Fixed Odds Betting Terminals: the psychology of state-corporate harm maximisation

High street slot machine gambling – especially the mushrooming of Fixed Odds Betting Terminals (FOBTs) – has entered the political debate in the UK. FOBTs are a type of gambling machine which has a set (’ fixed’) average level of payout (‘odds’). For example, a FOBT with fixed odds of 70% means that someone who puts in £10 to play would generally get £7 back, although this is an average: in practice, some players will get back more than this, others less. In recent years FOBTs have become common on British High Streets, allowing very large amounts of money to be gambled in a short amount of time.

In this context, it is worth taking a salutary glance to the other side of the world – to Australia, sometimes referred to as the ‘gambling capital of the world’. Central to this perhaps unwanted status is the phenomenon of ‘pokies’ – “a high-stakes, high-intensity” gambling machine which “has become ubiquitous in pubs and community clubs”. According to one recent analysis, “Australians lose more money gambling per person than any other nation. In 2011-12 this amounted to the equivalent of more than £650 per adult”.

Such per capita calculations obscure the real cost of class-targeted forms of gambling within that global figure. Frankston, in fact the second largest city in the state of Victoria but in effect a suburb of Melbourne, is desperately poor, beset by a range of economic and social problems. It is characterised by lower levels of income, a lower rate of education across all age ranges, higher levels of unemployment and youth disengagement, and poorer averages on every indicator of ‘health’ and ‘personal safety’ when compared to the Melbourne metropolitan or State averages.  It also has a higher rate of per capita gambling losses than the Victorian average. At the top of the walkway from the platforms of Frankston train station is a rather stunning visual: a more or less constantly displayed poster warning, in stark white lettering on a black background: POKER MACHINES HARM FRANKSTON. $62,225,277 LOST LAST YEAR ALONE.

How, then, does the state seek to mitigate the harms caused by FOBTs  to already disadvantaged communities? In Southern Australia, the Victorian Commission for Gambling and Liquor Regulation organises its regulatory approach around three commitments:

• achieving high levels of voluntary compliance with gambling laws by setting clear expectations, encouraging the right behaviour and taking strong enforcement action where required
• constraining the regulatory costs and restrictions imposed on the gambling industries to what is necessary to achieve regulatory objectives
• upholding a culture of integrity and harm minimisation in the gambling industries.

This illustrates a preference by the state for self-regulation: regulatory costs for and burdens upon industry are to be minimised; and the object is to maintain safer cultures. A walk around many Australian bars, replete with gambling machines, reveals the nature of such self-regulatory efforts. “Take Control Of Your Gambling”, “Don’t Chase Your Losses: walk away”, “Stay in Control”, ”Set Yourself a Limit and Do Not exceed it” and “In the End the Machines will Win” say the signage aimed at the hapless punter. Such exhortations are thoroughly undermined by the psychology that is wired into the very design of these machines.  This makes the regulatory commitment to uphold “a culture of integrity and harm minimisation in the gambling industries” somewhat disingenuous.

Though it might not be obvious from the common media focus, only around 1% of people meet the diagnostic criteria for gambling addiction. We cannot, then, explain the level of gambling in Frankston and, increasingly, in some of the poorest boroughs, towns and cities across the UK, as a pathological type of behaviour exhibited by a small percentage of the population. We might more usefully learn some lessons from the psychology of behaviourism, which explores how people (and other animal species) respond to, and learn through, rewards and punishments. Rewards are specifically relevant to gambling machines as their design often draws directly on behaviourist psychology. Whilst they apply to all learning species, including humans, many behaviourist principles were first discovered in experiments on non-human animals. One classic animal study illustrates the problem with gambling machines from a behaviourist point of view.

In the most basic design of experiment, the animal is placed in an enclosure that has within it a button and a food dispenser. Whilst exploring, at some point the animal will make contact with the button and a food pellet will be released from the dispenser. The animal finds the food pellet rewarding and quickly learns to associate pressing the button with receiving a reward. Because it is usually not fed before the experiment starts, the animal will spend a lot of time pressing the button until it is no longer hungry. Transferring this lesson to FOBTs, playing is the equivalent of the animal pressing the button and getting a win is the equivalent of the food pellet reward.

