Decimation in the High Street? What’s Happening to the Bookmakers?
July 15th, 2019 4.45pm
We reported recently on the upcoming closure of more than 700 William Hill betting shops. Are other betting shops likely to follow suit? Let’s take a closer look at the market to see what’s happening to the UK’s high-street bookmakers.
It’s important to understand the context behind William Hill’s latest move. On the surface, the closure of so many shops seems to be the actions of a struggling business, and indeed, they have said that the closures come amidst losses of £820m for their high-street operations.
These losses follow from a recent government overhaul of gambling legislation, with the aim of reducing problem gambling amongst punters. In particular, William Hill cites the restrictions on ‘Fixed Odds Betting Terminals’ (FOBT) – which saw the maximum stake drop dramatically from £100 to £2 – as the contributing factor behind their heavy financial losses.
But this isn’t the full picture, because where their high street shops have taken a huge hit, things are looking up for their online gambling operations. It makes more sense to consider recent closures through the lens of a company that is pruning business practices. They are cutting back on practices that no longer work, but cultivating practices that are experiencing growth.
In other words, William Hill is turning away from high street gambling and focusing its efforts online. This is because they are following market trends. The fastest growing sector within the gambling industry is online gambling, which in 2018, saw an increase in market share of 1.2% and now accounts for 39% of the entire gambling industry. Conversely, most bricks and mortar establishments are seeing a decline in footfall, with all but the casinos seeing a drop in profits.
How Are the Other Bookmakers Faring?
Naturally, with such heavy losses, William Hill has been the centre of most conversations concerning high street bookmakers, but are the likes of Ladbrokes Coral, Betfred, and Paddy Power likely to follow suit?
Unfortunately for many employed within the high street betting shops, the vast majority of bookmakers have announced that they will be cutting back on their high street operations. Those who have yet to announce cutbacks are expected to do so in the near future.
All of them cite recent legislation as the driving force behind closures.
Ladbrokes is set to announce the largest round of closures, with as many as 900 shops and 5000 staff at risk and plans to focus on the US market- where regulations are less strict.
Overall, the market is bracing itself for a combined closure of 2000 shops, or around 25% of the market. This represents a change in focus for these bookmakers, away from the high street and into new or growing markets.
Therefore, closures don’t represent an overall loss for these giants of the gambling world; despite heavy losses, they continue to make profits elsewhere.
You know the drill: the house always wins.