Bookies are under pressure but online gambling is on the up

EDITOR'S BLOG: Don't expect a crackdown anytime soon - the government needs the cash.

by Matthew Gwyther
Last Updated: 07 Dec 2016

It’s not been a great week for gambling companies. First, the news that William Hill has been turned down by a number of candidates it had approached to become its new CEO. Despite a six month search and the identification of a number of hiring targets, all approached have folded. The uncertainty in the industry caused by the rise of online gambling has caused a large numbers of mergers over recent years. And off-the-pace William Hill has failed so far to make a ‘transformational’ acquisition despite several false starts. So no bosses are currently biting.

Then came the revelation that back in 2009, Stewart Kenny, the co-founder and then CEO of Paddy Power warned that Fixed Odds Betting Terminals (FOBT’s) were dangerously addictive. ‘It is in no-one’s interest,’ he wrote, ‘ neither betting shop customers nor wider society to legislate to allow them into betting shops.’

FOBTs are, as The Times says this week - ‘not recreational gambling in the conventional sense of placing a bet at quoted odds. They are instead an absolute guarantee of a fixed house advantage generated by a machine whose very design, with rapid play and a short payout interval, is intended to override the better judgement of the punter.’ The Times isn’t alone. The Daily Mail has run a long and vigorous campaign against the FOBTs which it delights in reminding everyone are known as ‘the crack cocaine of the betting industry.’ They are already limited to four per betting shop and a maximum wager of £100. In the past year bookmakers made £1.75bn from FOBTs, providing tax revenues of £438m.

I’ve long thought that after booze and cigarettes, the business of gambling will be the next in line to feel some serious government heat. In October yet another review into the industry was announced by government which says it is going to take another look at both daytime advertising of gambling to the maximum stakes allowed on FOBTs. Where Gordon Brown showed an unexpected fondness for super casinos, the starchy Theresa May doesn't strike one as the sort of individual who likes a bit of a flutter. Few votes would be lost by a crackdown.

FOBTs are one thing. Online gambling is another entirely. Who knows what on earth people are up to online with the amazing ease with which they can lose vast sums with one press of the thumb on their mobile device? In the United States the National Gambling Impact Study stated "the high-speed instant gratification of Internet games and the high level of privacy they offer may exacerbate problem and pathological gambling". A UK government-funded review of previous research noted a small scale patient survey leading to press reports claiming that 75% of people who gamble online are "problem" or "pathological" gamblers, compared to just 20% of people who visit legitimate land-based casinos.

A good indication that the market remains pretty healthy is the vast number of gambling ads on TV and elsewhere. The commercial breaks between most sports events on Sky, ITV and BT are filled with them. The spend on TV ads alone has more than doubled since 2012 reaching nearly £200 million this year.

The cash-strapped Treasury is also addicted because the gambling industry provided £2.7 billion in tax revenues for 2015/16 a figure that has doubled since 2006. So whilst the PM may tinker at the edges it would be unwise to bet large on a major crackdown any time soon.

Image source: Yamaguchi/Wikimedia

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