is based on a net loss after the session is finished. 17

18 5.8 Machine manufacturers have provided data on all FOBT transactions in Glasgow, which confirm that 201 million is put into the machines annually and 31 million is retained by the bookmaker. Based on these figures, 16% of the original stake is lost on average As a result FOBTs have a significant financial impact on the city with in excess of million in losses experienced by Glasgow Citizens There are currently around 800 FOBTs in more than 200 licensed betting shops in the city. Regulations restrict the number of FOBT in any betting shop to 4. The industry states it is highly unusual for any shop to have less than 4 with a national average of around 3.67 per premises The game rules, the logic around win rates and the algorithms which govern game play are all controlled by the games manufacturers virtually on remote servers. There are 2 main suppliers of the games and machines who dominate the market and manage all game related activity on behalf of the bookmakers The games manufacturers are responsible for arranging independent auditing of the machines to a standard set by the Gambling Commission and the game play is tested by an independent lab The board heard anecdotal evidence that many gamblers believe there is an element of skill involved in playing FOBTs - and that successful strategies or systems can be devised to improve their chances of winning. However, manufacturers, regulators and bookmakers all confirmed that there is absolutely no opportunity to apply any level of skill when playing a FOBT and that winning and losing is purely a matter of chance. Even amusements popular with children, such as coin-push games or mechanical grabbing arms, are considered to require some ability and are classed as SWP, or Skill With Prizes. FOBTs are classed as EWP, or Entertainment With Prizes. This would appear to be at odds with the practise, employed by most bookmakers, of holding tournaments in which players are given free play to compete against each other for prizes. As it is impossible for one gambler to play 'better' than another, the tournament has no obvious function beyond introducing the gamblers to each game. It is not clear to what extent playing in such tournaments has any influence on gamblers' perceptions of whether skill is applied Although the use of gambling machines has mushroomed in Glasgow and across the UK in a relatively short period of time; the market pales in comparison to that in place in Australia, where machines have become ubiquitous, with sobering results Inspired Gaming Player Protection and Responsible Gambling June 2014 data (see Appendix B) per shop/per week figures extrapolated over 52 weeks and across 207 bookmakers in Glasgow 12 Inspired Gaming Player Protection and Responsible Gambling June 2014 data (see Appendix B) per shop/per week figures extrapolated over 52 weeks and across 207 bookmakers in Glasgow 13 The Gambling Commission gaming machine testing strategy 18

19 Australia has been dubbed the gambling capital of the world. Poker machines, or pokies, have become fixtures in pubs and clubs in every state, with the exception of Western Australia. In 2012, there was one machine for every 89 adults some 200,000 machines nationally. Australians also lose more money than any other nation around 650 per adult, compared to 130 in Britain. While the gambling industry in Australia disputes claims it targets poorer communities, publically released data shows a clear link between economic activity and the number of pokie machines being played. For example, Fairfield in Sydney is among the poorest 12% nationally and has one machine for every 42 adults, with average losses of 1,307. In nearby Ku-ring-gai and Willoughby where residents are among the richest in Australia - there is just one poker machine per 231 adults and losses are 151 per head. Meanwhile, in Western Australia, where poker machines can only be found in a single casino, the rate of problem gambling is calculated to be around one-third of the national average. Academics from Australian National University and the Centre for Gambling Education and Research at Southern Cross University told the Sounding Board that, while the Australian industry is now saturated, they believe Britain is at risk of repeating its mistakes. They argue that immediate action is required to reform regulation - and that the longer current arrangements are allowed to persist, the more difficult reform will be to achieve. 14 Evidence taken from Francis Markham (PhD Candidate, The Fenner School of Environment and Society at Australian National University) and Martin Young (Senior Lecturer, Centre for Gambling Education and Research at Southern Cross University, Australia) 19

20 6. Clustering 6.1 There is significant evidence to show a clustering of betting shops on many high streets in the city and up and down the country. Examples of areas with significant concentrations in Glasgow are provided on the maps in Appendix A. 6.2 There has been a significant increase in on-line gambling in recent years. The market is now worth in excess of 1.7 billion per year to the gambling industry in the UK. The Summer 2012 Regulated European Online Market Data Report shown below gives on-line sports betting revenue. 6.3 Despite this rise the number of licensed betting shops in the city or across the United Kingdom remains consistent. 6.4 This is largely as a result of the proliferation of FOBTs and a switch away from traditional over the counter betting to the use of FOBTs in betting shops. FOBTs now contribute significantly to betting shop profits. 6.5 Bookmakers suggest this clustering has come about through rival companies attempting to provide competition to established successful outlets. The profits to be made are also encouraging new companies not previously associated with the betting shop market to establish a presence in direct competition to the more established names. 6.6 Given the significant proportion of profits that are linked to FOBT activity, it is likely the popularity of the machines is fuelling the competition and in turn the clustering of premises. 6.7 The respected NatCen Social Research organisation in conjunction with Geofutures, a provider of geo-spacial tools, produced mapping suggesting that areas with a higher density of gambling machines were more likely to be poorer, with lower than average economic activity and more people in lower status jobs. 6.8 The gambling industry has suggested this is erroneous and based on research carried out by the Local Data Company betting shops are likely to be found in non- 20

