How Can High Street Bookmakers Survive?

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“The end of the British high street” is a phrase that has been used more often in national media outlets. In recent years, there have been an increasing number of firms that are facing financial problems or having to shut down for good. It is in large part because of the increasing popularity of shopping online, but other factors like the rising cost of goods and a poor infrastructure are also to the blame. Despite the precarious position many shops on the high street find themselves in today many still believe they are able to conquer the challenges confronted.

We’ve been discussing high-street stores generally, but what we are most at is betting stores. Some who are opposed to gambling have expressed their displeasure at the number of betting stores that are found on the average British High Street. However, will those people still feel the same way in the event that retail shops are left empty? A bookmaker might not be able to be as appealing as an artisan bakers or a boutique clothing shop However, considering some of the issues of the contemporary high street, if the bookshops went away, more likely, shops would fall to a bare floor. That would mean no rental for property owners without taxation for government and councils and no job opportunities for residents of the area.

Will bookies continue to have an presence in our town centres or is it simply the case that they move all their business online? If you frequently visit your local bookie to place bets their disappearance for good is a possibility. While it is impossible to know what the future holds, by studying recent trends and data that we can make an informed prediction of what’s to come for betting shops.

Fixed-Odds Bets Terminal Changes

Although we typically talk about high street shops as a homogenous bunch but each sector has its own specific challenges. The growth of Amazon in particular, for example, has created an even greater threat to retailers than the local grocery store (for for the time being but Amazon has plans on almost every aspect of retail! ).

Sometimes, the risk is due to competition , but in other situations, it may come from legislation of the government, as bookmakers discovered. In the year 2019 in particular, the UK government took the decision to cut the maximum limit for betting on fixed-odds gaming terminals (FOBT) from PS100 up to PS2. It was a major modification not just from a responsible gambling standpoint but also due to FOBTs being the source of PS1.7bn of high-street bookmakers’ PS3.2bn annual revenue – the largest percentage.

Culture secretary Jeremy Wright praised the move as a “significant advancement in protecting vulnerable people”, it threatened to pose a serious challenge to bookmakers across the nation. One report published in 2018 by the Association of British Bookmakers, said that the transition to FOBTs could lead to the closing of 4,500 betting stores (approximately 50 percent). It’s worth noting that this report, authored by accountancy firm KPMG which was later criticized by many as exaggerating dangers. It was also reported that Paddy Power declared that although the PS2 stake limit would be able to have “some impact” for betting establishments but it was “far more benign” than what the AAB depicted. Their view was echoed by Matt Zarb-Cousin, speaking as a representative of the campaign organisation Fairer Gambling.

As groups argued over what effect of the proposed FOBTs regulation would haveon betting shops, there was no doubt that they could harm betting shops to some extent. For one thing, FOBTs had always been an investment for many bookmakers on the high street. The new rules came in full force on the 1st April 2019 and, one month later, the machine revenues had dropped around 40 percent. The primary issue was, and still is for bookmakers that consumers were spending less overall rather than simply using it in other places in the shop.

Some bookies reported practically no increase in their over-the counter bets while others only saw a modest rise of about 10%. In the year following, in October 2020, GVC (Ladbrokes and Coral) reported that their machine revenue dropped 36% and betting revenue was up just 7 percent.

Since prior to the rule change FOBTs made up 57% of the money that betting shops take homes, up from 38% in 2008/09, this meant a lot of lost revenue. Paddy Power estimated that its annual losses would be between PS36m to PS47m as a direct result of the government’s actions. However, the Irish bookmaker was largely defiant saying that they didn’t expect to to close any of their shops. They were not the only ones in this opinion, even with all their competitors being more negative about their plans. In the end, for many of the individual shops with the new FOBT regulations made the difference between running net profit and operating at a loss.

A Decline is beginning

After reading the article above, it should come as no surprise that a number of betting stores on the high street had to shut, primarily because of the new FOTB legislation. In October 2020 an exclusive report published in The Mirror revealed that 460 bookmakers in the high street had been shut since the end of the previous year. This was a 12.2% reduction from the total number of high street shops.

Across all locations, including ones that aren’t near the high street, the reduction stood at 11.3%. While it’s a lot, this is far lower than many had predicted. In fact, GVC (owners of Ladbrokes and Coral) did not end up closing half the stores it had anticipated by March 2020.

The Coronavirus Challenge

Changes in FOBTs have certainly been the primary reason for high street betting shop closures. Even before the pandemic of coronavirus brought the nation to a complete halt, many shops had already closed or were at the point of doing so. But it would be wrong to conclude that the difficulties of Covid-19 were not a factor in the business. In the short run, returns slumped as sports events stopped running and the long-term impact is that there are more high-street betting shops could close.

In August 2020, William Hill made the decision not to reopen 119 high-street stores that were temporarily closed due to Coronavirus’s lockdown. When they announced the decision, they stated that they anticipated “that long-term retail footfall will not return to levels pre-COVID”. While William Hill were alone in making the decision, their forecast of footfall could be accurate. Many gamblers forced to operate their businesses online, when their local stores closed, might not be able to return to their old habits.

