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Betting & Gaming Market Report 2009
Key Note Publications Ltd, Nov 2009, Pages: 114
The UK's betting and gaming industry has a substantial turnover and net expenditure on games of chance, including The National Lottery, increased by 19.6% in 2008 compared with the previous year, which was by far the largest increase recorded over several years. The betting and gaming industry usually rides out a recession well, not least because people feel they have more to gain with a modest wager when money is hard to come by otherwise. However, National Statistics' figures for the first quarter of 2009 show a sharp decline in expenditure on games of chance, and bookmakers on the high street have admitted to less footfall and lower wagers. There is little doubt, nevertheless, that the current economic downturn in the UK, along with the smoking ban and cheap broadband connections, has fuelled an increase in betting at home via the Internet, digital interactive television and the telephone; land-based operators will find it increasingly difficult to compete.
While global Internet-based gambling is booming, online gambling operators based in the UK risk being overtaken by European rivals, owing to the Government's tax policy for gambling. They are losing market share to off-shore competitors, who pay much lower tax and, therefore, have more to invest in marketing, etc. The bingo industry was particularly hard hit in the 2009 Budget when the Chancellor of the Exchequer increased its level of tax from 15% to 22% with little or no prior warning. The bingo community is at a loss to understand why the pursuit, which is seen as relatively `soft' gambling with the majority of its players being women who place small bets, should be singled out for this tax hike, while other `hard' gambling pursuits such as casinos are subject to 15% tax. The recession, tax regime and smoking ban have deeply affected the profit margins of the industry and have resulted in the closure of several clubs and, of course, job losses.
Other recent corporate news has included a possible change in ownership of Camelot PLC, the operator of The National Lottery, as four of its five shareholders consider a collective sale of their 80% stake. Meanwhile, it was disclosed in August 2009 that the online operator Betfair is preparing a flotation on the stock market, which could value it at around £1.5bn, ahead of an anticipated overturn of the US ban on Internet gaming. Further consolidation has occurred in the bingo sector with online operator PartyGaming PLC acquiring competitor Cascade Ltd, which owns the Foxy, Cheeky and Think bingo brands. Gibraltar-based PartyGaming is in a strong position as a leading player in the UK's online bingo market. It has also reached agreement with the US Department of Justice, which frees it from the threat of prosecution for providing online gambling services to US customers before 2006, when the legality of Internet betting was a grey area. The company is known to be intent on further acquisitions.
Some within the industry would say that, instead of liberalising gambling laws, the 2005 Gambling Act that came into force in September 2007 has introduced greater regulation for land-based operators, yet none for online operators so distorting competition. In the face of reduced consumer spending in times of recession, a punitive tax regime and the smoking ban, the UK betting and gaming industry is facing more challenging conditions than it has seen in years.
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