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Gambling’s ‘crack cocaine’ is devastating lives and not doing much for the economy either

Since 2008, UK gamblers have squandered £11.4 billion playing games such as poker and roulette on fixed-odds betting terminals (FOBTs). These sophisticated gaming machines, often referred to as the “crack cocaine” of gambling, are to be found in high street bookies and casinos across Britain, allowing people to bet up to £100 every 20 seconds.

Not only is this helping to create a huge swell in problem gambling, it is also affecting the economy, because this spend has little ripple effect, flowing directly into relatively few pockets without generating a significant number of jobs.

Hounslow in south-west London huddles directly beneath the planes taking off and landing at Heathrow airport. A comparatively poor area of the capital, 20% of the local population earns less than the living wage. Hounslow’s high street contains 11 bookmakers, each with four FOBTs, and each of those has a maximum gambling stake of £100. In 2015, on this one street, £2.8m was lost to FOBTs, according to the Campaign for Responsible Gambling.

Anyone walking through their local town centre will see the number of betting shops has mushroomed, often with “cash converter” type shops nearby, where people can exchange goods for money. As of March 2015, there were 34,884 FOBT gaming machines around the UK providing bookmakers with a gross gambling yield (the percentage of a bet kept by the operator) of £1.7 billion in 2016.

Problem gambling

Research shows that the number of people in the UK with a gambling problem is rising. Around 500,000 Britons are experiencing difficulties – categorised as either “problem” or “at risk” gamblers – with numbers increasing every year.

And for each gambler there can be up to five close family members also affected through issues such as unmanageable debt, homelessness, hunger, domestic violence or having a parent or spouse in prison. Damage is not limited to families either; a significant proportion of problem gamblers commit crime such as theft and fraud to fund their habits, with some high-profile cases hitting the headlines each year.

In the UK, research shows that poorer people are more likely to develop a problem gambling habit. Data collected by the Campaign for Responsible Gambling reveals that betting shops with FOBT machines have expanded most in poorer areas, suggesting that action needs to be taken to limit the opportunities for people to experience heavy losses in the midst of their communities.

Although only 3-4% of adults use these machines, FOBT players account for 66% of all gambling losses. In 2015, the government rejected an attempt led by Newham Council to reduce the maximum stake from £100 to £2 per play.

The wider economic impact of gambling is poorly understood because at present the only data considered are gross gambling yield, jobs and profits in the industry – plus government revenue from betting duty and taxation.

Taken together, these present an encouraging picture with the industry claiming betting shops contribute £3.2 billion to UK GDP, with between 55,000 people directly employed in betting shops, 100,000 jobs supported in the wider economy and around £1 billion paid in taxes each year.

But this is not the full picture. Contrasting research by the Campaign for Fairer Gambling shows money spent on FOBTs does not support much in terms of jobs compared with spending in other sectors of the economy – while £1 billion of general consumer spending supports 21,000 jobs, £1 billion of spending on FOBTs only supports the equivalent of 4,500 jobs.

The real cost to communities

The problem with weighing up these competing claims is that no independent evaluation of costs and benefits has been developed and conducted in the UK. A more accurate calculation would need to include the social costs of gambling to affected families and communities, such as rehousing families who have lost their home to gambling debt, and the costs to the criminal justice system resulting from crime arising from problem gambling.

To develop an effective measure of the real costs of gambling, independent research will be needed. In the UK, the gambling industry funds research, education and treatment of problem gambling under the principle of the “polluter pays”, and most of the £7m raised annually from the industry is spent on treatment.

Fixed-odds betting terminals, on which punters can blow £100 every 20 seconds, are leading to a rise in problem gambling. Shutterstock

As a project led by Goldsmiths University found, the UK funding programme for gambling research prioritises “banal” research questions that will not offend the gambling industry, with funded research often conducted by private companies or academics that have close ties to the industry.

Similarly, Tim Farron MP has raised concerns about the close relationship the industry has with GambleAware (previously known as the Responsible Gambling Trust) which manages the funds provided by the industry to pay for research about problem gambling, education to prevent problem gambling, and treatment for problem gamblers.

The Charity Commission was also asked to investigate allegations that large research contracts were being awarded to companies with close links to senior staff at the Responsible Gambling Trust and that senior posts within it were filled without a competitive process. At the time, the Responsible Gambling Trust responded: “The Responsible Gambling Trust has robust procedures in place and we are a fully independent charity committed to minimising gambling-related harm.”

It also added later: “The Charity Commission dismissed as ‘unsubstantiated’ complaints about the Responsible Gambling Trust made by two lobbying groups – the Campaign for Fairer Gambling and Rethink Gambling. Correspondence from the Charity Commission, published on our website, confirms that potential ‘conflict of interest within the charity is well managed and recorded’.”

The whole notion of problem gambling separates and “individualises” consumers, suggesting they make a free choice to spend their leisure time and money as they wish. But, as the data on spending indicates, this is not an individual problem; it is a social problem causing real harm to individuals, to families, to communities and to the economy.

Unfortunately, the extent of that harm is not understood by society or policy makers because very little research is being carried out, and what research is being undertaken is focusing on the wrong topics. As the Charity Commission investigation proves, there is a potential conflict of interest between the people allocating research funds and the industry providing the money for the research.

A radical review of the impact of gambling, its social costs and benefits and the funding and governance structures that underpin research, education and treatment is urgently needed. But since the government’s review of FOBTs was shelved when the snap election was called, it’s not worth betting that this will happen any time soon.

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