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High Street Bookmakers – Down But Never Out

“The end of the British high street” is a phrase heard increasingly frequently in media outlets. In recent years there has been an increase in businesses that have run into financial difficulties or having to close for good. It is in large part an effect of the growing popularity of shopping online, but other factors like rising costs and inadequate infrastructure are also to be blamed. Despite the precarious position the majority of high-street shops have found themselves in today, there are many who believe that they can conquer the obstacles that they are facing.

So far, we have been discussing high-street stores in general terms but what we are most at is betting stores. People who do not like betting have criticized the large number of betting stores on the typical British market. However, will those people have the same feelings when retail stores are empty? Betting shops near me might not have the same appeal like artisan bakers, or a boutique-style clothing store; but such are the challenges of today’s high-street, if bookshops disappeared, then more than likely, the shops would be to a bare floor. That means there would be no rent for owners of property without taxation for the government and councils and no jobs for the local population.

Will bookies continue to have presence in our town centres or is it just the case that they are all online? For those who regularly visit your local bookie shop to place bets, the idea of their disappearance for good is perhaps a troubling one. While it is impossible to be certain of about the future, by examining the latest trends and statistics, we can make an informed prediction of the future of betting shops.

Fixed-Odds Betting Terminal Changes

While we often talk about the high-street shops as a homogenous set of shops however, each industry has its own specific problems. The rise of Amazon for example, posed an even greater threat to the bookstore than the local grocery store (for the moment, at least, although Amazon has plans on nearly every aspect of retail! ).

Sometimes the risk comes from competition , but in other cases, it comes from legislation that bookmakers have discovered. In 2019 in particular, the UK government took the decision to cut the maximum limit for betting on fixed-odds betting terminals (FOBT) from PS100 and down to PS2. It was a major change not only in terms of responsible gambling but also due to FOBTs being the source of PS1.7bn of bookmakers on the high street’ PS3.2bn annual revenue – an enormous portion.

Although culture secretary Jeremy Wright praised the move as a “significant improvement in the protection of vulnerable individuals” However, it is likely to be a significant challenge for bookies across the nation. One report published in 2018 by the Association of British Bookmakers, predicted that the change to FOBTs would result in the closing of 4500 betting shops (approximately 50 percent). It’s important to mention this this report, written by accountancy firm KPMG which was later criticized by some as exaggerating the dangers. It was also reported that Paddy Power declared that although the PS2 stake limit could be able to have “some impact” in betting stores, it was “far more benign” than the AAB depicted. The same view was shared by Matt ZarbCousin, who was speaking on behalf of the organisation Fairer Gambling.

In the debate over the exact impact that on the market that the new FOBTs regulation would have, there was no doubt that the proposed FOBTs regulation might harm betting shops to some extent. Since FOBTs have long been an investment for many bookies on the high street. The new rule went 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 remains for bookmakers, that people were spending less in total, rather than spending it elsewhere in the bookshop.

There was virtually no increase in over-the-counter bets while other bookies only saw a modest rise of about 10%. In the year following in the month of October, 2020 GVC (Ladbrokes & Coral) stated that revenue from machines fell 36%, whereas betting revenues had only increased by 7 percent.

In the past, prior to the rule change FOBTs made up 57% of the betting shop take-homes, a rise from 38 percent in 2008/09. This meant a lot of lost revenue. Paddy Power estimated that its annual losses would be between PS36m and PS47m due to the direct impact of the government’s actions. However, the Irish bookmaker maintained its stance saying that they didn’t expect to have to shut down any of their shops. They were the only one in this view though with every competitor being distinctly more gloomy in their predictions. In the end, for many of the individual shops and businesses, the new FOBT regulation made the difference between running at net gain or with a loss.

Start of a Decline

After reading the article above, it should come as no surprise that several bookmakers on the high streets were forced to close, principally due to the latest FOTB legislation. In October 2020 the Mirror published an exclusive piece in The Mirror revealed that 460 high street bookies had shut from the end of previous year. This was an 12.2 percent reduction on the amount of high-street shops.

For all areas, including areas that are not near the high street, the decrease was at 11.3 percent. While this isn’t a huge number, it is still much less than most were expecting. Indeed, GVC (owners of Ladbrokes and Coral) was able to only end up closing half the stores it had planned to close by March 2020.

The Coronavirus Challenge

Changes to FOBTs are certain to have been the driving force behind high street betting shop closures. Even before the coronavirus pandemic brought the nation to a stop, many shops had already shut their doors or were at the point of doing so. Still, it would be false to say that the challenges of Covid-19 had no impact on the betting industry. In the short-term it was a decline in returns as sporting events were no longer running and the long-term impact is even more high street betting shops may close.

In August of 2020, William Hill made the decision to not reopen 119 high-street stores temporarily shut due to closures for coronavirus. When announcing the move, they claimed “that in the long run, retail footfall wouldn’t be back to levels pre-COVID”. While William Hill were alone in making such a decision, their projection of footfall may be accurate. Many gamblers forced to operate their businesses online, when their local shops shut, may not return to former habits.

