High Street Bookmakers – Here For a Long time

“The end of the British high street” is a phrase heard increasingly often among national media outlets. In recent times, there have been an increase in businesses that have run into financial difficulties or having to close for good. It is in large part because of the increasing popularity of online shopping , however other factors like rising costs and poor infrastructure are also to be blamed. Despite the difficult situation that most high-street stores find themselves in today, many still believe they are able to conquer the challenges they face.

We’ve been discussing high-street stores in general terms but what we are most interested in is betting shops. People who do not like gambling have objected to the huge number of betting stores in the typical British main street. However, will they continue to feel this way when retail establishments are abandoned? A bookmaker may not offer the same appeal like artisan bakers, or a boutique clothes shop But, as the travails of the modern high street. If bookies disappeared then more than likely that shops would go completely empty. That means no rent for property owners without taxation for councils and government and no job opportunities for local people.

Will bookies continue to have an impact in our town centres or is it only one more step before they go online? For those of you that regularly visit the local book shop to place bets, the possibility of them disappearing for good is perhaps a troubling one. Although it’s difficult to be certain of how the next few years will unfold, by studying the current trends and information to make an informed prediction of what lies ahead for betting shops near me.

Fixed-Odds Betting Terminal Changes

Although we typically talk about high-street stores as a homogenous group but each sector has its own specific problems. The growth of Amazon for example, for instance, was the greatest threat to retailers than your local greengrocer (for the moment, at least, although Amazon has plans for the majority of areas of retail! ).

Sometimes the risk comes from competition , but in other situations, it may come from government legislation as bookmakers found out. In the year 2019 in particular, the UK government chose to reduce the maximum bet limit for fixed-odds betting terminals (FOBT) from PS100 right down to PS2. This was a particularly significant change , not only from a responsible gambler’s perspective but also because FOBTs were at the heart of PS1.7bn of bookmakers that are high-street’ PS3.2bn annual revenue – which is a significant portion.

Culture secretary Jeremy Wright praised the move as an “significant advancement in protecting vulnerable individuals” but it was a risk that it could pose a serious challenge to bookshops across the country. A report released in 2018, commissioned by the Association of British Bookmakers, warned that the switch to FOBTs would result in the closing of 4,500 betting shops (approximately 50%). It’s important to mention this report, authored by accountancy firm KPMG it was criticised by some as exaggerating the dangers. In fact, Paddy Power declared that although the PS2 stake limit could have “some influence” in betting stores, it was “far smaller” that those in the AAB depicted. Their view was echoed by Matt ZarbCousin, who was speaking as a representative of the campaign group Fairer Gambling.

While groups debated what effect this proposed FOBTs regulation would haveon betting shops, there was no doubt that the proposed FOBTs regulation could harm betting shops to certain extent. After all, FOBTs had for a long time been an investment for many bookmakers on the high street. The new rule came in full force on the 1st April 2019 , and just a month later, machines revenues had fallen by about 40%. The primary issue was, and continues to be for bookmakers, that people were spending less money generally, rather than using it in other places in the shop.

Some bookies noted there was almost no growth in the number of over-the-counter bets , while some noted a slight growth of 10%. Over a year later and in October 2020 GVC (Ladbrokes & Coral) stated that revenue from machines decreased by 36%, while betting revenue had increased just 7 percent.

Prior to the rule change FOBTs comprised 57% of the betting shop take homes, up from 38% in 2008/09, this meant a lot of lost revenue. Paddy Power estimated that its annual losses will range from PS36m and PS47m as a direct result of the actions of the government. But the Irish book retailer remained steadfast saying that they didn’t expect to to close any of their outlets. They were the only one in this opinion, even with every competitor being distinctly less optimistic in their predictions. In the end, for many of the individual shops, the new FOBT regulation made the distinction between running at net profit and operating losing money.

The beginning of a decline

After having read the above section and analyzing the information above, it’s no surprise that a number of high street betting shops had to shut, in part due to the recent FOTB law. In October 2020 an exclusive report published in The Mirror revealed that 460 high street bookies had shut since the end of the previous year. This represented a 12.2 percentage decrease by the quantity of high-street shops.

All locations, even those away from the high street, the decrease was at 11.3%. While this isn’t a huge number, it is much lower than what many expected. In fact, GVC (owners of Ladbrokes and Coral) was able to only end up shutting half the stores they had planned to close by March 2020.

The Coronavirus Challenge

Changes in FOBTs have certainly been the primary driver behind closures of betting shops in high-streets. Even before the coronavirus epidemic brought the nation to a stop, many shops were either closed or were on the verge of closing. However, it is false to say that the challenges of Covid-19 were not a factor in the betting industry. In the short-term, returns slumped as sporting events stopped being held and the long-term consequence is that there are more high-street betting stores could shut down.

In August 2020, William Hill made the decision not to reopen the 119 high street stores that were temporarily closed because of the coronavirus lockdown. In announcing the decision, they declared that they expected “that longer term retail footfall wouldn’t be back to levels pre-COVID”. Even though William Hill were alone in making such a decision, their forecast of footfall may be accurate. Many gamblers who were forced to take their business online after all local shops shut, may not go back to the ways they used to.

