A gamble too far Nils Pratley
The gambling firms’ defence of fixed-odds betting terminals has failed. It is now an oddson probability that the government will cut maximum stakes from £100. How did this happen to an industry that, despite compelling evidence of social harm done by their machines, seemed to have might on its side?
The bookies could point to the substantial sums of tax they pay the Treasury. They warned, with justification, that thousands of employees could lose their jobs if more high-street premises become uneconomic to run. They argued – again, soberly – that lower stakes on the high street might drive some problem gamblers towards the wild west of the internet.
It hasn’t worked. The only live question is whether the government reduces maximum stakes to about £25 or grants campaigners’ wish and settles on £2. Either way, the sums that the bookies collect from the fixed-odd machines – Brits lost an astonishing £1.8bn last year – seems set to fall.
The bookies have only themselves to blame. Roulette, the machines’ core offering, is a nasty product in the sense that it is a game of chance where the house’s edge is set in stone. It is different in character from traditional bookmaking, where the bookie must weather the occasions when Frankie Dettori wins all seven races at Ascot.
If New Labour, when it allowed the machines on to the high street, didn’t understand the difference, the bookies had no excuse. The “crack cocaine of gambling” label has stuck to the machines because it is basically correct: roulette, especially in electronic form, has a particular power to encourage some players to chase their losses. The arrival of the machines was a moment for the gambling industry, if it valued its own long-term interests, to ensure its fine words about encouraging “responsible gambling” meant something.
No industry is perfect, but some of the cock-ups have been extraordinary. The firm 888 copped a £7.8m penalty from the Gambling Commission last month after 7,000 people who had voluntarily banned themselves from gambling were still able to access their accounts. Last year, the commission reported that Paddy Power had encouraged a problem gambler to keep betting until he lost five jobs, his home and access to his children.
Or try yesterday’s tale about the grubby marketing tactics employed by “affiliates” chasing finder’s fees for delivering punters to the doors of the big firms. The bookies could have closed down that racket years ago by paying only properly vetted affiliates.
Not all the scandals have involved fixed-odds machines on the high street – the 888 one didn’t. But they have all eroded trust and forced the conclusion that stakes must be cut because the industry can’t run an orderly house.
The tale could have been different. The firms could have expended less energy on belligerent lobbying and more on containing the dangers from the machines. Too late now.
Bursting bitcoin’s bubble
Jamie Dimon, boss of JP Morgan, says bitcoin is a fraud that is only fit for use by drug dealers, murderers and people living in North Korea. He’s right.
The idea that governments are going to stand idle indefinitely and allow bitcoin and its cryptocurrency imitators to bypass banking systems and regulators is surely fanciful. As Dimon argues, countries like to control their currencies and their money supply, which means ensuring that a central bank and a legal system stands behind the process.
His other point is that bitcoin looks to be a bubble. That is almost unarguable. One unit of a normal currency should not surge in value from $500 to almost $5,000 in little more than 18 months, as bitcoin has. This is speculation upon speculation. The end will arrive when the late arrivals get burned in the crash. Stay well away.
More is better at Sky
They believe in better at Sky, or should that be more? Jeremy Darroch has emerged yet again as one of the bestpaid chief executives in the FTSE 100. He collected £16.3m last year as a longterm incentive plan came good and paid out £11.8m.
Darroch is an experienced operator and Sky, whatever you think of the Murdochs’ plan to own 100% of it, is an impressive commercial beast. But the pay committee may have forgotten that the broadcaster’s share price was stuck at a three-year low before 21st Century Fox turned up with its offer.
The near-£12m award may be justified by the performance conditions (they always are), but it’s a hell of a sum in the circumstances.