Slow death of the seaside slot-machine arcades

Business was slow in the Golden Horseshoe amusement arcade yesterday lunchtime. The fruit machine lights were flashing manically and the music was pumping from the racing car simulators but, even on an unseasonably warm winter's day, the punters were few and far between.

For Jimmy Norman and his wife Jill, who is the third generation of her family to run the glinting entertainment complex on Clarence Pier overlooking Portsmouth harbour, it was a depressingly familiar scene – a handful of customers fishing for cuddly toys at 50p a go where just a few months ago there had been dozens spending merrily on the gambling machines.

The Clarence Pier, a 1960s concrete edifice complete with a branch of Wimpy and painted in a chequerboard of yellow and blue that harks back to happier days for Britain's seaside resorts, has long grown used to the steady decline that afflicts traditional gaming venues in coastal towns.

Over the past seven years, a mixture of budget airlines and fierce competition in the leisure market has seen the number of visitors to the pier, just south of the city centre, fall by half.

Since September last year, that rate of decline has accelerated dramatically to such an extent that Jill and Jimmy – and the proprietors of the rest of the UK's 1,000 remaining seaside amusement arcades – are warning that without urgent Government intervention, up to half of a sector that employs 26,000 people and contributes £500m to the Exchequer will be wiped out within 12 months.

The cause is an obscure change to the rules governing the fruit machines on which the Golden Horseshoe and its like depend. Since the 2007 Gambling Act came into force on 1 September last year, a little-noticed clause has halved the minimum stake for players on fruit machines that offer a jackpot of £500 from £2 a go to £1.

The number of the £500 jackpot machines – which cost £6,000 each and represent the lifeblood of the seaside arcades – was also restricted to four per venue, regardless of its size.

To the outsider, it seems a trivial adjustment and even a praiseworthy attempt to put a cap on the growing attractions of a burgeoning gambling culture. But according to the arcade industry, its effects have been devastating. Revenues have on average collapsed by more than a fifth, wiping out profit margins across the country and leaving many on the brink of collapse. In the meantime, new casinos have been allowed to introduce machines where gamblers can bet up to £100 a time for five-figure jackpots.

Mr Norman, 44, who has helped his wife to run the Clarence Pier for 23 years, could do little to disguise his sense of foreboding. He said: "Unless we change these rules within the next six to 12 weeks, arcades will start going under. We have had the worst winter season we can remember. Our takings are down by at least a fifth and we are nowhere near breaking even. The customers simply do not like the way the rules have changed. We didn't see it coming. We thought the change in the stake wouldn't matter too much but it clearly has and people are just staying away.

"We rely on the income from these machines to keep the rest of the business going. The summer season will be absolutely crucial because we can't survive as things are."

Jill, 43, whose grandfather opened the pier in 1961 after it was destroyed in the Second World War, pointed to the string of ice cream stalls, souvenir shops and cafés along the seafront. She said: "A lot of the local economy depends on our existence. Our seaside amusement arcades are part of our heritage. How is it going to help coastal towns that are already struggling if half the arcades are boarded up by this time next year?"

Despite the sometimes tawdry image of arcades as gaming dens for those on the margins of society, there is no sign that the Golden Horseshoe accommodates problem gamblers. The fruit machines are barred to under-18s and large posters offer guidance on behaviour: "Playing machines is buying fun, NOT investing money. Stay in control."

Through the British Amusement Catering Trade Association (Bacta), the industry is asking the Department for Culture, Media and Sport (DCMS) to allow it to restore the £2 stake and implement a ratio system for the £500 jackpot machines so that they account for no more than 20 per cent of the fruit machines per venue.

An Early-Day Motion with cross-party support has also been placed before Parliament asking for the gambling minister, Gerry Sutcliffe, to take urgent action. Nick Harding, Bacta's president, said the closure of arcades would push recreational gamblers to harder forms of betting. "The machines have just become less attractive to the players," said Mr Harding. "With a £2 stake the odds of a jackpot win were 250 to one and 92 per cent of what the machines took was paid out again. With a £1 stake the odds are also shorter.

"Without the arcades, the alternatives are harder forms of gambling such as betting shops or casinos. If the Government wants to reduce problem gambling, this is the wrong way of going about it."

Ministers have shown little sign of acceding to Bacta's requests, but say that they are engaged in "constructive dialogue" with the industry. A spokeswoman said: "It would be unusual for us to revisit an important part of a new piece of legislation so soon after it has been implemented."

At the Golden Horseshoe, Derek Martens, 36, a carpenter playing a lower-stake machine with a £35 jackpot, said: "Gambling is supposed to be about fun. You only bet what you can afford to lose but you want a little bit of a thrill that you might actually win big. You know a quid in the slot isn't going to get you the big one."

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