Debunking the "Gambling away £100 every 20 seconds" myth

"At the moment, a punter can walk into a high street bookmakers and gamble away £100 every 20 seconds for 13 hours."

Tom Watson - HuffPostUK - Oct 2013

I'm highlighting this claim about Fixed Odds Betting Terminals in particular because it is so mathematically wrong-headed. Also because the "gambling away £100 every 20 seconds" and "gambling away £18,000 per hour" narratives are now forming a core part of the campaign against FOBTs. I may come back to the political and moral arguments on this subject in a later post. But for now I just want to focus on the maths.

FOBTs, which are most commonly roulette have a house edge of between 2.7% and around 5%. This is in line with the standard odds yielded by a roulette table. If a table has a single zero then the odds of winning on a red or black bet are just less than 50/50 (because if it comes up zero the house wins). So with 36 numbers plus zero the chances of winning in a single spin are 18/37 or 0.486. This yields a house edge of just over 2.7%. If the roulette table has two zeroes (a zero and a double zero) then the odds are titled more in the house's favour as it becomes 18/38 or 0.474 yielding a house edge of 5.26%.

So as probability theory tells us, over the long term we would expect a punter on the first type of table to be about 2.7% down and a punter on the second type of table to be 5.26% down. For the rest of this piece I am going to focus on the second type of table as I wanted to pick the worst case scenario for this to be generous.

If someone was foolhardy enough to bet £100 on a red or black bet every 20 seconds for an hour on this sort of table they would be incredibly unlikely to lose (or "gamble away" to use Watson's term) £18,000. In fact we can calculate just how unlikely this is. We simply take the chance of them losing each time and multiply this number by itself the number of times they are going to play. From this we can see that the chance of this happening is (1-(18/38))^180

Which is one in 149,847,041,024,310,787,847,729,246,045,620,000,000,000,000,000,000*

Or to put it another way roughly the same likelihood as picking two random molecules of water from all the oceans of the world and them being the same one. In other words pretty much as close to impossible as you can theoretically get.

In actual fact someone who gambled £100 every 20 seconds for an hour would not have "gambled away £18,000". They would, on average gamble away 5.26% of £18,000 or £946.80. Now I'm not trying to claim this is not a large amount of money, it of course is, but it's only around a twentieth of the amount that the headlines and distortions of the campaign would have you believe.

More importantly though it is the most extreme interpretation of the possibilities. How many people who gamble on these machines seriously wager the maximum amount every 20 seconds for an hour (or more) at a time? I suspect very few. Far more likely is that they would wager smaller amounts, perhaps £5 or £10 a spin. So if someone did bet £5 for 180 spins they'd be on average down about £48. Now whether £48 spent in this way for an hour is a wise use of money is a different question. But of course losing £48 in an hour is not as scary or headline grabby as £18,000 in an hour.

As I said the politics and morality is for another post and I am not covering that here. I'm simply saying that if people want to campaign on this they should at least get the basic maths right.


*After the 32nd figure my calculator ran out of accuracy (because the number is so massive) so the final 19 digits are all zeroes meaning that it is rounded down.

Political outrage template article

A [supporter/member/if you're lucky MP or Peer] of [political party you don't like] has made a [comment/speech/if you're lucky bad taste joke] that has offended a number of people.

Calls have been made for the [supporter/member/if you're lucky MP or Peer] to apologise for the [comment/speech/if you're lucky bad taste joke] that was made on [Tuesday/Question Time/if you're lucky Twitter].

The gaffe comes just [months/weeks/if you're lucky days] after [supporter/member/if you're doubly lucky MP or Peer] of [political party you don't like] also caused controversy with a [comment/speech/if you're on a real outrage winning streak bad taste joke] that also offended lots of people. [supporter/member/if you're doubly lucky MP or Peer] apologised for this at the time but these latest scandalous remarks show that they simply have not learned their lesson.

"They just don't get it" said a spokesperson for [pressure group/political party you do like/political party you dislike less than the political party you don't like]. "It's absolutely typical of people associated with that party and demonstrates why you should never vote for them."

House of Comments - Episode 89 - 2 Unlimited

Episode 89 of the House of Comments podcast "2 Unlimited" is out. Emma is back! Recovering well from her recent operation we discuss the recently floated "two child benefit and no more" policy from a close Cameron advisor, the gender pay gap rising and the BBC's policy on promotion and non-promotion of charities.

