The latest statistics from the UK Gambling Commission released at the end of last year contained with them some figures for betting shop closures that might yet be a sign of things to come for UK bookmakers.
The total number of shops as of the end of September 2017 stood at 8,502, down 304 from March this year and 412 outlets down from the same time last year.
Half of the total is accounted for by Ladbrokes Coral which, according to the Commission statistics has shed 255 shops since March. The company said in its mid-November trading statement that 96 outlets had been shuttered in the past three-month period.
There would appear to be some minor overlap with Betfred over the period. Ladbrokes Coral sold a parcel of 359 shops as part of the Competition and Markets Authority (CMA) mandated offloading in October last year. In the six months to September this year, Betfred added 34 shops to end the period with 1,671 outlets.
Still, the industry-wide 4.6 percent fall comes ahead of any predicted negative effect from whatever stakes limit for FOBTs is finally decided upon under the auspices of the triennial review and would seem to point to further falls in the years ahead.
As Paul Leyland, partner at gambling consultancy Regulus, pointed out, this is a “material shift” ahead of the review and fears remain that an even bigger shop closure figure could be in the offing should the worst happen with stake sizes.
All this is against a general backdrop of changes in retail behaviour in the UK which suggest the move to online shopping is becoming ever more pronounced. In early December, for instance, Thomas Cook said it was closing 50 stores in the UK due to the increasing shift to online, a phenomenon that UK betting is only too aware of.
Yet, there are reasons to believe that it is too early to pronounce on the death of the betting shop in the UK. Partly, this is down to culture. As one commentator in the FT said recently about those that are still loyal to cash, it is the favoured means of transaction among the very rich, the very poor, the criminal and the merely old-fashioned. Betting shop habitués are highly represented among at least three of those.
As much as we know that the major shop estates of Ladbrokes Coral, William Hill and Betfred have long tails, it is hard to quantify just how many of these would be tipped into loss-making territory by any change in the stakes and prizes regime.
It is telling, for instance, that the ‘contingent value right’ at the heart of the recent GVC takeover of Ladbrokes Coral presents a wide disparity of outcomes depending on what level of stake is finally handed down.
In truth, no one yet knows what the impact of a lower stake limit will have on either individual estates or on the UK picture as a whole. Despite the warnings from the industry of job losses in the thousands and shop closures blighting every high street, it is likely that for a period a phony war will take place that will see the larger operators holding out in multiple locations to see who blinks first.
This is one effect of the recent clustering seen in many high streets; the assumption on the part of the bookmakers is that the custom from the first shop to close will disperse to rival shops in the locality. No one wants to be that first shop and everyone wants to be the last man standing. It is a Mexican stand-off that could last a long while.
But there is one sub-sector which might not be quiet so able to stand its ground while the shakeout takes place. The independent sector has long been complaining that both industry trends and the regulatory backdrop is putting their collective presence on the high street under threat and the evidence of the Commission statistics would appear to back that up.
Since March 2015 the total of other shops in the Commission data has fallen by 195 or 15 percent to 1,089 as of the end of September. Taking Paddy Power Betfair’s 357 shops out of that equation, the percentage fall is a very steep 20 percent.
As one analyst put it, the independents are “much less able to withstand” negative shocks and without the online backup, will be particularly vulnerable to further pain caused by the triennial review.
With costs rising and major competitors willing to hold out even in unprofitable locales in the hope of reaping any omni-channel benefit to be wrung from the high street, the independent sector is facing a potentially existential squeeze. Time – and luck – might be running out and the some of the political decisions due to be made early this year will play a huge part of the future.
The future of the Retail Betting industry will be discussed and debated at the upcoming ‘Betting on Football 2018 Conference’ (#bofcon2018 – 20-23 March – London – Stamford Bridge). Click on the below banner for more information…