Not amused: Should Britain's arcades be more tightly regulated?

Addressing the argument for more tightly regulating Britain's arcades.

Not amused: Should Britain's arcades be more tightly regulated?

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Seaside arcades are something of a shared experience for every person in the UK. Chances are, as a child, your parents or grandparents took you to the coast or a holiday park and let you entertain yourself with a bucket of 2p coins and nothing but time on your hands. Those were the days, right? 

But what if childhood visits to amusement arcades were subconsciously conditioning you to gamble in later life?

There is evidence to suggest that the flashing lights, bright colours and positive reinforcement that amusement arcades provide aren’t as harmless to children as they appear on the surface. These childhood memories may be the beginnings of problem gambling later in life.

We surveyed 2,000 UK parents to find out which popular seaside arcade machines they let their children spend money on.

Are arcade machines gambling?

The UK Gambling Commission separates all gaming machines, like slot machines or fixed odds betting terminals (FOBTs), into seven different categories from A to D, based on maximum stakes and payouts.

You may not be aware, but most popular amusement arcade games are category D gambling machines. Category D machines have stake limits that range between 10p and £1 depending on the machine. There are also different payouts depending on whether the machine gives a cash prize (like a slot machine) or a non-cash prize (like a claw grabber).

Spend the pennies and the pounds spend themselves

So what did our survey find out?

How often are children visiting arcades?

Our findings uncovered that 75% of UK parents with children under the age of 18 have visited an amusement arcade within the last two years. A 2020 statistic estimates that there were 12 million children under the age of 16 in the UK, so it can be estimated that at least 9 million children visited amusement arcades within the last two years.

Almost 66% of those we asked visited amusement arcades 2-5 times per year, with most respondents (40.29%) spending an average of £2 - £5, resulting in an average annual spend of up to £25 per family. 

What category D machines do children play most?

We asked respondents to let us know which arcade machines they would be happy letting their children use when they visit an amusement arcade.

While the claw machine grabbed the attention of 82% of respondents, it was tipped out of top spot by the 2p coin pusher with 83%. Both of these machines are played by over 80% of children in arcades, with their popularity reflected by the floor space they occupy and how synonymous they are with amusement arcades in the UK.

Remember, all of these machines are Category D gambling machines. You might be thinking to yourself “but these don’t feel like gambling?”, and you would be right. These games are set up to feel like skill-based games, but just like slot machines and online poker games, these have a Return to Player (RTP) rate. RTP determines how often the game pays out, and how often the game takes money as profit for the arcade and the game producer.

While you might feel like a claw machine master as you aim the claw to drop perfectly onto your desired toy, the decision about whether the claw picks up the prize or drops it is entirely up to the software built into the machine.

In July 2021, popular Japanese game creator Sega was sued after it was alleged that its Key Master arcade machine was rigged [1]. Though the game appears to be entirely skill based, the final results are still dependent on whether enough players have lost to balance out the win in Sega’s favour.

The Key Master lawsuit is ongoing in California, but in the United Kingdom, a similar lawsuit would likely be thrown out immediately due to the game’s category D gambling status. A status that allows children to gamble away money in the hopes of a prize indefinitely, potentially unaware of the random nature that is rendering their skills irrelevant.

Lucky wins or skillful victories?

Though the British public may not be aware of the categorisation of gambling arcade machines, they have demonstrated an awareness that luck plays a role in the results. Over half of those we asked (52%) stated that the outcome of the listed arcade machines were purely down to luck. The other 48% thought that it was a combination of luck and player skill (38.65%) or purely the skill of the player (9.05%).

Over 90% of parents are aware that luck plays a part in every arcade machine win, so why do they visit arcades? Well, our survey results also show that most parents believe their children aren’t just playing to win. 

64.60% of respondents said that the primary appeal of amusement games is to have fun. Only 26.65% believe that children play to win prizes or tickets, with a further 5.50% saying that winning real cash prizes is a draw.

