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In the year to March 2012, £40bn was staked on fixed odds betting terminals in betting shops. The industry says the return to player is 97%. Photograph: Alex Segre / Rex Features
In the year to March 2012, £40bn was staked on fixed odds betting terminals in betting shops. The industry says the return to player is 97%. Photograph: Alex Segre / Rex Features

Betting terminals 'being used to make huge profits from vulnerable people'

This article is more than 11 years old
Fairer Gambling campaign says bookmakers made £1.4bn in a year from high-speed, high-stakes machines

For a man whose fortune was made in poker games and casinos, Derek Webb admits he was a late starter when it came to developing a conscience about the social cost of gambling. A multimillionaire from Derby, who now lives mostly in an apartment in a Las Vegas luxury hotel, the 60-year-old made a living for 25 years exploiting weaker players across the green baize of a poker table.

But for the past five years Webb has poured cash into a low-level war with Britain's bookmakers, whom he accuses of subverting legislation to flood high streets with high-speed, high-stakes gambling machines. These fixed odds betting terminals (FOBTs), Webb says, have seen £40bn staked in the country's betting shops in the year to March 2012.

In an interview with the Guardian, Webb said he first came across the machines when he found one in 2007 loaded with a game — three card poker — he had invented. "The point of three card poker was that it was easier to play … I had designed it to be fairer for the players but on the machines it was played four, five times faster and the rules had been changed to make it less favourable … I was annoyed about it. But rather than sue I backed a campaign to make my point," says Webb.

What this chance encounter led to was Webb's non-profit Fairer Gambling campaign, which on Monday reveals that the machines are worth £1.4bn in profit a year to the betting industry — and controversially claims more than £250m of this comes from problem gambling. While he still has commercial interests in gambling, his campaign is focused on the games that are most stacked against the player, which, he argues, are increasingly targeted at vulnerable people in the poorest areas of the country.

The machines offer quickfire casino games allowing players to stake up to £100 on a 20-second spin of the wheel. Punters can play with cash, or pay with credit or debit cards at the counter. "The crack cocaine of gambling," the critics call it. Webb says his "eyes opened" when one of his relatives was ravaged by "gambling addiction". As a first step Fairer Gambling says stakes should be reduced to £2 a spin.

Derek Webb
Derek Webb at home in Las Vegas.

Webb learned cards at his grandad's knee. A child of the 1960s, he dabbled in politics, attending rallies with communists, marching with CND from Hull to Liverpool and having a "hippy moment". He gave up a place at Bristol University to focus on poker and ended up travelling the world, living a jetset lifestyle and playing for $50,000 pots.

It was a losing streak in the mid 1990s that convinced him he needed a new career — and he ended up inventing casino games.

Webb sold up in 2011 to Galaxy Gaming, a casino games supplier, which paid him $800,000 in company shares and $22.2m in monthly payments spread over seven years. "I wanted to do something different. Retire from the commercial world but still have fun."

This included giving the Lib Dems £25,000 after Webb met the MP Don Foster, who shared his fears about FOBTs. Last September the party called for tighter regulation of FOBTs. "I spent a long time in the US and it was the polarised US politics that made me want to support Lib Dems. I wanted someone in the middle," says Webb.

Webb's campaign has drawn a furious reaction from bookies, who accuse him of peddling "misleading and unverified" statistics and are incensed about claims the industry has deliberately targeted the poorest areas with the highest unemployment and poverty. "Poorer areas have denser populations, that's why they have more shops," said a spokesman for the Association for British Bookmakers. The ABB argues Webb "still has commercial interests in the casino gaming sector and the casino gaming sector could benefit from Fairer Gambling's proposals".

Webb rejects the charge and says no casino has closed down because of FOBTs. "Casinos employ more staff and I don't see fights or violence in casinos. But you do in bookmakers when people lose on FOBTs. There's a difference."

What everyone agrees is that these FOBTs could barely have been found in Britain a decade ago. Now there are 35,000 of them – and they account for 80% of bookies' turnover. Last year Labour's deputy leader, Harriet Harman, told Channel 4 that the Gambling Act 2005 had been a mistake and these machines were "ruining the high street and people's lives".

Webb says that the secret to FOBTs' success lies in George Bernard Shaw's maxim that in "gambling the many must lose in order that the few may win". He points out that it is the industry that insists these machines are "fixed odds" – the "return to player" is 97%, leaving roughly 3% for the house. The probability has to be shown by law on every FOBT. Hence if the profits are about £1bn, then the amount staked is £40bn.

"What the bookies will not tell you is how much is actually put into the machine rather than the amount wagered [ie winnings carried forward to new games]," says Webb. "Our analysis shows that is more like £8bn.

"We think the return to player is much lower but the industry don't want to admit that you are much less likely to win than they previously said."

If these figures are correct, the return to the gamblers would be about 88% rather than 97%.

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