What are fixed odds betting terminals and why are they known as the 'crack cocaine' of gambling?

Problem gamblers are costing the Government up to £1.2 billion per year, new research has found.

A study carried out by the Institute for Public Policy Research and commissioned by GambleAware estimates that problem gamblers cost the Government between £260 million and £1.2 billion each year.

The report covers the use of fixed odds betting terminals (FOBTs) which have frequently come under fire in the past, even labelled as the "crack cocaine of gambling" by the former boss of Paddy Power.

The report found that those aged between 16 and 25 use FOBTs the most, with 12% saying they had used them in the past year.

Unemployed people were also found to use FOBTs more than those in employment, with 12% using them compared to five percent of people in work.

The report also found that men were five times more likely to be problem gamblers than women.

But what are FOBTs and why are they considered such a problem?

What are fixed odds betting terminals?

FOBTs are electronic machines that play a variety of games, such as roulette, poker, Black Jack, electronic slot games and virtual racing.

FOBTs accept bets for amounts up to a pre-set limit and pay out according to fixed odds on the simulated outcomes of the games.

Where are FOBTs?

FOBTs are restricted to casinos, race tracks, and betting shops - where the vast majority are found.

Each betting shop is allowed no more than four FOBTs in each premises.

How much can be won on FOBTs?

The maximum prize on FOBTs is £500.

The industry voluntarily introduced a £50 limit, though the maximum stake can be increased to £100 if the gambler asks to stake more.

This means that gamblers can stake £100 every 20 seconds.

Anti-gambling campaigners want the maximum stake cut to £2.

The "crack cocaine" of gambling?

FOBTs have been called the "crack cocaine" of gambling due to their addictive nature and their anonymised, cash-based system of play.

There are claims problem gamblers are more vulnerable to FOBTs as it is easy to place numerous bets in a short space of time, with a high-payout ratio and the promise of free games.

Earlier in December the former boss of Paddy Power, Britain's biggest bookies, urged the Irish government not to legalise FOBTs which he branded the "crack cocaine of gambling".

The introduction of FOBTs into betting shops in 1999 was criticised for bringing "casino-style" betting into a bookmaking environment, since they are governed by fixed odds rather than real-world events.

Do FOBTs encourage problem gambling?

The Gambling Commission, which regulates gambling in the UK, says it is not clear machines cause people "to develop problems to a greater extent than other forms of gambling."

Player awareness systems are designed to identify signals of problem gambling, such as the frequency and size of player's bets. Once a customer is flagged as "at risk", they can be sent messages encouraging them to take a break or warning them of the danger of addiction.

However, a PwC report, commissioned by the Responsible Gambling Trust earlier this year, found holes in how some bookmakers are using the system.

In numbers: Fixed odds betting terminals

• 70%-80% of FOBTS sessions result in a net loss for the player.

• The average loss per session is £5, but 10% of sessions result in a loss of more than £60.

• The average session is 3 minutes and 54 seconds, but 10% of sessions last longer that 22 minutes.

• In the 12 months to June 2014, 8.2 billion bets were placed on FOBTs in the five major bookmakers.

• Last year bookmakers raked in £1.75 billion from FOBTs which delivered £438 million in taxes to the Treasury.

If you or someone you know is affected by problem gambling, you can call GamCare in confidence on 0808 8020 133, 8am to midnight, seven days a week.