Gambling machines are controversial-and increasingly unpopular

Gambling machines are controversial—and increasingly unpopular

Mar 8th 2014 | From the print edition

BOOKMAKERS are an easy target for politicians seeking a quick win. On March 2nd Maria Miller, the culture secretary, promised tougher regulation of high-stakes gaming machines, which allow betting-shop punters to wager up to £300 ($500) per minute. Her proposed rules, which include forcing customers to set a cap on the amount they will spend each time they start a gaming session, did not much impress many Labour bigwigs, who would prefer to see big-money machines banned. But, racing to dominate an increasingly heated debate, the three main parties have long left the facts behind.

High-stakes machines made bookies about £1.5 billion last year, 48% higher than four years earlier. They now account for about half of all betting-shop profits, having boosted takings even as wagers on dogs and horses have plunged. Their popularity is one reason the number of betting shops has risen—from 8,600 in 2009 to about 9,100, according to Dave Jennings of Davy, a research and investment company.

Campaigners complain that gaming machines are most popular among the poor, who can least afford to lose money. Yet their concerns have mounted just as the craze begins to subside. Total revenue growth from gaming machines in betting shops halved in the year to March 2013, and has probably slowed since. In February William Hill and Ladbrokes, Britain’s two biggest betting chains, said profits per machine fell for the first time last year. The take from small-stakes machines, which allow punters to wager no more than £2 at a time, is now growing faster.

Nor are betting shops proliferating as quickly as some fear. Deregulation made it easier for firms to close branches in backwaters and open them in busy places, such as high streets. Shops are thus more visible but not much more numerous (and not nearly as numerous as they were decades ago: Britain had nearly twice as many bookies in the 1970s). Ladbrokes will close 50 premises in 2014 after average annual profits per shop fell from £82,000 to £58,000. Mintel, a research firm, thinks the betting-shop business will decline 7% by 2019.

The biggest uncertainty is whether high-stakes machines make gambling addiction more likely, or addicts’ behaviour more harmful. A study published in December by the Health and Social Care Information Centre, a government body, found “problem gambling” much less prevalent than a similar survey two years ago. It said 0.8% of English men were gambling addicts, compared with 1.5% in 2010 (women rarely gamble to excess). Addicts might just as likely wager away their money in small sums as in big ones.

A government study reporting in the autumn will answer some of these questions. But regulation is not betting firms’ only concern. Betting-machine taxes in Britain are about half the rate common in Europe, suggesting rises are coming. Some think bookmakers have been so obsessed with expanding floor space that they have failed to invest in online gambling, which now accounts for a quarter of the cash Britons wager, according to Simon Holliday of H2 Gambling Capital, a data supplier. Of the four biggest high-street firms only William Hill is cleaning up online.

Hand-wringing over big-money gaming might encourage a broader crackdown on the gambling industry ahead of next year’s general election. Ms Miller says she has asked regulators to examine whether new rules are needed to limit betting ads on television, which have grown sixfold to 1.4m a year since laws were relaxed in 2007. In 2012 these accounted for about 4% of all TV advertising, and are becoming essential for firms that wish to snag a slice of the swiftly growing online gambling market. The stakes are rising.

From the print edition: Britain