Setting the scene...
In the UK in 2019 the UK betting industry was worth £14.3 million pounds, that’s £200 for every adult and child in the country. Given that almost everyone dreams of that big win that means they can say goodbye to the 9-5 life, what is the real price of those dreams? Bookmaker profits are directly tied to you (and you, and you, and you) losing your money plain and simple, and whilst bookmaking is by no means the only corporate sector that profits are predicated in large part on societal loss…(think tobacco, fossil fuel, alcohol, fast food) so is it unfair to single them out? Bookmaking is an industry that is coming increasingly under the spotlight as more of the harm done by out of control gambling, is insidiously fostered by their use of ‘insider’ and sharp practices.
The Gambling Commission is the Government regulator and it is charged with keeping crime and bad practice out of gambling and to protect the vulnerable. It advises the government on gambling-related issues. In 2019 it said publicly that it believed more than two million people in the UK either to be problem gamblers or at risk of gambling addiction.
Bookies have been always been on the ropes, but especially in the last 3 years finding themselves coming under an increasing vociferous groundswell of media, political and regulatory pressure. It all started with industry deregulation enacted by the Blair government which released the shackles on bookmakers advertising and crucially allowed them to introduce FOBT’s into UK betting shops in 2001. The machines quickly gained a bad media reputation; becoming known as ‘crack machines’ for the addictive behaviours they induced in players and regular stories of individual tragedies.
In just a few years FOBT’s became the cash-cow for a large percentage of corporate profits. They became increasingly controversial and after furious lobbying for and against, which ultimately ended with the resignation of Tory Sports Minister; Tracey Crouch... stakes were slashed from a maximum of £100 a spin to just £2.
Bookie's woes continue...
This reduction caused loud gnashing of teeth from the bookmaking industry who trotted out gloomy announcements of staff lay-offs and high street closures. Given that over 50% of profits were estimated to come from FOBT’s it was quite staggering to see them take the moral low ground and put profits (dressed up as shop closures and staff lay-offs) over the mental well-being of vulnerable punters. After all the boom in high street betting shops was directly driven by profits from FOBT’s, so their claims were morally bankrupt… but does that really come as a surprise to you?
The surge in bookmakers revenue and profits was accompanied by record fines in 2019 of almost £20 million for failing to protect vulnerable punters and not effectively policing potential money laundering. In fact, the evidence was easy to find that they were actually targeting problem gamblers.
Stories in the press claimed 'VIP customers' make up to 80% of bookmakers turnover. Possibly the most ‘celebrated’ example shamed Ladbrokes who were found to be comping a VIP client funded his gambling with money stolen from his clients’ accounts. He was given free tickets to Arsenal games, tickets to the Mayweather v Maidana fight in Las Vegas and an invite to Lqadbrokes corporate box at Royal Ascot, as well as business flights to the UK to watch Arsenal.
Ladbrokes secretly agreed to refund his victims to the tune of £975,000, but only as long as they signed a confidentiality agreement that barred them from contacting the authorities or gambling regulators. It hardly sounds legal, does it?
The rise and rise of the Premier League and live coverage meant that football became the main earner for bookmakers. Big gambling brands saw the benefits of linking their names with the most popular teams and in the 2020 season, over 60% of Premier League teams had a shirt sponsor with gambling links. This raised public concern that linking football and gambling in younger peoples minds that had echoes with the public furore seen in the US fast food industry with advertising specifically designed to target kids... ‘the customers of the future’.
This social risk/corporate objective was underlined by the NHS announcing in 2019 that it was opening a series of specialist units to help problem losers – including, disturbingly, one for children and teenagers. That nice man Tony Blair claimed his reforms would increase protection for youngsters, but research actually found that children as young as eight recalled betting advertisements and suggested 40% of children aged between 11 and 16 had gambled at least once in the previous 12-months.
Some of the big bookmakers agreed on deals with broadcasters giving rights to stream certain matches for free to account holders, a move that both angered both the FA and the rest of the industry and ended in a swift climb down. The welter of advertising before, during and after televised matches led to a voluntary 'ban' on TV advertising during in-play or ‘whistle to whistle’, however, there were suspicions that bookmakers had to be seen to be taking pro-active action to forestall more draconian regulatory action.
There is evidence that this led to a big increase in social media advertising which circumvents TV rules and goes straight to punter’s betting device of choice… mobile phones. I would argue that forcing bookmakers to become expert social media manipulators might be the most dangerous thing we could do!
In April of this year deposits by credit cards were banned by the Gambling Commission as it was linked to a high percentage of ‘problem gamblers’. It is beyond irony that bookmakers trumpet slogans like ‘when the fun stops… stop’, and ‘don’t gamble with money you can’t afford to lose’, then allow punters to fund their bets from debt!
more bad news... sporting lockdown!
While racing takes place behind closed doors there are no on-course bookies so the winner’s SP is now calculated by the Press Association using ‘average’ betting shows from 5 big bookmakers. This puts the industry uncomfortably close to being able to directly influence punter returns. We are yet to see what happens to overrounds, but given that they directly affect bookies gross racing profit, it would be no surprise to see upward pressure. I’m sure this was a move warmly welcomed by bookies, albeit in very hushed tones!
With the sporting lockdown, UK gambling revenue fell by over half as there were nothing to bet on, but it’s now reported that turnover has risen above normal levels since the restart. Bookmakers shares fell heavily in April but have since recovered to pre-virus levels, which is a bit odd given the risks that still look to be out there.
The furlough comes to an end in October, and many people getting paid to effectively sit at home will find themselves without a job and an income. We are 100% certain to see a big spike in unemployment, a U (or V)-shaped recovery followed by upward pressure on tax as the Tories try and recoup record levels of spending during the Covid-19 crisis. Not the best business scenario by a long way...
Betting is a discretionary spend, so with less money about it should naturally follow that punters tighten their belts, and there will be people out there that have realised just how much their ‘fun bets’ were costing them and quit the habit for good.
It's what you do, not what you say...
It is absolutely damning for the industry that they clearly and pro-actively target losing punters to leverage profits. Whether this happens through products such as FOBT’s or virtual racing, or through pushing boosted returns on 6-fold accas, offering poor value odds on exotics. Whilst on the other side of the coin anyone who looks like they might come out a winner is immediately subject to stringent staking restrictions or account closure.
So going back to the question I posed… can we trust bookmakers? Let me ask you another question… would you trust McDonald, Marlboro, Seagrams or any other big consumer brand to have their customers best interests closest to their hearts?
As an example, the VW emissions scandal answers loud and clear, and tells us not to be so naive!