Why are so many bookmakers facing closure?
Their ads tell us that “when the fun stops, stop” and the fun appears to have stopped for William Hill.
They announced that they’re planning to close 700 betting shops all over the country with up to 4,500 employees at risk of losing their jobs.
A spokesperson said: “The group will look to apply voluntary redundancy and redeployment measures extensively and will be providing support to all colleagues throughout the process. Subject to the outcome of this, shop closures are likely to begin before the end of the year.”
Gaming analyst Gavin Kelleher thinks this is only the beginning of a coming wave of closures and redundancies. He told the BBC: “We’ll definitely see more closures. GVC, which owns the Ladbrokes and Coral brands have said they will close up to 1,000 stores.
“You’re also likely to see stores close elsewhere in the market from independents and potentially from Betfred so I think all told we’ll probably see over 2,000 to 3,000 shops close in the UK which is a big chunk of the 8,400 stores that are already open.”
The company primarily blamed the reduction in the maximum stake on fixed-odds betting terminals from £100 to £2 in April saying it had seen a “significant fall” in gaming machine revenues.
The machines have certainly proved a bonanza for the industry with each machine earning them an estimated £52,887 a year – more than twice the average wage. Industry earnings overall were estimated to be in excess of £1.7 billion annually.
One reason for the proliferation of betting shops in the UK is that while they are limited to a maximum of four FOBT machines in a single location they’re not limited to the number of branches they can open except within a specified geographical distance – but this only applies to one company.
For example, Ladbrokes couldn’t open two stores next to each other but there’d be nothing stopping Paddy Power, Betfred or William Hill opening one next door. Nor would there be anything stopping Ladbrokes opening another location 400 meters or so up the street.
Staffing didn’t always increase as a result and in many cases some stores were left with a single operative, sometimes with tragic consequences.
The gambling industry has always been quick to spot the next trend and make it as widely available as possible for its customers to bet on. Greyhound racing only came about as a betting alternative between horse races and the 90s and 2000s saw the rise of virtual racing – literally betting on video games.
FOBTs were just the latest in a long line of innovations and the industry is already moving strongly in the direction of online betting through apps to allow punters to bet on the go and play other casino type games such as roulette, blackjack and virtual poker.
This is the key to understanding the driving forces behind the current situation.
And it’s market correction by a nose
Statistics from the Gambling Commission show that income from racecourse and bookmaker shop betting had fallen from £3.3 billion in April 2015 to £3.2 billion in September 2018. During the same period online betting jumped from £4.2 billion to £5.6 billion.
A YouGov survey indicated that online gambling was the most popular kind with 13% of people admitting they had placed a bet online with only 11% at a live event or in a bookmakers shop.
Former Sports Minister Tracey Crouch, who resigned from the government over a planned delay in the implementation of the maximum limit, thinks it’s too convenient for bookmakers to blame the policy. She said: “While I’m sorry to hear of job losses, the truth is there was a huge overinflation in the number of bookmakers on our high streets because of the profit-making capacity of FOBTs. It’s too simplistic to blame closures on stake changes.
“There’s been a consolidation within the industry and a drive from bookmakers themselves to less costly online gambling for some time now and mass closures were predicted in the industry-funded KPMG report (produced to support the higher maximum limit) even without stake reductions.”
There are also other unintended consequences from these decisions. The horse racing industry itself will see a reduction in their income as they had agreed an annual payment of £30,000 per shop from each bookmaker.
Gambling itself has undergone a moral makeover in recent years with an attempt to move its image away from that of smokey, sawdust covered shops to a communal activity enjoyed by sports fan in the pubs or at home.
You can’t watch any modern football match without being assailed by ads displaying live odds and promotions for the game you’re watching and many teams themselves are sponsored by online betting companies with LCD perimeter advertising boards displaying the latest betting information and encouragement during the game.
FOBTs are probably going to be the highly profitable epitaph for the high street bookmaker but they will always have the opportunity to continue to make money from other gambling arenas.
Sadly, and one of the main reasons why the maximum limit was enforced, for some tragic users they became an actual epitaph.
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