While, from the perspective of the parents we surveyed, the main goal for children at arcades is to have fun, the arcade owners see things from a different perspective. For them, the primary goal is to make money. Just like a casino, there’s a give and take relationship between the player and the operator. However, where a casino visitor’s goal is to leave with more money than they came in with, a child may find a physical prize - like a toy - to be a more attractive outcome.

Prizes, often in the form of toys in a claw machine or a ticket exchange, are generally much cheaper to buy outright than to try and win by playing. For example, popular claw machine prizes include stuffed toys from properties such as Frozen, or Among Us. Those toys generally cost between £10-15 to buy at an online store, but the chances of winning them from a claw machine at £1 a play are much lower than 15/1. 

The odds are also stacked against the player, much like in a real casino, which makes it feel all that much better if you are lucky enough to win.

Are we gambling with our children’s future?

Now, we aren’t trying to suggest that Britain’s kids are becoming addicted to coin pushers or claw grabbers, and there is no evidence to suggest that either. However, there could be a larger, unintended byproduct of being exposed to this kind of stimulus, which is the potential conditioning of children to gamble later in life.

In 2020, a study by Dr Philip Newall and colleagues [2] looked into the links between legal underage gambling (i.e. Category D machines) and problem gambling symptoms in adults. It notes that “The UK is rare in that it allows for a number of gambling products to be legally used by people under the age of 18.”

The study questioned over 1,000 UK gamblers between the ages of 18-40 and asked them about their past experiences with Category D slot machines, the National Lottery, National Lottery scratchcards, coin push machines, and claw grabber machines, which are all legally available to people under the age of 18.

The study discovered that over 50% of those questioned had interacted with every one of the products above, and that simply having played a legal gambling product had no association with gambling disorders. However it did conclude that “more frequent use of each of the five products was associated with an increased risk of disordered adult gambling.”

Essentially, the more those questioned played with legal forms of gambling under the age of 18, the more likely they were to develop gambling disorders later in life. Specifically, the findings were that claw machines were the biggest risk, and that the frequency that the gamblers played them as children was “robustly associated with adult disordered gambling.”

A product of their environment

Think about the atmosphere in your average arcade. Dimly lit with artificial lighting. The game machines play their music, flickering and flashing with lights, sounds and colour to entice you to play. There are change machines dotted around and the sound of coins falling into metal trays, being scraped into hands and pots. 

It’s a feeling of nostalgia and childhood warmth that you become very accustomed to, and it instantly hits you when you visit an arcade even as an adult, but it’s also emulating the same atmosphere and feeling one might experience inside a casino.

It’s this kind of conditioning and acclimatisation from such a young age that can make a casino feel like an exciting and comfortable place to be, even if you’ve never stepped foot in one before. 

That’s without even mentioning the fact that every one of these amusement arcades also usually contains an area that resembles and functions like a real casino. Marked as an 18+ area and filled with slot machines and fixed odds betting terminals (FOBTs), these areas are rarely far removed from the rest of the arcade and are usually visible from other games that children of all ages are allowed to enjoy, supervised or otherwise. 

The only barrier between these ‘gambling’ machines that children can play in the main arcade and the real gambling machines (that only adults over the age of 18 can play), is often just a piece of rope and an invisible Gambling Commission categorisation. This thin divide and lack of secrecy gives off the impression that children can - and should - progress to these adult-only games when they turn 18.

Only 2.4% of the parents we surveyed believed that the primary appeal of amusement arcade games was that they replicate a real casino experience, but that doesn’t mean that children aren’t being affected by the similarities, or that the design of the games don’t contribute to conditioning.

As children are very impressionable, we believe that there should be more restrictions in place to protect them. In an arcade setting where children should be able to roam and play unsupervised, having these alluring forbidden zones in full view is pretty irresponsible in our opinion.