21 residential areas and have similar distribution patterns to other high-street brands as they are servicing demand 15. The position in some areas of Glasgow is displayed in the maps attached at Appendix A. For planning purposes betting shops fall into use-class 2 - Financial, Professional and other services. As a result, premises including banks, offices of accountants, dentists, doctors, solicitors, estate agents and even beauticians can be converted to betting shops without planning consent. This gives councils very little opportunity to consider over-provision. The Scottish Government can, by Statutory Instrument, create new use-classes that would help to give councils greater control over decisions around over-provision of betting shops. In general, national planning policies are good at balancing economic and environmental sustainability, but less strong when it comes to considering socially sustainable development. There is a recognition from the Royal Town Planning Institute that the goal of creating great places for people cannot be achieved without taking social issues into account 16. Licensing regulations are focused on compliance. There is little that can be done to restrict where a betting shop is located if the proprietor meets the licensing obligations The ability to forge greater links between planning and licensing through regulation would allow a more holistic approach to be adopted 6.10 Currently the options open to councils to control clustering and decide on over provision are limited. 15 Association of British Bookmakers The Truth about Betting Shops and Gaming Machines, submission to DCMS triennial review April Evidence to the Sounding Board from the Royal Institute of Town Planning and internal planning officers 21

22 7. Problem Gambling and Fixed Odds Betting Terminals 7.1 As noted The Scottish Health Survey (SHS) suggests 0.7% or around 30,000 people in Scotland are problem gamblers. This is from the population as a whole including non-gamblers and those who only gamble on national, local and charity lotteries. 7.2 The SHS used 2 mechanisms used to establish problem gambling. Diagnostic and Statistical Manual of Mental Disorders, 4th Edition (DSM-IV) and the Problem Gambling Severity Index (PGSI.) Both were used in the SHS and produced broadly similar results. 7.3 The PGSI asks a series of questions and derives a score to indicate the level of problem. Scores for the 9 items are summed, and the respondents are categorised as: Non-problem gambling. Low level of problems with few or no identified negative consequences. Moderate level of problems leading to some negative consequences. Problem gambling with negative consequences and a possible loss of control. 7.4 The DSM-IV screening instrument contains ten diagnostic criteria ranging from chasing losses to committing a crime to fund gambling. Each DSM-IV item is assessed on a four-point scale, ranging from 'never' to 'very often. Responses to each item are then scored. A total score between zero and ten is possible. A threshold of meeting at least 3 of the DSM-IV criteria is used to define problem gambling. Clinicians currently use an additional threshold of a DSM-IV score of 5 or more to represent pathological gambling. 7.5 Using these methods the SHS suggests 5.5% of moderate interest gamblers (those who bet or use gaming machines) are problem gamblers and 13.3% of multiple interest gamblers (those who engage regularly in 8 or more gambling activities) are problem gamblers. It is fair to say these groups are more likely to frequent betting shops and are exposed to 4 FOBT machines on a regular basis than the wider population. 7.6 Evidence was provided to the Sounding Board from the focus groups, advice agencies and academics that the consequences of problem gambling can be significant and include: Severe financial hardship including the inability to pay essential bills such as rent, mortgage and utilities Family and relationship breakdown Influencing or exacerbating mental and physical illness Difficulties with employers Resorting to criminal activity to fund problem gambling Surprisingly the Sounding Board found that very few longitudinal studies required to verify and quantify these issues had taken place in the UK. Similarly the Sounding Board were surprised to find that many standard financial assessment tools are not designed to take into account the financial impacts of gambling. Where longitudinal studies have taken place on the activities of regular gamblers it has been noted many 22