Similar to other sectors that are affected, the crisis brought on by the pandemic could serve to speed up the process of moving online. The people who have never had the pleasure of betting online might have discovered its ease of use. Additionally, those who love FOBTs will have found that stakes in retail shops are limited to PS2 and online at present you can bet higher and choose from a broader selection of games.

The number of punters is increasing. Betting Online

With lockdown meaning there was no option of betting in-store at their high-street store so the only option was online betting. Due to the lack of sporting events, this generally required betting on games , such as virtual sports, or on gambling games like roulette or slots, rather than on actual sporting events.

Mobile Betting

Interestingly, this rise was fueled by mobile gambling , and not by bets on laptops or computers. Gambling Commission data found that between 2015 and 2019 there was a 25% drop in the number of players who placed bets on their laptop or PC in the past four weeks. The figure for smartphones in this period however jumped from 23 percent to 50%.

It is clear that the most formidable rival for betting shops that are on the high street nowadays are mobile apps. Each major bookmaker today has the option of both Android and iOS app that offers are regularly distributed via emails to boost engagement. This type of direct marketing, in conjunction with features such as in-play betting could be a huge help in attracting people to take an enticing game. After all, according to information from 2020 84% of the population had smartphones, and spent on average 2 hours and 34 minutes on it each day.

The growing trend of betting on live events is a further reason why betting shops aren’t getting. Many punters love the ability to place bets in the game, match or race. Mobiles are perfect to make this happen, but in-play betting is not something that is feasible in a typical betting shop, or at least in the traditional fashion.

Hope? Signs of Hope?

The combination of changing consumer practices, the less lucrative returns of FOBTs and the ongoing uncertainty due to Covid means that high street betting shops aren’t making a profit. They’re far from being extinct though so it is worth asking if there is still hope for them, or is their slow death an inevitable event?

As things stand, we are far more likely to choose the former over the latter. While betting shops might not bring in more money than they did in their prime however, some still draw enough players over time for them to be viable. Some bookmakers might even think about running a shop with a loss, due to the importance of increasing brand awareness , which will increase the legitimacy and credibility of the company. The recognition of brands and the interest in multichannel marketing is a reason why Deloitte believe betting shops will continue to survive in significant amounts.

There are other arguments supporting the idea that high-street betting shops will not disappear anytime soon. One convincing opinion, as expressed by Susannah Streeter from Hargreaves Lansdown there is the fact that the desire to visit betting shops will not go away because of the social element of it.

imageHOLDERS who manufacture gambling kiosks, agreed to this conclusion, saying that chat rooms that are available on betting websites cannot substitute for in-person social interactions. They also discovered a crucial benefit in the fact that bookmakers at book shops and bookmakers in-store, as opposed to online, happily accept cash bets. Although the world is becoming more and more cashless (another trend that has been accelerated by recent events) However, there’s many who like to keep notes or coins in their pockets. Additionally, not many can argue that receiving winnings in cold, hard cash can be better than seeing it put into your account online.

Even in 2020, cash payments still represented 23% of all payments, that’s PS9.3bn in actual money terms. Even if the percentage share is not reduced, which it is bound to do however, we’re talking about billions being exchanged in cash each year. It would be wrong to believe that some people are averse to cash solely due to their inability to stay up-to-date with technology.

Certain people prefer cash since they are able to avoid spending more than what they have. It is worth mentioning though that this isn’t as much of an advantage as people in the UK population aren’t able to utilize credit cards in order to pay for wagers. Additionally, it is the case that cash payments are untraceable which makes it more appropriate for people who are concerned about their online fingerprint.

The Survival of the Fittest

It is important to note that we are discussing what the future holds for betting stores as though the shops only have the option of continuing to function the same way they are currently. But this isn’t always likely to be the scenario. In other fields, innovation can often be what keeps shops on the high street afloat.

When the FOTB stake reduction came into the full swing, Paddy Power as well as Betfred attempted to work around the issue by introducing new roulette-style games. To ensure they did not strictly break the rules, at Betfred punters were required to go to the counter to put wagers (of at least PS500) in Paddy Power’s Pick ‘n’36 game was only played every 3 minutes. In both cases, the games were terminated within a short amount of time, but even so they show that innovation and change remain the sole constants.

Thinking Outside the Box

The controversial attempts to circumvent the new rules are clearly not the right way to go and, in fact, they were rightly criticised in the past. But what they do show is that bookmakers are willing to think outside the box to increase customer engagement. There is no real reason why a bookmaker shouldn’t suggest a less controversial idea to help bring people back to their stores. This is exactly what Ladbrokes Coral attempted to do when setting up a pair of ‘concept’ gambling shops within Birmingham towards the end of the year.

Conclusive: High street shops are closing but Never Out

Although we expect the number of high-street betting shops to gradually decline over time but there’s still enough interest for thousands to remain. There’s plenty of reasons for bookmakers who want to remain with a having a presence on the high streets as most of their clients will not, or would rather not, take their business online.

High street shops are also an important factor in the perception of brand and trustworthiness and this aspect should not be ignored. The shops that can begin to provide a more upscale surroundings are more likely to have higher chance of avoiding the axe. External factors, like changing demographics and fluctuating rents, will of course contribute to the overall picture, but , in general, the best shops won’t be leaving our high streets for quite a while but.