As with other industries that are affected, the crisis brought on by the epidemic could help to encourage the shift to online. The people who have never had the pleasure of betting online might have discovered its convenience. Additionally, those who love FOBTs may have realized that, whereas stakes at the shops are only PS2 but online, for now at least, they can wager far more and select from a broader selection of games.

The number of punters is increasing. Betting on the internet

Since lockdown meant it was impossible to betting in-store at their high-street shops, the obvious alternative was online betting. Due to the absence of sporting events, this often meant betting on games , such as virtual sports, or on casino games such as roulette or slot machines, instead of real sporting events.

Mobile Betting

The rise is due to mobile gambling , and not by bets on laptops or PCs. Gambling Commission data found that between 2015 and 2019 there was a reduction of 25% in the number of gamblers who placed bets on their laptop or computer within the last four weeks. The figure for smartphones in the time period was however up from 23 percentage to 50%.

The biggest threat to betting shops on the high street today are mobile applications. Every major bookmaker offers as both Android and iOS app that offers are regularly delivered via notifications to increase the amount of engagement. This direct advertising in combination with features such as in-play betting can be extremely effective in encouraging people to have some fun. According to information from 2020 84% of people used a smartphone and spent two hours and 34 minutes on it every day.

The growing trend of betting on live events is a further reason why betting shops aren’t able to offer. A lot of punters are enthralled by the ability to bet on games, matches or a race. Mobiles are ideal for this , but betting in-play is not something that is available in a traditional betting shop, at a minimum not the way it is traditionally done.

Signs of Hope?

The combination of changing consumer habits, the reduced returns of FOBTs and the ongoing uncertainty due to Covid implies that the high-street betting stores aren’t thriving. They aren’t completely gone however, it’s important to consider whether there is any hope for them or is their slow decline simply inevitable?

As things stand, we are far more likely to select the former rather than the latter. Although betting shops may not make more money than they did back in the day, however some still have enough gamblers over the long run for them to be viable. Some bookmakers may also consider running a store in a loss because of the importance of boosting brand recognition and increasing the credibility and legitimacy of the organization. A growing interest in brand recognition and in multichannel marketing are two reasons for Deloitte believes betting shops will survive in large amounts.

There are additional arguments to support the belief that high-street betting shops will not disappear any time soon. One persuasive opinion, as voiced by Susannah Streeter from Hargreaves Lansdown is that the desire to visit betting shops will persist due to the social component of it.

imageHOLDERS, who produce gambling kiosks, agreed with this point stating that online chat rooms on betting sites aren’t able to substitute the interaction in person. They also discovered a crucial advantage of in-store bookmakers that and bookmakers in-store, as opposed to online, will happily accept bets in cash. Although the world is becoming more and more cashless (another trend that has been accelerated by recent events) There are plenty of people who prefer to have notes and coins in their hand. Additionally, not many could argue that receiving winnings in cold, hard cash is superior to having it deposited to your bank account online.

In fact, in 2020 cash payments accounted for 23 percent of all payments which is PS9.3bn in real terms. Even if that percentage is not reduced, which it surely will however, we’re talking about billions being paid in cash every year. It’s a mistake to conclude that some punters have a preference for cash simply due to them refusing to stay up-to-date with technology.

Certain people prefer cash since it stops them from spending more than what they have. However, it is important to note that this is less of an advantage as members of the UK public are not able to use credit cards in order to fund bets. It is also true that cash withdrawals aren’t traceable, making it more suitable for anyone who is particular conscious about their online fingerprint.

The Survival of the Fittest

It is important to note that we’re discussing how betting businesses will develop in the near future as if they have the option to operate in the same manner they do now. However, this isn’t necessarily likely to be the situation. As we’ve seen in other sectors, innovation could often be what keeps shops on the high street afloat.

In the event that the FOTB stake reduction was in fully force Paddy Power and Betfred sought to wriggle their way around the issue by introducing new games based on roulette. To ensure they didn’t in any way violate the rules at Betfred the players had go to the counter in order to place bets (of as much as PS500) and Paddy Power’s Pick ‘n’36 game ran only every 3 minutes. Both games were halted after only a short period of time, but even so they prove that innovation and change is the most constant thing.

Looking Outside the Box

These controversial attempts to bypass the new rules is clearly not the ideal solution and the couple were criticized at the time. However, what it demonstrates it that the book industry is willing to think out of the box at increasing player engagement. There is no real reason to think that a bookmaker can’t suggest a less controversial concept that can help bring people back in the stores. That’s exactly the way Ladbrokes Coral attempted to do by establishing two ‘concept’ betting outlets in Birmingham toward the end of the year.

Final Conclusion High Street Shops Down But Not Out

While we anticipate the number of high-street betting shops to fall over time but there’s still enough demand to keep thousands. There is plenty of incentive for bookmakers who want to remain with a having a presence on the high streets as large proportions of their customers will not, or would prefer not to, do business online.

High-street stores are also a major factor in the perception of brand and trustworthiness and this is something that must not be neglected. It is a fact that stores that are able to offer a higher-quality atmosphere are more likely to have an increased chance of being spared being snubbed. External factors, like shifting demographics as well as varying rents will obviously contribute to the overall picture, however, generally speaking, the top stores will not leave our high streets for quite a while at least.