Are you familiar with your local betting shop? It sits on most high streets and you can pop in and out of it as easily as you can the bank or the launderette. Perhaps you put a bet on the National or the Derby, but not much else. It may surprise you to know that some of the criminal fraternity see their local betting shop not just as a place to bet, but as a bank and a money laundering service.
The reason for this is the FOBT (Fixed Odds Betting Terminals) known as the ‘crack cocaine’ of gambling. These machines ( there are over 33,000 of them in the UK), are said to cost punters a staggering £8.5 billion a year. Many of the poorest in society are becoming hooked on these machines.The terminals offer games such a roulette, bingo and blackjack. They are very fast – average 20 seconds per bet for roulette, and can swallow a weekly wage packet or max out a bank card in a very short time.
FOBTs arrived in the UK about twelve years ago and have always been lightly regulated.
They are targeted at deprived, high unemployment areas and now make up around 80 per cent of turnover in most betting shops, leading thousands of the most vulnerable people into desperate misery. A campaign was recently started by a national newspaper to have FOBTs much more tightly regulated, limiting for example, the amount wagered and requiring that the exact chances of a payout are made clear to punters before any amount is wagered.
However, there exists a more sinister side to these machines. Last month the Gambling Commission publicly admitted what has long been privately acknowledged: FOBTs present a “high inherent money-laundering risk”. Recently the industry regulator fined Coral bookmakers £90,000 in profits made from one drug dealer who had laundered almost £1m in its shops.
What the machines provide is the chance for criminals to quickly convert large sums of money into virtual cash that can later be converted back into the real thing. For example, a money launderer can put £500 into a machine using cash, play a little and expect to lose a little, then ask for the balance in the machine to be returned to them either in the form of cash with a receipt or, in some cases, by transfer of the balance onto a card. They do not expect to collude with the management of the betting shop in fact they have to be careful to make it look like they are normal punters so they go round as many betting shops as they can, so as to avoid being recognised.
There is little official research into the scale and extent of such operations. The 2005 Gambling Act, which regulates the terminals, says one of its primary objectives is “preventing gambling from being a source of crime or disorder, being associated with crime or disorder or being used to support crime”.
However, it has long been obvious to the public that criminals can convert their loot into a clean win on an electronic roulette table. Dealers feed their drug money through the machines, losing a little and then cashing out with the vast majority of their stake. They can then collect a printed ticket showing they have gambled that day ““ meaning that if stopped by police, they can answer questions about why an apparently unemployed young man carries hundreds of pounds in rolled-up cash.
There are favoured bookies. Ladbrokes is said to be useful because you can transfer winnings in the shop to an online gaming account. In William Hill’s you can ask for your winnings to be credited directly to your debit card, with the cash landing up in your bank the same day, giving the impression of a very successful punter. The economics of drug dealing make it cost-effective to pay 5% to 10% to betting shops (through incurring betting losses) in order to launder the illicit profits.
Human nature is such that there will always be compulsive gamblers and there will always be money launderers too. A machine that is tailor-made to cater for both activities should at the least be strictly regulated or at best, banned completely.