Children are playing real slot machines

You might think that separating these 18+ spaces from the rest of the casino and clearly marking them with age warnings would be enough, but that doesn’t work if the ‘real gambling’ leaks into the rest of the arcade.

Despite category D slot machines having low stakes (10p) and jackpots (£5), they are still fundamentally slot machines in the literal sense. You press a button or pull a lever, the reels spin and you have a chance to win money back depending on how the symbols line up.

The risk and reward nature of gambling is what makes it so enticing, and reducing the cost of entry and potential prize money doesn’t change that. 

The European Lotto Betting Association (ELBA) is an industry association set up by five major operators to represent the lotto betting industry. The ELBA has said in written evidence [3] that “Children should not be provided access to any type of gambling products regardless of their perceived risk profile. There is no such thing as a harmless gambling product. Category D games machines could act as gateway gambling products for young children.”

The 2019 UKGC report into young people and gambling [4] found that 23% of those under the age of 18 who admitted to gambling had first experienced it through playing ‘fruit machines’.

Of which, 42% of these underage gamblers played a ‘fruit machine’ in a family arcade, with another 26% experiencing ‘fruit machines’ in a holiday park. 

Are arcades doing enough to protect children from gambling harm?

We wrote about the risks of slot machines in children’s arcades back in 2019 and concluded that the Gambling Commission is using technicalities to allow children to be exposed to gambling. Even though the activity directly mimics gambling in every single way, it is only the fact that the stake limits and prizes are smaller that means kids of any age can spend as much time as they want playing them. 

What contradicts this lack of action is that the Gambling Commission’s own findings state that Category D gambling machines are potentially a danger to children. Written evidence from 2019 [5] states “It is confusing for children and parents when products for children look and feel exactly like those which are limited to adults, and we do not know enough about the long-term impacts”. 

When a child plays one of these machines growing up, it normalises the activity as something they do for leisure, with little ramification for longer play sessions due to the smaller cost of entry. However, when that child turns 18 and starts playing real slot machines to simulate their childhood experience, the potential for gambling harm starts to become a factor. 

Suddenly, 50 spins at 10p each becomes 50 spins at £1 and, before you know it, an 18 year old at university can find themselves with a gambling problem that can be traced back to their visit to the seaside as a 10 year old.

The British Amusement Catering Trade Association (BACTA) is a group that represents the whole arcade industry, in the same way the UKGC does for gambling. In 2020, BACTA released a change in its voluntary code [5] that raises the minimum age limit of Category D fruit machines to 18. While this is obviously a step in the right direction, it might not be a strong enough change.

Ultimately, the changes are voluntary and it is down to arcade owners whether they choose to implement the ban. Because of this, the categorisation of these machines is not changing, and children are still legally allowed to play on these machines. 

The changes are intentionally limp in order to “still allow family groups to play in close proximity to each other without segregation”, but if BACTA is really trying to “limit any potential risks to gambling harm no matter how small”, then why aren’t they applying harsher changes or taking the machines out of the spaces where children are altogether? 

Conditioning through advertising

The 2p coin pushers may not have a direct analogue in the casino space, but that doesn’t stop gambling companies from using these arcade machines to advertise to children.

An amusement arcade in the seaside resort of Herne Bay, Kent, features an iconic 2p machine front and centre, with one interesting addition - the machine and the point of sale that advertises it are very clearly covered in Rainbow Riches logos and iconography.

Rainbow Riches is one of the most popular and recognisable slot games and comes in many forms, whether it’s physical slot machines or a range of online video slots, making it harder to overlook this blatant advertising as a misunderstanding or coincidence.

If you took a trip into the 18+ section of this same arcade then you would be greeted by another giant Rainbow Riches machine. This time though, it’s a row of actual category B1 slot machines, with £2 stakes and much bigger jackpots. It’s incredibly easy for children to make the connection between the two, creating the desire to play the ‘adult’ version when they grow up.

