High-stakes gambling machines 'suck money from poorest communities'

MPs express alarm about £5bn spent on fixed odds betting terminals in northern cities and London boroughs

More than £5bn was gambled on high-speed, high-stakes gambling machines in northern cities and London boroughs with high levels of unemployment last year – four times the amount bet in richer rural areas in southern England where jobless numbers are low, according to an analysis for the Guardian.

The report reveals that in the 50 parliamentary constituencies with the highest numbers of unemployed people, punters visited 1,251 betting shops and put £5.6bn into 4,454 so-called fixed odds betting terminals (FOBTs). By comparison, the 50 constituencies with the lowest levels of unemployment had only 287 betting shops and 1,045 terminals, and saw £1.4bn gambled last year.

The figures, produced for Fairer Gambling – a non-profit organisation which campaigns against problem betting, run by a gambling expert who helped bring the casino-style fixed odds machines to the UK high street – appear to show that bookmakers have deliberately targeted the poorest areas with the highest unemployment and poverty. It is a charge the industry vigorously rejects.

In East London's Bethnal Green and Bow the 45 betting shops saw £243m placed in bets on machines, dubbed the "crack cocaine of gambling", which 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. By comparison, in Oxfordshire's Henley not a single licence had been issued for a betting shop.

Lucy Powell, Labour MP for Manchester Central, said she was "shocked" that £190m was being gambled in her local area. "There are mind-numbing numbers of betting shops in places like Moston in my constituency. I think it is a moral question to ask whether it is a good thing that betting companies are targeting the poor and whether government lets them.

"According to these figures there's more being spent on gambling than by the council in my constituency on services."

The profit made by betting shops, known as the gross gambling yield, in the 50 poorest constituencies was just over £173m, according to Fairer Gambling, which gleaned the figures from analysis of industry data.

There appears a distinctive political divide, with the betting shops clustered in Labour MPs' constituencies and almost absent in Tory MPs' backyards. Diane Abbott, MP for Hackney North and Stoke Newington, said almost £200m was spent on betting in her constituency last year. "It's a business model which sucks money from the poorest communities," she said, adding that hundreds of public order offences were committed outside betting shops every week, contributing to low-level social disorder.

However, Tories blamed the culture of poor people rather than betting companies for exploiting them. John Redwood, the Conservative MP for Wokingham in Surrey, which has three betting shops, said he had been "surprised" by the spread of bookmakers in poorer areas.

"I put it down to the fact that poor people believe there's one shot to get rich. They put getting rich down to luck and think they can take a gamble.

"They also have time on their hands. My voters are too busy working hard to make a reasonable income."

At the heart of the debate is whether the government should intervene to reshape the nation's high streets. Last July, the culture media and sport select committee called for the lifting of the limited number of high-stakes gambling machines allowed in each betting shop. Currently, bookmakers are limited to four machines per shop. The machines are hugely lucrative, bringing in on average £900 a week in profits, so bookmakers have bypassed the restriction by opening more branches in high streets – "clustering" in poorer areas.

However, Labour said the select committee was wrong, and instead the opposition agreed with Mary Portas, the retail guru, who argued in her government review that "the influx of betting shops, often in more deprived areas, is blighting our high streets". Her analysis was that betting shops were cluttering up Britain because they were listed as "financial services" in planning guidelines.

This meant empty shopfronts that once contained banks and building societies could be converted into betting shops without any planning permission. The Portas retail review urged ministers to remove this anomaly and instead ensure every prospective bookmaker would have to apply for planning permission.

Hilary Benn, the shadow local government spokesman whose Leeds central constituency saw £132m gambled last year, said: "There should be a separate use class order for betting shops under planning rules so that local communities and councils can decide how many shops they wish to have in their area. This will help deal with the problem of clustering. I do not support a relaxation of the current limit on the number of high-value machines."

Adrian Parkinson, who worked for the Tote, was involved with launching fixed-odds betting terminals from 1999 until 2008, and authored the study for Fairer Gambling. He said: "Despite what the bookmakers and their supportive MPs say, the proliferation of betting shops is driven by FOBTs, and is focused on the most deprived areas in the UK."

He argued that the culture secretary already has the power to rein in the bookmakers. "The Gambling Act 2005 gives Maria Miller the power to reduce the maximum stake and increase the time between spins without primary legislation, so there is no excuse for government inaction."

In a statement the Association of British Bookmakers (ABB) said: "The idea that bookmakers target vulnerable communities is both false and offensive. Like any other retailer, we locate our shops where footfall is high and rents are affordable. These factors vary, which explains there can be different numbers of shops in different parts of the country.

"At a time of economic uncertainty and record retail vacancies, we are proud to play our part in supporting jobs right across the UK."

Bookmakers claim that Fairer Gambling is motivated by commercial interests. Fairer Gambling was founded by Derek Webb, founder of casino games developer Prime Table Games, which he sold in October last year to the Las Vegas-based Galaxy Gaming for $23m (£15m). Webb and his partner Hannah O'Donnell took the payment as $800,000 in Galaxy shares and the rest in two promissory notes.

The ABB said: "Betting shops have been located on our nation's high streets ever since off-course betting was first made legal in 1961. The betting industry would welcome an evidence-based debate, but the research presented is misleading. Fairer Gambling is an organisation with a commercial interest in running down high street bookies. This inaccurate piece of research discredits their place in this debate."

The government said it was reviewing fixed-odd betting terminals and would respond to the select committee "within weeks". A department for culture, media and sport spokesman said: "We will undertake a review of the evidence around fixed odds betting terminals and problem gambling. An announcement about the scope and timing of the review will be made in due course."