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Controversial 'puggies' are driving productivity hike

A massive jump in productivity in the gambling industry in Scotland over a 14-year period can be directly linked to the growing popularity of big money fixed-odds betting terminals, according to a leading economist.

A new Scottish Parliament Information Centre (SPICe) briefing on labour productivity in the Scottish economy found that gambling showed the highest rate of growth since 1998. Gross Value Added (GVA) in the industry shot up by more than 440% from £19,000 per full-time equivalent employee in 1998 to £102,000 in 2011, when it was more than double the national average of £44,275.

Inverness-based economist Tony Mackay ascribed the explosive growth to the use of controversial high-speed, high-stake fixed-odds betting terminals (FOBTs) as well as the rise in online gambling.

The introduction of FOBTs in betting shops requires no extra staff, which means that the output, turnover and profit per employee has increased substantially. Mackay said: "The turnover of the betting shops in Scotland has definitely increased substantially because of FOBTs."

Dubbed the "crack cocaine of gambling", FOBTs allow punters to stake up to £100 every 20 seconds in the hope of winning up to £500 on a variety of casino-style games, of which roulette is the most popular.

FOBTs were introduced unregulated to betting shops in 2001 and have largely replaced the lower-stake traditional fruit machines, known in Scotland as "puggies".

Legislation to liberalise gambling introduced by Labour in 2005 limited the number of FOBTs to four per betting shop, a restriction which is believed to have led to the proliferation of betting shops, with around 950 in Scotland.

According to the UK regulator the Gambling Commission, there are around 34,000 FOBTs across the UK.

The terminals have an average gross yield per year of £47,000 each and now account for more than half of betting shop profits.

But a spokesman for the Association of British Bookmakers (ABB) denied that FOBTs were behind the boost in productivity.

The ABB pointed to the 2012 Scottish Health Survey which concluded that the most popular form of gambling activity in Scotland was buying tickets for the National Lottery draw, followed by the purchase of scratchcards. By comparison, the survey found that fewer people bet on horses, used slot machines, played bingo or gambled online.

But the survey data did not report on the amount of money spent on gambling, simply the percentage of people who engaged in different forms of gambling in any one year.

The ABB also claimed that the average stake on FOBTs is £7.55 and that most punters play the machines for an average of 20 minutes.

The association said it has addressed the issue of gambling addiction by offering punters the option of setting a time or money limit on their play. But critics of the industry said that these limits should be mandatory - and that it only takes a flick of a button to continue playing once the voluntary limits have been reached.

A recent study on FOBTs by Glasgow City Council, believed to be the first attempt to gauge their impact, found that gamblers in Glasgow are spending more than £200 million a year on the machines. The study also found that more than £500,000 is pumped into the city's 800 machines in around 210 betting shops every day while punters typically stake more than £12 on each spin on the machines.

The council is now lobbying the Scottish Government to change planning rules to give local authorities the power to restrict the numbers of betting shops. In particular, the council wants to limit the concentration of gambling and payday lending companies, which are often to be found in close proximity in the city's more deprived neighbourhoods.

At the time of the study's publication in June, Paul Rooney, Glasgow City Council's treasurer, said Glasgow had become home to more than 200 "street-corner casinos" without communities getting the chance to consider whether they want them.

Responding to the Scottish Parliament productivity report, Rooney said: "There have been some very significant changes in the industry over the period in question, and I don't doubt that the switch from betting duty to a tax on profits will have had a substantial impact on these figures.

"However, it would appear obvious that the introduction of a new product that generates £1.5 billion profits with almost no overheads will also improve productivity - particularly when you are also cutting staff."

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