There have to be better ways to start your day than being woken up by an argument about FOBTs, but such was my fate this morning. No sooner had my alarm clock radio turned on, than I was listening to the Mayor of Newham and the Chairman of the ABB go at each other about shops on the High Street. It was about 6.40am. There should be a law against it, really.
The reason for the argument was that apparently a group of 93 councils is calling on the government to reduce the maximum stakes on FOBTs from £100 to £2. If this sounds like the same debate as I’ve written about before, that’s because it half is – but apparently only half. When Paul Darling, for the ABB, defended his organisation’s position by saying that there was no evidence to show that such a cut would help problem gambling, the Mayor, Sir Robin Wales, countered that it wasn’t problem gambling that concerned him, but the state of the High Street. There are too many bookmaking premises, he claimed; and action is needed to force the closure of some.
What he was never asked, and what I would love to know the answer to, is why he and the other 92 councils think that a cut in stakes will reduce the number of shops – at least to any significant extent.
You might think that’s a silly question. The implication for years has been that a cut in stakes would impact bookie profitability, and all things remaining equal, I suspect that it would. But the thing is that when changes like that come about, all things do not remain equal; and while profitability might be impacted, the shift in its make-up would end up by not, I think, delivering to Sir Robin the result which he and his fellow councillors intend. Why? Because a B3 machine, which has a maximum stake of £2, has almost exactly the same level of profitability per hour as a B2 machine, with a £50 average stake.
Don’t believe me? Well, have a look at the maths. A B3 machine has an 8-10% margin, against a B2 machine’s margin of 2.7%; and a B3 machine can spin every 2.5 seconds, against every 20 seconds for a B2. So the margin is three times as great, and the spin rate eight times as quick. Combined, that makes the machines 24x more profitable. But the stake is 1/25th. So, basically quits.
What that means is that if you can guarantee the number of hours played – and bear in mind that every debate about FOBTs always seems to assume that a machine is used to its absolute maximum capacity (which is why people talk somewhat absurdly about being able to lose £18,000 in an hour) – then B3 machines are just as profitable as B2s. Perhaps that explains why B3s are the fastest-growing product on the High Street. If a change in B2 stakes led in turn to a levelling of the playing field between how many B3 machines a bookmaker can have relative to an arcade, as seems likely, it seems to me that profits could be re-couped, and the overall number of shops might barely be impacted at all – maybe even maintained in a manner that undermines Sir Robin Wales’s stated cause.
Of course, there may be other reasons why a £2 stake makes sense. The debate around it will, I am sure, come up on Monday, when the Responsible Gambling Trust publishes its much-awaited Featurespace-led research into problem gambling issues, and those on either side of the debate as to whether a reduction in stake would help stop people developing addictions will doubtless be watching closely. But the interesting thing about this morning’s squabble was the way in which Sir Robin was very clear in stating that he had one agenda and one agenda only in calling for a reduction in stakes: that introducing one would impact the number of shops there are on the High Street.
Maybe he’s right, and it will. He certainly seemed very confident of his case. But he was never actually challenged on it, and it would have been interesting to hear his response to the fact that the maths don’t actually support it. Next time, perhaps.