Is the betting sector being too pessimistic about the long-term future prospects of retail betting? Should stakeholders welcome the disruption as a chance to reinvent retail betting’s overall proposition? Scott Longley gets the lowdown for SBC.
The perils for land-based gambling enterprises in the UK were all too evident in the profit warning issued by bingo-to-casino operator Rank in early April.
Like-for-like revenue at the Mecca bingo business was down 2 percent year-on-year for the 13 weeks to 1 April while revenues at the Grosvenor Casinos venues business were off by 9 percent.
The company had its excuses. ‘The Beast from the East’ snowstorm that afflicted the UK in early March hurt footfall at both businesses, exacerbating what the company claims are a weaker consumer backdrop.
This downbeat prognosis comes at a time of intense change for UK bookmakers. Not only is the decision (finally) imminent on the government’s triennial review on stakes and prizes, but the ownership of the country’s largest betting shop estate, Ladbrokes Coral, has also only just switched into the hands of GVC.
But hope springs eternal, and among the suppliers into UK betting shops there is a suggestion that the pessimism, particularly over the impact of the likely cut in stakes, has been overdone.
“I think the impact of the decision is somewhat over-exaggerated,” says John Pettit, Managing Director for Playtech BGT Sport for the UK, Ireland, Asia and Australia, which supplies self-service betting terminals (SSBTs) to the majority of betting shops in the UK.
“I think the decision will be £20 and £2 and that effectively shop revenues will go back to perhaps 70% or 80% of what they are today,” he adds. “This is effectively a tax on the super shops where machines can mean so much more to revenues. Overall I don’t think things will be as bad as they make out.”
Rays of light
The rise of the SSBT within the past five years or more is one manifestation of how the betting shop proposition in the UK has been changing even as the FOBT debate has raged.
Pettit points out that the SSBT represents the perfect product for customers that want to enjoy the traditional benefits of retail anonymity allied to the wider sports offering available to online sports-betting punters.
“We are trying to build a digital interface within a retail environment with all the attractions that significant for some people,” he says.
Playtech BGT isn’t the only company viewing the potential disruption in UK betting shops as an opportunity.
“The stakes and prizes issue might open up the UK market for us; it is so big and so strategic,” says Heinz Kierchhoff, Managing Director of gaming at Sportradar.
“Money will redirect within betting shops. Looking at it from a product perspective I think virtuals have huge potential and football is definitely under-represented in the virtual offering in the UK.”
“That is because of the tradition of dogs and horses. If you see a shop today, it has big screens with dogs and horses and live commentary and football is not represented in the way that it is in Italy.”
UK betting shops is one sector that should be looking at how the retail experience has developed in the rest of Europe for indicators of how it can survive and thrive without the prop of the vast majority of B2 gaming machine revenues.
“The focus on omni-channel for multi-channel operators is starting to deliver a great user experience and a regular focus on product innovation is always a good idea – whether it’s the best from overseas, online or entirely new products,” says Mike Bogie, Director of Lottoland Solutions.
The lotto product is delivered via an SSBT and, as Pearson adds, it adds a “compelling” new event betting opportunity for retail. “The ability to bet small stakes for the chance to win huge prizes appeals to existing and new shop customers,” she says. “With more betting data we can keep learning and adapt to provide more event betting markets via the SSBT channel.”
Indeed, the SSBT is also a likely route for more virtual sports in betting shops. Kierchhoff suggests the company is already trialling this with Eurobet in Italy. “We are looking at putting virtuals on SSBTs in Italy,” he says. “With the regulations, there is now more space available to do business there. That will be a mix of being on the screen on the wall and betting on the SSBT. That is what we mean by full flexibility.”
None of the new products will completely repair the hole in the finances for betting shop retailers. But if there is life in the old dog yet, it might well be that a move to a broader product mix will hold the key to high-street longevity.
“There is obviously a challenge but shops have shown historically they are resilient,” says Pettit. “They have fought off other challenges; the introduction of the national lottery, for instance. Like everyone else we want a buoyant retail sector.”
The Betting industry’s future enterprise and operational context will be discussed at the upcoming ‘Betting on Sports Conference’ (#boscon2018 – Olympia London-17-20 September 2018). Click on the below banner for more information…