23 individuals moved between periods of safe and problem gambling over the duration of the 5 year study In December 2008 the Gambling Commission desktop exercise Impact of highstake, high-prize gaming machines on problem gambling noted the link between problem gamblers and gaming machines. The executive summary notes Evidence suggests that while gaming machines appear to appeal to many gamblers, they seem to be particularly attractive to those at risk of problem gambling and to those with a gambling problem. Compared to non-problem gamblers, problem gamblers tend to play on gaming machines more frequently and spend more time and money on them. The available research has identified the sort of features that appeal to gamblers (eg fast games, multi-stake, high payout ratio, free games) and that are therefore associated with higher levels of both gambling and gambling-related harm. 7.8 Research carried out by respected academics in the field Jim Orford, Heather Wardle and Mark Griffiths around the British Gambling Prevalence Survey was picked up by the Dispatches television programme and suggests 23% of the profits from FOBTs come from problem gamblers. 7.9 The following table shows this the impact of problem gamblers on other common gambling activities. It is notable both that significantly more is earned from casinostyle FOBTs than from actual casino games and that the activity with the greatest percentage of profits earned from problem gamblers is betting on dog races; another form of gambling known for its relative speed The Responsible Gambling Trust (RGT) is the leading charity in the UK committed to minimising gambling-related harm. As an independent national charity funded by donations from the gambling industry, the Responsible Gambling Trust funds education, prevention and treatment services and commissions research to broaden public understanding of gambling-related harm. The aim is to stop people getting into problems with their gambling, and ensure that those that do develop problems receive fast and effective treatment and support. 17 Evidence provide to the Sounding Board by Gerda Reith, Professor of Social Sciences (Sociology), University of Glasgow 23

24 7.11 The Responsible Gambling Trust raises around 6 million each year from the gambling industry operating in Britain within a voluntary (donation based) system and funds research, education, prevention and treatment services. Funding priorities are guided by the national strategy advised by the Responsible Gambling Strategy Board (RGSB). The RGSB has representatives from the fields of advice, psychology, social sciences and gambling industry Bookmakers have advised the Sounding Board that they do not wish to make money from problem gamblers. However with Gross Gambling Yield in excess of 4 billion 18 in 2012/13 and a voluntary contribution to the Responsible Gambling Trust via The Responsible Gambling Strategy Board of around 6 million per year it could be suggested that not enough of the funds raised from problem gambling are being reinvested in research, education, prevention and treatment services Advice and support agencies and the focus groups have given evidence. They suggest gambling as a way-out of debt or as a way of chasing other gambling losses are common triggers for a move away from safe to problem gambling. When chasing losses or trying to find a way out of debt, FOBTs with the potential for quick results, offer a particular temptation. Surprisingly, problem gambling is not always covered in financial assessment and as a result the relevant sign posting does not always take place Examples have been provided of where problem gambling is being funded by nonstandard payday lending or debt to payday lenders is fuelling problem gambling as a way-out of the payday loan cycle 19. In particular the Sounding Board heard evidence of a single individual with 16 non-standard loans to fund FOBT gambling The proliferation of advertising, particularly on television and on-line, is helping to normalise gambling and places particular pressure on problem gamblers trying to opt out of gambling Research for communications regulator Ofcom found that the total number of gambling advertisement spots shown on television increased from 152,000 in 2006 to 1.39 million in The Advertising Standards Agency (ASA) note the UK advertising rules for alcohol are amongst the strictest in the world. The rules are based upon evidence that points to a link between alcohol advertising and people s awareness and attitudes to drinking. Accordingly the rules, independently enforced by the ASA, were significantly tightened in 2005 and were again re-evaluated and subject to full public consultation in The stringent rules, which apply across all media and are mandatory, place a particular emphasis on protecting young people; alcohol ads must not be directed at people under 18 or contain anything that is likely to appeal to them by reflecting youth culture or by linking alcohol with irresponsible behaviour, social success or sexual attractiveness. The TV and radio advertising rules contain strict controls about the placement and content of alcohol advertising. Alcohol ads are banned from appearing in and around 18 Gambling Commission Industry Statistics April 2008 to March Evidence provide to the Sounding Board by RCA, the focus group, Citizens Advice and StepChange 24

25 programmes commissioned for or principally targeted at audiences below the age of 18, as well as programmes likely to appeal particularly to audiences below the age of 18. Similarly, advertisements in the UK must not promote smoking or the use of tobacco products. If a product shares a name, emblem or other feature with a tobacco product, a non-tobacco product or service may be advertised only if the advertisement is obviously directly targeted at an adult audience, makes or implies no reference to smoking or to a tobacco product, does not promote tobacco or smoking and does not include a design, colour, imagery, logo style or the like that might be associated in the audience s mind with a tobacco product. Advertisements that might be of particular interest to children or teenagers must not refer to tobacco or smoking, unless that reference obviously forms part of an antismoking or anti-drugs message. The regulation of gambling marketing and advertising is complex and responsibility is shared among a number of regulators. A working forum comprising the Commission, the Committee of Advertising Practice (CAP), the Broadcast Committee of Advertising Practice (BCAP), the Advertising Standards Authority (ASA), Ofcom, PhonepayPlus and the Department for Culture Media and Sport (DCMS) was re-established in 2013 to ensure more efficient and joined-up regulation. In recent years the gambling industry has increased the marketing of bonus offers and free bets as an incentive to attract new customers to their products. The ASA Gambling Compliance Survey (2010) demonstrated that the majority of advertisements considered in breach offered free bets but did not include significant terms and conditions. Since 2008 the ASA has received an increasing number of complaints relating to free bets and bonuses resulting in more than 50 investigations, of which the vast majority were upheld or upheld in part. As a result the Gambling Commission will include advertising regulations in the upcoming review of bookmaker Licence Conditions and Code of Practice (LCCP) in the summer of The gambling industry s response to problem gambling has been to introduce and support self-exclusion schemes where gamblers can set limits or opt out altogether of various activities. Typically, this requires gamblers to visit a betting shop and ask to be excluded, providing a photograph for identification, which is distributed to a varying number of local premises in the same company. Staff are then expected to identify the gambler if he or she enters the shop The Sounding Board could find little evidence that self-exclusion is working. Over 2/3rds of gamblers who self-exclude cancel the arrangement after the minimum time 20 Review of licence conditions and codes of practice (LCCP) Ensuring that free bets and bonus offers are marketed in a fair and open way and are consistent with the licensing objectives of the Gambling Act 2005 Terms of reference, April

