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Fixed Odds Betting Terminals vs Internet Betting: Which is worse?

March 9th, 2014

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A look at the big betting policy debate

Internet betting has often been under crossfire for causing problem gambling and addiction, but in recent years a new form of gambling has been gaining traction (and notoriety) in the UK.

Fixed Odds Betting Terminals (or FOBTs), can be found in almost every betting shop, often alongside traditional slots machines. These new gaming devices are favoured both by shop owners and gamblers alike because they offer a wider variety of betting games and are very fast.

The addictive nature of FOBTs has often been compared with that of internet gambling. In this article we seek to understand the differences between FOBTs and desktop or mobile internet betting, as well as find out which type of gambling may be the most harmful.

What are FOBTs?

FOBTs are touch-screen electronic gaming machines that enable players to try a variety of casino games – very much like an updated version of the classic fruit machines. The terminals can pay out a maximum prize of £500 and their defining – and most controversial – feature is the high speed with which players can bet again and again.

The number of FOBTs installed in betting shops between 2002 and 2012 rocketed to over 34,000 and the three major betting companies that operate these machines are estimated to rake in more than £900 per week profit from each terminal.

A Brief History

FOBTs aren’t a recent invention. The machines were launched as early as 1999, although it was only three years later that they began gaining prominence in the media, when roulette was introduced.

Betting shops installed these devices despite there being no clear regulations about their use and this lead to one of the UK’s largest betting companies being hauled to court over these gaming machines.

Following this incident, bookmakers volunteered to self-regulate FOBTs, but this move simply led to a wider spread of them and easier access for gamblers.

The Public’s Reaction

It is safe to say that the reaction to FOBTs has been overwhelmingly negative, even more so than that directed towards internet betting. Experts have called these machines the ‘crack cocaine of gambling’ due to their highly addictive nature.

Modern FOBTs now offer an array of games rivalling that of any betting website. Players can play anything from slots to roulette to blackjack and poker on a typical terminal.

The social impact of the machines has been the centre of a heated debate in the UK, with media pundits and anti-gambling campaigners claiming that thousands of Britain’s poorest people are being fleeced because of these machines.

The Dangers of FOBTs

The dangers of internet betting pale in comparison to those of FOBTs. These terminals are known to correlate to an increase in criminal and antisocial behaviour in the areas where they are found.

There is widespread criminal use of these machines for money laundering purposes, with the machines being used as a means to exchange drug money into clean cash at the shop counter.

A shocking investigation by The Sun showed how shop owners allowed under-age gambling in their premises, with almost half of the outlets investigated omitting to request proof of age and identification from youngsters.

The ability to place quick bets in succession, only 20 seconds apart from each other, has also raised a lot of concerns about problem gambling.

How Does Internet Betting Compare?

Internet betting can also lead an individual down the path of problem gambling, however, compared to FOBTs, its impact doesn’t tend to spill over to affect the whole community and it has certain features which make it safer.

For starters, internet betting requires the user to register for an account on the betting website and input debit or credit card details. This system offers better screening against under-age gambling, something which contrasts heavily with the free-for-all scenario that FOBTs present, especially in the light of lack of proof of age screening by shop owners.

Moreover, internet betting has recently taken on a more social turn, with social gambling driving most of the download of gambling apps on mobile and desktop devices. It seems like internet betting has come of age and, although its dangers are no less real, has successfully made the transition to a legitimate hobby in most cases. With the rise of online gambling, more popular games like poker no longer have the same stigma they once had, and have large virtual player communities.

The same cannot be said about FOBTs, which are often looked upon as money-stealing devices that attract vulnerable people and negatively impact their lives.

Another factor that sanitises the image of internet betting is the fact that online operators often offer generous bonuses and free credit to players, thus setting up a more level playing field. This is not the case with FOBTs, which are plainly created to give users just one shot at winning their bets.

Making FOBTs Safer

Admittedly, the public outcry against FOBTs has done very little to reduce the perceived dangers of FOBTs, but now things seem to be changing.The betting companies that form part of the self-regulatory group have agreed to issue amendments to their code of practice, granting gamblers the ability to set limits on the time and money they can spend on a machine at any one time.

But campaigners demand more. Some of their suggestions include a decrease of the maximum betting amount, longer spin times and messages plastered onto the machines that warn about the dangers of gambling addictions and display the odds of a payout. Also being mooted are pop-up messages on screen alerting gamblers to perhaps the amount wagered during that session.

Playing a Fairer Game

The main difference between internet betting and FOBTs, is that the latter are considered to have a more direct effect on the community and can be more easily misused for criminal purposes.

Internet gambling, on the other hand, is perceived as a safer bet for gamblers and thanks to the popularity of social gambling it has become more legitimised and accepted among players. For these reasons, FOBTs are generally considered to be more problematic than internet gambling and, due to their high potential of causing addiction, more likely to be at the centre of attention as efforts to control their negative impact on gamblers continue.

Political Hot Potato?

Recent coverage of FOBTs has meant media coverage of high street betting shops, perhaps an area of gambling much of the pubic had seen as a dying breed with the rise of online bookies. FOBTs have now been debated in Parliament. In one session, Alex Cunningham, MP, said:

In my constituency there is one Fixed Odds Betting Terminal for every 700 people who are eligible to play them, and the vast majority are in areas of high deprivation. In Broadland, a southern constituency, there is one machine for every 18,300 people. Is that not a clear confirmation that the poor are being targeted by this empty promise of great wealth? Do we not need to do something about this?

With discussion of FOBT regulation so prominent in the media and at such high level, it also impacted in the share price of some of the larger companies, with William Hill taking a dive in January following the Parliamentary debate. However, the Independent quoted Ivor Jones (Numis Securities) as saying “no material regulatory changes are likely in the near term and any possible legislation would not be debated in Parliament before the second half of 2015 at the earliest”.

Meanwhile this leaves the bookmakers fighting back to protect perception of their brand, pointing out that problem gambling in England is only estimated to be between 0.4 and 0.5% of the adult population.

Politically, every party is expressing a view; The Green Party for example taking a clear side, stating ‘These terminals are clearly designed to encourage reckless betting. The Green Party is calling on councils to be given more power to refuse betting shops planning permission and a cap on how much money could be lost on these machines.”

Ed Milliband also takes a stern and clear view on the, stating they are “dangerously addictive” and cause “untold damage.”

FOBTs – Where Now?

FOBTs are a hot topic and have bought attention to the public across mainstream media and online discussion. With such clear opinions being unambiguously shown by the highest level of decision makers, it can be assumed that change and regulation will occur. The questions are then, when will this be and to what extent?

Politically it needs to be demonstrated that protection against problem gambling is being taken seriously, whilst on the other hand, not being seen to be dictatorial against betting as a whole.

The bookmakers, meanwhile, attempt to balance the risk of negative PR with the urge to retain FOBTs which allow them vast profits and revenue.

The coverage of FOBTs has allowed online betting a ‘breather’ in terms of public attention.

It’s fair to see that in the last couple of years there has been a shift in public perception of it, especially with the growth of online bingo. Online gambling of course can be done ‘anonymously’ (in the sense you can do it at home without anyone seeing you), whereas FOBTs involve a visit to a physical presence where you can be seen by all.

The next few months will be interesting ones as further debate, discussion and media coverage continue – watch this space.

Mike Smithson