Like other industries that are affected, the crisis brought on by the pandemic could serve to speed up the process of moving online gaming. For those who had not yet tried betting online may have discovered its convenience. Additionally, those who love FOBTs will have found that stakes in retail stores are only PS2 and online for the moment at least you can bet more and select from a greater variety of games.

Punters Increasing Betting on the internet

Lockdown meant that there was no possibility of placing bets in their high street shop an alternative was to gamble online. Due to the lack of sporting events, this often involved betting on games like virtual sports, or on casinos games such as roulette and slot machines, instead of real sporting events.

Mobile Betting

The rise was fueled by betting on mobile devices, not bets on laptops or PCs. Gambling Commission data found that between 2015 and 2019, there was a reduction of 25% in the number of people who placed bets on their PC/Laptop during the past four weeks. The figures for smartphones during this period however jumped from 23 percent to 50 percent.

It is clear that the most formidable rival to betting shops near me currently are mobile apps. Every major bookmaker nowadays provides the option of both Android and iOS app , with promotions regularly delivered via notifications to increase engagement. This kind of direct advertising with features like in-play betting could do wonders in attracting people to take some fun. According to research conducted in 2020 eighty percent of adults had smartphones, and spent on average 2 hours and 34 mins using the device every day.

The growing trend of betting on live events is a further reason why betting shops aren’t able to offer. Many punters love the ability to place bets on a game, match or race. Mobiles are great for this purpose, however in-play betting isn’t possible in a high street betting shop, or at least not in the traditional way.

Hope? Signs of Hope?

It is clear that the change in shopping habits, the reduced return on FOBTs as well as the continuing uncertainty resulting from Covid makes it clear that high street betting shops aren’t making a profit. They’re far from being extinct however, it’s worth asking if there is any hope left for them or is their gradual demise a mere inevitability?

As things stand as of now, we’re more likely to choose the former rather than the latter. Sure, betting shops might not be able to make the same amount of money as they did in the past, however some still have enough gamblers over the long run to make them feasible. Some bookmakers may even consider running a store with a loss, due to the importance of boosting the visibility of their brand and enhancing the legitimacy and legitimacy of the organization. A growing interest in brand recognition and in multichannel marketing is a reason why Deloitte believes that betting stores will continue to survive in significant quantities.

There are other reasons to support the view that high street betting shops will not go away any time soon. One convincing view, presented by Susannah Streeter from Hargreaves Lansdown there is the fact that the desire to go to betting shops will not go away due to the social aspect of it.

imageHOLDERS, which manufacture gambling kiosks, agreed with this point stating that online chat rooms on betting websites cannot substitute for real-time social interactions. They also spotted another crucial benefit in the fact that bookmakers at book shops in contrast to online retailers, will happily accept bets in cash. Although the world is increasingly cash-free (another trend that has been accelerated by recent events) however, there is a significant number of people who prefer having notes and coins in their hand. Additionally, not many would argue that receiving cash in hard and cold cash is superior to having it deposited into your account online.

In 2020, for instance the cash payment still accounted for 23% of all payments, that’s PS9.3bn in real terms. However, even if the percentage share decreases, and it is bound to do, we are still speaking of billions of dollars that are transferred in cash every year. It’s not correct to believe that some people have a preference for cash simply due to them not being able to stay up-to-date with technology.

Many people are drawn to cash because they are able to avoid paying more than they have. It’s worth noting that this isn’t as much of an advantage since those who are part of the UK population aren’t able to utilize credit cards in order to fund wagers. Also, there is the fact that cash-based transactions are not traceable and therefore more secure for people who are conscious about their online fingerprint.

Survival of the Fittest

It is important to note that we’re talking about what the future holds for betting stores as though the shops only have the option to operate the same way they currently do. This however is not necessarily likely to be the situation. We have seen it in other industries, innovation may frequently be what keeps high-end stores in business.

When the FOTB stake reductions came into complete force Paddy Power as well as Betfred sought to wriggle their way around it by introducing new games based on roulette. To ensure they did not completely violate the rules at Betfred the players had go to the counter in order to place bets (of the amount of PS500) and Paddy Power’s Pick ‘n’36 game played only once every 3 minutes. Both games were pulled after only a short period of time. However they provide evidence that innovation and change remain the sole constants.

The ability to think Outside the Box

The controversial attempts to circumvent the new rules are clearly not the right way to go and in fact, the two were rightly criticised at the time. However, what it demonstrates is that bookmakers are willing to think outside of the box in the direction of increasing participation of customers. There’s no reason why a bookmaker cannot offer a more palatable concept that can help bring people back in the stores. This is exactly what Ladbrokes Coral attempted to do by establishing two ‘concept’ betting shops in Birmingham at the close of 2019.

Final Conclusion High Street Stores Closed, But They’re Never Out

Although we expect the number of high-street betting shops to gradually decline in the future however, there is enough interest for thousands to remain. There’s plenty of reasons for bookmakers to maintain their a high street presence as large proportions of their customers will not, or would prefer not to, do business online.

High-street shops are also an important factor in brand awareness and legitimacy and this aspect cannot be overlooked. The stores that are able to offer a higher-quality environment are likely to stand more chance of not getting the axe. External factors, like changing demographics and fluctuating rents, will certainly contribute to the overall picture, but in general, the most reputable shops will not be leaving our main streets for a long while in the near future.