It was New Labour, during its brief and bizarre flirtation with “supercasinos” as a tool for urban regeneration, that gave the green light to fixed-odds betting terminals (FOBTs) on the high street. The only generous interpretation is that ministers didn’t know what they doing when they set maximum stakes at £100 and spin speeds at 20 seconds.
The main game on the machines is roulette, which even irregular casino-goers know is a properly nasty game. The addictive quality lies in the high 97% return rate to the player. Yet the house’s edge is mathematically certain and, over time, a player can only lose. From the operators’ point of view, it’s the perfect product.
Allowing four roulette machines to be placed in every bookmaking shop was grossly naive. Yes, as far as possible, we must all be free to lose our money as we wish, but the fallout from problem gambling hits others, not least social services. FOBTs are not the only cause of problem gambling, of course, but the high rates of addiction to the machines are undeniable.
What you need to know about FOBTs
Fixed-odds betting terminals (FOBTs) are machines, found largely in bookmakers and betting shops, that allow customers to stake up to £100 every 20 seconds on digital versions of games such as roulette.
The UK has 33,611 FOBTs, each of which take more than £53,000 from gamblers per year.
Critics of FOBTs say they are particularly addictive, allow gamblers to rack up huge losses within a few hours, and are concentrated in deprived areas. They have also been linked to money laundering.
The culture secretary, Matt Hancock, deserves huge credit for facing down the bookmakers and opting to limit stakes to £2 on the grounds that FOBTs are “a social blight”. He still has to find a way to tackle the online problem but imposing a sense of moderation on the high street is a good place to start.
Perhaps Hancock, as a horseracing man, could see what New Labour didn’t: that roulette isn’t real gambling, and inevitably involves gouging the vulnerable when offered in souped-up electronic form on the high street.
As for the bookies, they consistently refused to acknowledge the difference between a casino game and a flutter on the 4.30 at Ripon. Maybe that is why their lobbying was so poor. It is certainly a reason why they deserved to lose this fight. Well done, Mr Hancock.
Ocado finally grows up
When the Ocado chief executive, Tim Steiner, said 15 months ago that “we expect to sign multiple deals in multiple territories in the medium term”, he provoked guffaws. He’d been making similar promises for three years and had nothing to show.
Nobody’s laughing now. Ocado’s technology deal with Kroger in the US is as eye-catching as they come. Kroger has 8% of the world’s biggest grocery market – it is second only to Walmart in the US – and the idea is to open 20 distribution centres in three years. For context, Ocado, under its own steam and via a partnership with Morrisons, currently serves the UK from just three warehouses.
The Kroger alliance follows deals with Groupe Casino in France, Sobeys in Canada and ICA in Sweden – all big players on their home patches. The “multiple territories” boast has been met and the “medium term” promise exceeded.
How did it happen so quickly? Ocado’s kit has clearly impressed a lot of people but the new factor may be the fear Amazon caused in boardrooms around the globe when it paid $13.7bn (£10.1bn) to buy Whole Foods Markets in the US last year. That takeover was a firm signal that Jeff Bezos, in between saving civilisation with his space projects, plans to colonise the grocery market on Earth. Ocado’s technology is now seen as anti-Amazon device for traditional supermarkets in distress. It’s not a bad marketing pitch.
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It is still hard to believe that ol’ Ocado, after the astonishing 44.4% pop in the share price, can be worth £5.3bn. Since outsiders don’t know the terms of the licensing deals, the valuation is taking an awful lot on trust. The sale of £183m-worth of new shares to Kroger, in exchange for a 5% stake, gives comfort that Ocado can handle the upfront capital costs, but the City’s long-term profit projections are basically guesswork.
Still, Ocado is plainly now a serious grownup company, not the “charity” that Sir Terry Leahy used to call it when he was he was running Tesco a decade ago. Indeed, even if Ocado’s American adventure turns out not to fulfil the highest hopes, it can’t go as badly as Tesco’s expensive flop.
Mothercare’s change of heart
What’s got into the baby milk at Mothercare? Last month, a board chaired by Alan Parker ousted chief executive Mark Newton-Jones and appointed a new boss. A couple of weeks later Parker retired. Now Newton-Jones has been reappointed under the new chairman, Clive Whiley. Maybe the independent non-executive directors who oversaw the firing and rehiring of Newton-Jones can explain their thinking. Or do they just do whatever this week’s chairman tells them to do?