Now, what happens when pressing the button doesn’t always make the food dispenser give out a food pellet? Say, for example, the food dispenser only gives out a pellet for every third press of the button: does the animal give up pressing the button, because it’s usually not rewarding? No, in fact the animal keeps on tapping that button: because it needs to press it three times as often to get the same reward, that’s what it does. You’ve probably already worked out the link to FOBTs: they don’t give out a reward every time (if they did they would just be change machines), but the fact that they don’t is one of the things that keeps people playing.

Back to our animal experiment. What if, instead of giving out a food pellet every three presses, the food dispenser is set up to give out food pellets randomly? Does the animal, not ‘knowing’ whether or not pressing the button will get it a reward, give up now? Again, no. This actually makes the animal press the button the most of all: because it cannot predict which presses will or will not be rewarded, the animal will press the button over and over and over again, periodically getting a food pellet reward which keeps it going. You can probably also see how this relates to FOBTs: the randomness of which plays get rewarded and which don’t is one of the factors that keeps the player going – the next play might be the one that ‘wins’. Psychologists have known about these principles since the classic work of B.F. Skinner with pigeons, which identified the role of random rewards in explaining how gambling ‘works’.

There’s one more twist. With the animal in our experiment, there are two things that will stop it pressing the button: (1) if there is a long enough sequence with no reward then, yes, eventually the animal will give up; (2) if the animal gets rewarded too often then it won’t be hungry anymore, so will no longer be motivated to seek the food reward. In a truly random set-up either could happen (although they would be fairly unlikely to happen very often). If you wanted to keep the animal pressing the button as much as possible you would put some limitations on the randomness, so that it never went too long without a reward but also never got so much of a reward that it lost the motivation to continue. The designers of FOBTs know this, so the machines are set up not to go too long without giving a ‘winning’ play. They are also, obviously, set up not to pay out more than they take in (FOBTs exist to make a profit, after all), so players will rarely reach a point where they are no longer ‘hungry’ for a ‘win’.

Overall, then, behaviourist psychology demonstrates how FOBTs are designed to maximise the amount that people play. If gambling is ‘harm’, then FOBTs are technologies of harm maximisation. This hardly squares with the regulatory gloss about a “culture of integrity and harm minimisation in the gambling industries”.

FOBTs – the so-called ‘crack cocaine’ of high street gambling – have recently become a matter of formal political debate in the UK. Out of this debate came the Gambling Protection and Controls, April 2014, which most notably required anyone using such machines to inform shop staff if they want to bet more than £50 cash at a time – rather than placing any maximum limit on spending. More recently, some UK councils have proposed a maximum individual stake for these machines. The Association of British Bookmakers inevitably claimed that the law would “restrict growth for the sector and mean hundreds of shops and thousands of jobs are now at risk“, even as others argued that ‘regulation’ was best left to the markets. An example of industry self-regulation in the UK can be seen in the work of the Senet Group, an ‘independent’ body with the ostensible aim of ‘promoting responsible gambling standards’, which was set up by the bookmakers William Hill, Paddy Power, Ladbrokes and Coral. In early 2015 the Senet Group, along with Gambleaware, launched a campaign with the strapline “When the fun stops, stop”. An example image from the campaign is shown below: notice how the word “fun” is presented much larger, and in a more eye-catching design, than the word “stop”. What message is this advert really sending about gambling?

Again, there is much to learn via lessons from Australia. As anti-gambling campaigner Paul Bendat says, there the industry and its political allies have consistently used a series of discursive techniques to pre-empt effective regulation, so that the “harm to the disadvantaged” can proceed and accelerate. This strategy, resonant of those deployed by, for example, the tobacco and alcohol industries, denies that FBOTs are responsible for harm and deflects attention from the machine to the individual, claiming to defend individual freedoms and calling for voluntary, ‘responsible’ codes while citing potential employment losses as a risk of tighter regulation.

Viewed in the light of the psychology of FOBTs, the dangers of such claims, and their logic of self-regulation and appeals to cultures of harm-minimisation, are clear. Following the development, in the 1990s, by US criminologists of the term state-corporate crime, we might think of the failure to regulate FOBTs effectively as ‘state-corporate harm’ – harm generated by private companies which is facilitated by states. The dominant preference for self-regulation is probably best explained by the convergence of corporate and governmental interests that benefit from it: an enormously profitable industry, that at the same time generates considerable tax revenues for Government. Meanwhile, state and capital benefit by extracting revenue from populations who are already economically, socially and politically marginalised.

Steve Tombs and Jim Turner, The Open University