You can subscribe to the podcast on iTunes here.

Other podcasting software e.g. for Android can be pointed here to subscribe.

You can download the mp3 for the latest episode directly from here.

Or you can listen to the embedded episode below here:

listen to ‘Episode 89 - 2 Unlimited’ on Audioboo

Any feedback welcomed in the comments below.


PS: A big thanks to Audioboo for hosting the podcast for us. We would also like to thank Kevin MacLeod from Incompetech.com for our theme music.

Why the MP pay rise "scandal" matters - a lot

I wrote a piece last weekend arguing that MPs should have their pay rise. As a result of this I got a number of invites onto various TV and radio stations to explain my reasoning and argue for something that virtually no MPs (nor very few commentators) were willing to.

As a result of this I have engaged with a number of people and also listened to a fair few members of the public calling these shows to express their opinion. One thing that is abundantly clear is that there is a toxic atmosphere around the issue of MPs' pay. I had a fair bit of reaction to my stance on Twitter as well and the vast majority of it was also hostile. Incidentally the number of people who seemed to assume I had something personal to gain financially from taking the position I have was quite depressing; it seems the idea that someone might just believe something without directly benefitting from it themselves is somewhat outmoded.

The more I have been mulling this over the more concerned I am getting. Ever since the expenses scandal the subject of MPs and money has been a fraught one. But this goes further back. Much further back. The whole reason we had the dysfunctional expenses system which tacitly allowed MPs to claim in a way that substantially augmented their salaries is because Margaret Thatcher in the early 1980s turned down a report similar to the IPSA one today on MPs' pay and instead allowed the nod/wink system to flourish. Her reasoning was that the public would not stand for a large one-off pay rise for MPs. It was the wrong time. The idea it would ever be the right time for this is proven by history to be a falsehood.

So MPs' pay has been a difficult issue for a long time. But let's take a step back a minute. MPs are in a very special position. They are elected by close to 100,000 constituents. They are supposed to have gone through a process, both through initial selection and then later election that makes them the choice of those 100,000 people to represent them. They then are supposed to work very hard at representing those people and also holding the government to account (or if in government administering it in the interests of the entire country). It is an incredibly important job and it requires acute judgement and the ability to make very difficult choices well on behalf of constituents and more widely the whole country. They vote on whether we should go to war, how our health service works, how the poorest in society are treated by the state etc. etc. etc.

But if we cannot trust MPs to settle something very simple like their basic pay and working conditions for themselves then it does not take that much of a logical leap to start to question whether they will be able to take these other sorts of decisions well too. The pay issue is gone. That ship has sailed. We definitely do not trust them on it. There is almost unanimity on this, not least from MPs themselves who recognise the political reality. So what about other issues? Why would we trust them on anything else if we essentially think they are a bunch of shysters on the make and out only for themselves?

I should stress that despite the fact that I do think our politics is somewhat broken, I do not think MPs cannot be trusted to decide important issues. But it is clear that the majority of electors do think this if the response to this story in the last week is anything to go by. Indeed the fact the story lasted almost a week (and is still unresolved - incidentally I expect a deal will be stitched up to "reject" the pay rise) shows how strongly people feel about the issue.

I very much fear where this will ultimately lead. It is an obvious next step once MPs cannot be trusted on pay for them not to be trusted on all sorts of other things.

We elect them through the ballot box to represent us. If they mess up we can kick them out a few years later. If we need to strengthen this democratic link through e.g. some sort of parliamentary recall mechanism (and I think we should) then fine. Various other reforms are needed too as I have written about endlessly in the last 5 years. But there needs to come a point where we trust them to get on with it.

This is not all one way traffic. MPs themselves need to earn the trust and after the expenses scandal it is understandable that the public is wary. But if we cannot regain some sort of trust for politicians then our democratic system will eventually break. I cannot predict on what issue(s) it will eventually founder but when it does we will have a constitutional crisis the like of which we have not seen for several hundred years.

The MPs' pay "scandal" of 2013 is a harbinger of much worse things to come if we are not careful.

House of Comments - Episode 88 - Forever Autumn

Episode 88 of the House of Comments podcast "Forever Autumn" is out. I am joined by LabourList's Mark Ferguson and freelance journalist and Lib Dem activist Charlotte Henry to discuss Nelson Mandela's legacy, the aftermath of the Autumn Statement and whether MPs deserve an 11% pay rise.

You can subscribe to the podcast on iTunes here.