Sweet but not innocent

Research was undertaken in the year 2000 by Jonathan D Klein & Steve St Clair [6] into whether the consumption of candy cigarettes encouraged young people to smoke. In a 1990 study of American children aged 10/11,those who consumed candy cigarettes were “twice as likely to have also smoked tobacco cigarettes, regardless of parental smoking status.” 

The research also delved deeper into how the tobacco industry was luring children into taking up a smoking habit. Candy cigarettes have been around since 1915, however in 1939, tobacco companies started to allow confectioners to market and sell candy cigarettes with real cigarette packet designs on them. 

Brands like Marlboro and Winston allowed the sale of candy cigarettes with packaging that mirrored their own tobacco products all the way up until 1997-8, when brand names were dropped in favour of more generic looking cigarette packaging.

While some candy cigarettes were the white chalky stick we may know as “candy sticks” in the UK, there were also bubblegum versions wrapped in a white paper with a brown tip, designed to mimic real cigarettes, complete with an icing sugar tip that resembles a puff of smoke when blown into.

The study ultimately concluded that “the tobacco industry enabled confectioners to market candy cigarettes as advertisements directed at “coming up cigaret (sic) smokers” and that “tobacco companies cooperated with the manufacturers of candy cigarettes in designing candy products that would effectively promote smoking to children.”

Imagine if Smirnoff, known for its range of alcoholic drinks, decided to make a drink for children, branding and all. Imagine that they then sold it in soft plays and kids entertainment centres, with the Smirnoff logo on the bottles, walls and fridges. It would simply not be allowed, and the fact that gambling companies can do that exact thing without any legislative involvement is frankly hypocritical.

Keeping seasides alive, whatever the cost

Our research focuses on how UK parents and children interact with these machines, but what about the companies who provide these games and arcades for the public? Are these companies intentionally doing the bare minimum to protect children, and choosing to protect the profitability of these seaside towns instead?

When asked if children should be allowed to play Category D gambling machines, BACTA has stated [7] that “these types of games formed the backbone of Britain’s family seaside arcades”, and that “They provide local jobs and economic activity in towns up and down the country”.

They continue to say “Without them these towns would fall into further decline”. Which sounds to us like the BACTA has far more interest in preserving the seaside towns that arcade owners rely on to stay in business than protecting the millions of children who are playing in arcades across the country every year.

The House of Lords agrees with this. In a 2019 report titled "the future of seaside towns" [8], the importance of arcades and the potential risks to children were factored into the discussion.

The report states that “family amusement arcades are an integral part of seaside resorts. Banning children from playing on Category D machines could well have a devastating impact on individuals, businesses and communities”. 

In the very same report, the House of Lords report also admits “if we were starting from scratch in creating a new gambling industry it is unlikely that children would be allowed to play on such machines.”

If an industry can only exist and remain profitable by putting its patrons at risk down the line, and must ignore or brush that under the rug to continue to be in business, then that is surely a failed business model?

All of these comments go to show that the people whose job it is to provide family friendly activities are also willingly allowing children to be exposed to gambling. They have all the information and awareness of the potential harms, but instead choose to keep quiet in order to suit the best interests of an industry that they themselves admit is in decline.

Public perception of gambling

If you asked people on the street if they would be happy with their underage children spending £25 a year on poker or roulette, they would almost certainly say no. However, our data shows that children spending £25 a year on Category D gambling machines isn’t outside of the realms of possibility for most British parents. Where does this disconnect come from?

A 2019 YouGov report found that 42% of the UK public doesn’t consider games at a seaside amusement arcade to be gambling. That same report revealed that only 10% of the nation would consider themselves to be gamblers, despite 50% of respondents buying lottery tickets and 33% buying scratch cards.

The survey makes a distinction between ‘hard’ gambling activities, like poker, slot machines and betting, and ‘soft’ gambling activities like the lottery and bingo. Public perception of gambling and the harm that can come from it have created some confusion about what counts as gambling, and seaside arcades have fallen under the ‘soft gambling’ category.

