When Paddy Power launched a new advertising campaign with the tagline “You’re Welcome!” last year, its chief marketing officer told a trade magazine that “the Paddy Power brand has always been about two things – being as generous as we can with our customers, and behaving in a mischievous way”. Thanks to a damning account of its failures on customer protection and crime prevention, published by the Gambling Commission on Monday, we can now add a third: exploitation, of the most cynical and deliberate kind.
The Commission’s report tells the story of “Customer A”, who had five jobs to feed his addiction to fixed-odds betting terminal gaming machines. By the time “Paddy” had finished with him, Customer A had lost everything: his family, his home and his jobs.
Concerns about his compulsive gambling were passed up the line to senior managers by betting shop staff, to no avail. One senior employee, in fact, responded to a report that Customer A might be “visiting the shop less frequently” by advising that “steps should be taken to try to increase Customer A’s visits and time spent in the gambling premises”.
The Commission’s report strips away the calculated, “cheeky chappie” offensiveness of Paddy Power’s multimillion-pound ad campaigns and exposes what lies beneath: a business founded on betting which is now hopelessly addicted to the risk-free profits from high street gaming machines.
And for Paddy Power, you can read any major high street bookie. Scratch the surface, and they would all have similar stories of addiction and destitution, fuelled by the FOBTs. They might look like betting shops, and they advertise sports betting in the windows, but what particularly appeals to senior executives is the easy, no-risk money from gaming machines.
The fixed margin is the key difference between betting and gaming. Unlike the Cheltenham Festival or the Saturday football coupon, roulette and other games of chance ensure that the bookie simply cannot lose.
The machines do not demand wages either, or holidays or sick leave, or even lunch breaks. They shore up the share price, guarantee the bonuses of senior executives, and all anyone needs to do is plug them in at opening time and empty them at night.
The cash starts to flow from across their estate as soon as the machines are switched on, at an unbending rate of about 2% of turnover.
Never mind all the headline figures of possible losses for individual punters of £100 a spin, three times a minute. That 2% is the number that really matters, because it is as fixed and fundamental as the laws of planetary motion. In the decade since FOBTs were rubber-stamped by the 2005 Gambling Act, they have turned the biggest names in gambling into the business equivalent of trust fund layabouts. A huge annual income is guaranteed, and they don’t need to lift a finger to get it.
The potential impact of allowing roulette out of casinos and on to the high street could and should have been foreseen. It has caused huge problems in many of Britain’s most deprived communities, because of the inevitable “clustering” of shops in areas of high population density. But the FOBTs are a festering problem for racing too. The sport depends on betting – not gaming – for its income, but it has still been unequivocal in its support for gaming machines in betting shops. Racing’s media rights deals with the bookies, which are worth many millions of pounds each year, are negotiated on a “per shop” basis, and any threat to the machines is seen as a threat to shop numbers too. Racing’s official line on FOBTs is clear. “Betting shops are pivotal to the funding of British racing,” Will Lambe, the British Horseracing Authority’s director of public affairs and policy, says, “and as such we do not support any measure that could compromise their financial viability.”
In the short term, racing is sharing in the benefits of the bookies’ risk-free bonanza. Yet it is the very same gambling firms, the ones with big off-course chains of shops in addition to their online sites, which are resisting the BHA’s Authorised Betting Partner initiative most fiercely. And just because the big bookies have been allowed to enjoy their FOBT boom for a decade, there is no guarantee that they will do so forever.
It is possible, but by no means certain, that betting shop numbers would decline following any move to restrict or ban FOBTs. The bookies say that closures would be inevitable, but then they are hooked on the easy money, and will do or say anything to safeguard the supply.
Paddy Power’s senior executives need only step outside their Dublin head office to see that betting can work without gaming to back it up. FOBTs are banned in Irish betting shops, and guess what? There still seem to be plenty about.
The miserable story of Paddy Power’s “Customer A” offers further evidence that racing is on the wrong side of the FOBT argument. The backlash against FOBTs extends across the political spectrum and continues to grow. So too does the risk that racing will be caught in the crossfire.
Source: The Guardian