Other podcasting software e.g. for Android can be pointed here to subscribe.

You can download the mp3 for the latest episode directly from here.

Or you can listen to the embedded episode below here:

listen to ‘Episode 88 - Forever Autumn’ on Audioboo

Any feedback welcomed in the comments below.


PS: A big thanks to Audioboo for hosting the podcast for us. We would also like to thank Kevin MacLeod from Incompetech.com for our theme music.

MPs should have their pay-rise - Oh, and it's 2.2% not 11%

Having seen the almost uniformly negative coverage of this "11% MP pay rise" (even from MPs themselves) I feel that somebody has to stick up for them.

All the commentary I have seen has been along the lines of the rest of the country is suffering from austerity and public sector wage rises have been kept to 1% so WHY ON EARTH SHOULD MPs HAVE AN 11% PAY RISE??!!!

Well firstly the rise would not be 11%. At least not if you measure it fairly and in the same way that pay-rises are measured for everybody else, i.e. annually. The salary is currently £66,396 (since Apr this year). The proposal is to raise it to £74,000 in 2015. So this would be a rise of just under 5.6% per year from that baseline. But that isn't really fair either because between Apr 2009 and Apr 2013 MPs' salaries rose by 0.6% annually (when the historic average of the last decade has been more like 2.2%). And this current rise is at least partly designed to address this. So when you compare the Apr 2009 figure with the proposed 2015 one you get an average pay-rise of 2.2% across the 6 years. Which doesn't even keep pace with inflation.

"AH!" I hear you cry "BUT WHAT ABOUT THE 1%?". But there's more dear irate capitalised fictional reader. IPSA are actually proposing quite radical changes to the structure of MPs' (historically very generous) pensions and also ironing out some expenses anomalies. So the cost to the taxpayer of this latest rise would actually be cost neutral. That's right, it won't cost us anything more. Not that you'd particularly have been aware of that judging by much of the coverage.

It's also worth noting that IPSA is an entirely independent body. Many MPs hate IPSA although most are reluctant to criticise them publicly. This is not a case of MPs with their snouts in the trough trying to diddle the taxpayer. It is an independent group who have scrutinised the current settlement and proposed some changes that will be entirely cost-neutral whilst addressing the fact that MPs' pay has been slipping back in the last few years. It sort of makes me wonder how we are ever going to get to a position where the politics can be taken out of this issue.

Perhaps the proposal to have rises linked to average wage increases is the answer although there are bound to be some sectors that suffer in the future even though the average is much better and hence relatively MPs will appear to be living high on the hog. There is probably no answer to this.

And I have to say that I am not really interested in what cabinet ministers like Phillip Hammond, David Cameron and Danny Alexander have to say on the subject as they all earn well over £100K anyway and in many cases are already very independently wealthy anyway. Just because they can afford to refuse a pay increase does not mean all other MPs should be pressured to do so too. We need to be very careful about this. If this sort of thing carries on and MPs are continually forced through political pressure to refuse successive pay rises we will eventually end up with even higher numbers of MPs from wealthy backgrounds which is not good for politics. We have seen a similar dynamic recently with the whole "expenses saints" phenomenon where MPs who do not claim any expenses at all are lauded. Of course they are all independently wealthy and can afford to pay the expenses themselves. This should not afford them better career prospects but sadly it does seem to be doing so.

In the meantime, can we please stop comparing apples with oranges? Putting the 11% MP figure alongside the 1% public sector figure is completely distorting and unfair. It would be much fairer to compare it to the 2.2% figure for the average rise over the last few years. And it would also only be just to acknowledge that it is cost neutral.

Anything else is simply bullying our MPs and I really do fear where that will ultimately lead.

House of Comments - Episode 87 - Reforming Sir Humphrey

Episode 87 of the House of Comments podcast "Reforming Sir Humphrey" is out. Myself and Emma discuss potential reform of the Civil Service, the Government's ideas on reducing energy bills and the increase in food banks.

You can subscribe to the podcast on iTunes here.

Other podcasting software e.g. for Android can be pointed here to subscribe.

You can download the mp3 for the latest episode directly from here.

Or you can listen to the embedded episode below here:

listen to ‘Episode 87 - Reforming Sir Humphrey’ on Audioboo

Any feedback welcomed in the comments below.


PS: A big thanks to Audioboo for hosting the podcast for us. We would also like to thank Kevin MacLeod from Incompetech.com for our theme music.