With the GambleAware conference currently making headlines, and another big money merger looking increasingly likely, the road ahead for the gambling industry continues to look treacherous.
It’s been a profitable and in many ways, transitional year for betting. Bet365 was voted Britain’s fourth most admired company this week, offering further proof that online is now the industry standard: founder/CEO Denise Coates took home a whopping £175m pay packet without owning so much as a single betting shop.
Despite declining public trust in what GambleAware chair Kate Lampard calls an ‘existential threat’ for the industry this week, revenues continue on the whole to be rosy, with the industry last September reaching record heights of £13.4bn. As gambling world continues to see shifts both internally and externally, here are the two main points of interest heading into 2018:
Ladbrokes Coral, which formed from a merger that made it the largest UK bookie, is reportedly adding another barrel to its name: FoxyBingo and Sportingbet owner GVC is considering a £3.9bn takeover of its larger rival.
It would be just the latest episode in a wave of consolidation to have hit the industry in recent years. This particular move is widely believed to be a clear sign that bookies are looking to reduce their reliance on fixed odds betting terminals (FOBT), lucratively addictive machines recently hobbled by a £2 maximum bet cap. This caused a considerable blow to many high street firms reliant on FOBTs as a steady income stream with each machine reported to take home an average of about £50,000 a year.
Goodbody Stockbrokers estimated that 30% of high street bookies could be shut as a result, accelerating a longer term trend away from bricks and mortar. Currently, online represents a third of the market, but it’s where all the growth is. By way of illustration, consider William Hill’s latest figures: It closed 104 stores in 2014, and Q3 revenues reported a 4% rise, built from a 6% rise in online and a 1% decrease in store revenues.
In this context, consolidation makes sense - plenty of ‘synergies’ to cushion the P&L, and a greater capacity to invest in the online technology that will save them. ‘They'll adapt and survive as good businesses do,’ said John White, CEO of the British Amusement Catering Trade Association, which has backed the the FOBT cap since 2015.
2) Reputation and Regulation
With problem gambling getting more attention (The Guardian recently reported that the NHS has ‘no idea’ of how many gambling addicts it treats), the industry can expect a tightening of the regulatory screw, particularly online.
It’s already been announced that from April 2018, operators will be required to accept a series of measures designed to inform customers of the risks. More could follow.
‘Innovation and technological advancement continues to drive growth in the £4.5bn a year online gambling market,’ said Sharon McNair, programme director at the Gambling Commission ‘But as the industry transforms, operators are reminded that we too will continue to adapt our regulation to raise standards across all gambling sectors and enhance the protections available for consumers.’
There have also been calls that the voluntary 0.1% revenue contribution towards Gambleaware be made into a statutory levy after it was revealed in May that the charity had fallen 20% short of its funding target. Labour has thrown its weight behind the issue, meanwhile, with deputy leader Tom Watson saying that the party would ‘finally confront problem gambling’ if elected.
The threat may not be existential, but it is serious, and if the industry is to thrive, it will need to address public concerns. ‘My experience of the industry thus far is that it's not wholly undeserving of all the flak it gets,’ GambleAware chairwoman Lampard told the charity’s conference yesterday. ‘The testosterone needs to make way for more enlightened women and men who take a long-term view.’
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