Since the financial crisis, the perfect storm of recession and banks restricting access to credit has led to the rise of payday lenders. Our high streets are slowly deteriorating from the vibrant, diverse places they once were into an abyss of pawnbrokers, payday loan shops and bookies.
The three feed off of each other, targeting some of our most deprived areas and perpetuating a cycle of despair driven by the need for extra income. Research carried out by Geofutures found there to be 2.4 times the amount of betting shops in areas of high unemployment than in areas of low unemployment, and bookies are clustering as the Gambling Act 2005 limits each shop to four Fixed Odds Betting Terminals, or FOBTs. These machines are lethal, highly addictive roulette and casino gaming machines, upon which it is possible to stake up to £100 every 20 seconds. For this reason, many see it as a quick way to make a bit of extra money.
So why should this concern us? FOBTs have been described as “the crack cocaine of gambling” and there is empirical evidence linking them to problem gambling. The last thing some of our most deprived areas need right now is more social problems. Then there is the economic impact. A report by Howard Reed of Landman Economics found that for every £1bn spent on FOBTs, 7000 jobs were created by the industry but 20,000 jobs were lost in the wider economy as FOBTs are a very “labour unintensive” form of consumer spending. In 2012, I witnessed this first hand when I visited Newham, as what was once a pub, probably employing up to 10 people was now a BetFred employing two or three staff on minimum wage yet sucking more than £3,500 per week out of the area from FOBTs alone. In 2012, £1.4bn was lost on FOBTs across the country, and Mintel project this will rise to £2.2bn by 2018. Landman Economics predict, based on growth in real terms, FOBT revenue will increase to £1.7bn by 2016 and £3.4bn by 2023 – and this is money that’s coming primarily from our poorest areas.
Newham is an interesting case study, as they have 24 betting shops and have recently rejected an application from Paddy Power for number 25. The proposed site is on Green Street and would be situated 100 yards from another Paddy Power and less than 50 yards from a Ladbrokes, which is opposite another Ladbrokes. You really have to see it to believe it. The Council have rejected the application on the basis that the shop will not be used for traditional, over the counter betting – which is what the license is for – but for gaming on FOBTs. Because of the limit of four FOBTs per shop, betting shops cluster to allow for as many as possible, so this is evidence alone that the primary gambling activity in these shops is gaming and not betting. According to Ladbrokes’ most recent accounts, 52% of their profits and 83% of their turnover is derived from FOBTs. The case in Newham is going to Magistrates’ Court on the 10th June, and if they are successful other local authorities will be able to successfully reject betting shop license applications on this basis.
It’s great that Labour have committed to sticking bookies in their own use class if they win the next election, but this looks to have led to the bookies bringing forward loads of capital investment to prepare for that eventuality. As a result, the PLCs Ladbrokes, William Hill, Coral and Paddy Power are planning 245 new shops in 2013. Add BetFred and independents to that and we’re looking at another 300 betting shops this year.
So what can we do? We set up the “Stop the FOBTs” campaign as we believe the proliferation of betting shops is driven by FOBTs, and this is having a parasitic effect on some of our most deprived areas. We’re also concerned about their link to problem gambling, so the Government must reduce the maximum stake from £100 to £2. If you want to set up a local campaign, please get in touch with me [email protected] and we can advise you on how to go about objecting to new license applications or building a grassroots movement.
The more people we have on board, the more likely it is we will succeed.