How can the public be trusted to regulate its own gambling habits when the regulators are confusing which habits constitute gambling with convoluted rules surrounding age restrictions, marketing and categories.

Another form of gambling that the UKGC knowingly allows children to participate in is the purchase of loot boxes in video games. A loot box is an in-game item that players can buy with real money, containing randomised digital contents in the form of items, cosmetics and bonuses. Games like FIFA, Call of Duty and Overwatch have all featured loot boxes across multiple releases.

Loot Boxes let players spend money with no knowledge of what the outcome will be. It could contain worthless prizes, or something incredibly valuable. Like a slot machine or lottery ticket, the only way to find out if you’re the lucky winner is to buy and open them. 

A report by BeGambleAware from April 2021 [9] found that 40% of children who play video games have also bought loot boxes at some point. Games often dangle the benefits of buying loot boxes in players’ faces, with rare, limited edition cosmetics in Overwatch or better, rarer football players in FIFA’s Ultimate Team mode. These factors, when combined with social pressures, can coerce children into engaging in Loot Boxes.

Parents may not see the harm in spending a little to help their children fit in or make progress in a popular game, but BeGambleAware’s report establishes that loot boxes are “structurally and psychologically akin to gambling”. This, coupled with the lack of real regulation, means that children are not just being exposed to gambling in these games, but that the games are actively encouraging children to gamble.

Dr David Zendle is the leading authority on loot boxes in video games and has given evidence to the House of Lords regarding their classification as gambling. His research shows that there is enough of a connection between spending on loot boxes and problem gambling to suggest that the two are related, but not enough evidence to regulate them just yet, which means children will continue to have access without the proper warnings to parents. 

Without more obvious warnings about the potential harm that loot boxes and category D gambling machines can have, parents could be setting their children up for issues later in life and not even be aware that it’s happening.

What do we think can be done?

From our survey and research, we have learned a few key things:

  • 75% of parents in the UK take their children to amusement arcades every year
  • All the top games are category D gambling machines, and exposure to these has been linked to problem gambling
  • A lot of money is being spent by parents who may not be aware of the potential risks
  • Arcade owners are aware of the risks, but the money that arcades make is interrupting real change
  • The current rules in place at arcades are directly contributing to the conditioning of children to gamble later in life

With all the evidence of conditioning and the risk of gambling problems later in life, it is disappointing to find BACTA, the House of Lords and the UK Gambling Commission all shirking their responsibility to protect children, instead prioritising profit. 

We don't believe that keeping the economy alive in dying seaside towns is worth the potential harm that arcades can bring, however we also don’t believe that seaside arcades should become a forgotten relic of the past.

Arcades are an iconic tradition for British parents and children, one still enjoyed by millions up and down the country. So what steps should be put in place to protect children from potential gambling harm? 

If we were going to make a list of suggestions for arcade owners and the UKGC to follow, it would be this:

  • Ban the advertising of gambling related games in areas designed for children, the same way childish imagery is banned from gambling marketing online.
  • Create stricter rules for the visibility of 18+ only spaces that arcade owners must adhere to in order to benefit from the added revenue of higher stake limits.
  • Stop prioritising the profitability of arcades over the health and futures of the children who visit them, and instead repurpose the arcades that are failing into different entertainment venues. These new venues can start to generate profit without the potential risk that arcades provide
  • Change the categorisation of 10p slot machines and force them to be moved into the 18+ areas
  • Require all category D machines to plainly show their gambling classification and RTP percentage

Do we think parents should stop taking their children to amusement arcades? Absolutely not. Like gambling, these arcades are supposed to be a fun activity and we shouldn’t deprive children of that experience, but that doesn’t mean we can’t protect the vulnerable in the process. 

One thing that we can do is ensure our children are more aware of how gambling problems can form and affect people before they find out the hard way, as preventing gambling addiction is easier than trying to cure or control it.



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