26 frame 21. Evidence from the focus group and advice agencies suggests that problem gamblers who self-exclude will simply move on to a different chain and commence gambling again. The industry agree that self-exclusion is a useful tool for those who identify they may be beginning to have an issue, however it is not as effective for pathological gamblers 22. The Sounding Board was alerted to how the use of new technology could enhance self-exclusion schemes and that bookmakers may be open to running pilot schemes in a local authority area Players can set voluntary limits using machine functionality. In addition a mandatory warning is now displayed when users reach set time or spend thresholds. The ability to set limits has mixed results as users can simply over-ride and play on after the warning is displayed. Data provided by a leading gaming machine manufacturer 23 identified that when a voluntary limit is set for spend or time the following playing pattern can be identified: Spend 46% will end the session immediately on reaching their voluntary spend limit 42% will continue playing but using existing credit rather than inserting more cash 4% will continue playing but will not insert more cash around 8% will insert more cash than the original voluntary limit and continue paying Time 76% will end the session having reached their voluntary time limit 11% continue playing but do not insert more cash 13% continue playing and insert more cash However on mandatory set limits of 250 spend and 30 minutes play the following can be demonstrated: Spend 4% end the session immediately 21% will continue playing using built up credit but will not insert more cash 75% will insert more cash Time 6% end the session immediately 50% continue playing but do not insert more cash 44% continue playing and insert more cash 21 Gambling Commission Industry Statistics April 2008 to March Evidence provided to the Sounding Board by William Hill 23 Inspired Gaming Player Protection and Responsible Gambling June 2014 data (see Appendix B) 26

27 8. Regulation 8.1 The Scottish Health Survey notes In Britain, gambling is positioned as a legitimate recreational and leisure activity with policy responsibility held by the British Department for Culture, Media and Sport. While gambling policy is a reserved matter, some limited functions in relation to the setting of conditions for premises licenses are exercised by Scottish Ministers. There is widespread recognition among policy makers, industry and health care professionals that, like alcohol consumption, some people who engage in gambling activity can experience harm. Unlike alcohol consumption, there are no specific policy targets relating to harm minimisation. 8.2 The Gambling Commission was set up under the Gambling Act 2005 to regulate commercial gambling in Great Britain in partnership with licensing authorities. On 1st October 2013 the Gambling Commission took over the responsibilities of the National Lottery Commission to regulate the National Lottery under the National Lottery etc Act It is an independent non-departmental public body (NDPB) sponsored by the Department for Culture, Media and Sport (DCMS) All commercial gambling operators which hold a licence under the Gambling Act must comply with the legislation and licence conditions and codes of practice (LCCP). Using a risk-based approach, the Gambling Commission focuses on those issues and operators that potentially present the greatest risk to the licensing objectives. 8.4 The Gambling Commission collaborates with local and international researchers and organisations to deliver its responsibility under the Gambling Act 2005 to provide advice to the government on important information about gambling behaviour in Great Britain. 8.5 The Commission supports the Responsible Gambling Strategy Board's (RGSB) objectives to advise on strategic priorities for research, education and treatment to minimising gambling related harm. The RGSB sets the strategy for research priorities, with a programme of research being delivered by the Responsible Gambling Trust. The work is funded by voluntary contribution from the gambling industry. 8.6 The Gambling Commission undertakes data collection and analysis to monitor participation in gambling and the prevalence of problem gambling in Great Britain. This was previously monitored through the British Gambling Prevalence Surveys which were conducted in 1999, 2007 and An important part of the Gambling Commission s work is to ensure that licence holders are compliant. Compliance requires licence holders to understand and act in accordance with: the Gambling Act 2005 regulations (statutory instruments) made under the Gambling Act 2005 the Licence conditions and codes of practice (LCCP) any technical standards that apply to operating licences. 24 The Gambling Act