If you consider the betting and gambling industry and see a lot of healthy competition with hundreds of brands today vying for our attention. Some companies, though they may appear independently, actually in fact part of the group and you might not even. As with many markets, there are in fact some major players, and the rest are left to compete for the custom.
It isn’t just the old high-street bookshops such as Paddy Power and Betfred that occupy the top spots in the biggest betting company leagues. Numerous early bookmakers that are solely online have already defeated the previous physical-based players including Bet365 as well as the largest and the first trading platform online, Betfair. Fusions of already huge companies such as Ladbrokes as well as Coral and Betfair and Paddy Power have led to the creation of massive book publishers, and these giants are now combining to create collosus billion pound companies such as Entain and Flutter Entertainment, who are currently expanding into America.
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Bookmaking’s future in the UK is at stake since it could become the sole monopoly of just a small number of large companies, similar to the energy market.
In this piece, we take a look at the progress of the UK gambling industry and the magnitude of the earnings generated, and the gradual transition to online betting and gaming.
The size of UK Gambling Industry
The UK gambling industry generates approximately PS15 billion each year in revenues and was growing by 8 percent a year up to the time of the pandemic in 2020. Of this total, well more than 1/3 (PS6.8 billion) is made from online gambling, with roughly 60% casino and 40 percent sports betting.
The entire industry is responsible for bringing in around PS8 billion to the UK Treasury each year. directly employs over 50,000 people (perhaps as high as 100,000 if you include indirectly employed workers).
Despite the ongoing shift towards gambling online since turn of the millennium , there’s still approximately 7600 betting establishments within the UK (90 percent of which are managed by Coral, William Hill, Paddy Power, Ladbrokes and Betfred) and 648 bingo halls as well as 1448 arcades, and 84 land-based casinos (52 of which are owned through the Rank Group and 32 by Genting). There’s currently an region of 200,000 gaming machines used in the UK also, and of those, more than 40,000 are fixed-odds betting machines (FOBTs).
The National Lottery (and other lottery) revenue is also part of the overall gaming revenue. This make up to PS4.15 billion of total revenue, with approximately PS300 million going back to good causes.
High street bookmaking is responsible for a lesser amount, PS2.4 billion annually, accounting for more than 54% of all revenue from gambling that is not remotely generated from the UK. Arcadesand family entertainment centers casino, bingo halls and bingo halls, plus bets on pools (such such as Tote) and on-track bookies are the remainder.
Casinos that are located in the land generate more than PS1 billion in annual revenue. With the complete shift to online casinos, in the real world, gaming machines such as slots only account for 21% of the casinos revenues, while tables games like blackjack and roulette contribute the remaining 79 percent.
Internet Betting and Casino
Around 58% of online gambling revenues come from remote casinos. Of this almost three quarters (72%) comes from slots, and the remainder from table games and other games (an opposite pattern from land-based casinos). Poker, which falls as a casino game, contributes only 3.5 percent of the total revenue.
Sports betting is the 2nd most lucrative sector, generating up to 38% of the overall online revenue. Around 46% comes from football betting, around 32% from horse racing and the rest from other sources. Virtuals make a surprise appearance as the 3rd most favored sport to bet on. This is a sign of the trend shifting away from football indicating that people tend to diversify their gambling preferences, since footy used to hold around 54% of all online sports bets.
Other sources of online income include bingo on the internet, exchange betting and betting on pools. However, lottery revenues are not listed in this list.
In 2014 , the internet sector represented 29% of the total market share. By the year 2016, it had risen to 32%. By 2020, it was 44.5%. If we take out lotteries from the equation, the online gambling industry accounted for 60% of remaining annual market share in gambling actions in UK which shows how fast the internet has taken over the industry of gambling.
Development of High Street into Online Betting
With the exception of the odd independent bookie as well as the stalls you see at races, almost all bookmakers now provide online betting. It wasn’t previously happen this way prior to the internet age breaking into the industry was much more challenging than it is now. To learn more about the history behind gambling, visit our dedicated page.
Pre-1960’s
Prior to 1960 in the UK it was unlawful to bet away from horse and greyhound tracks. Gambling was heavily regulated by the government and although the illegal operators were present however, you’d find it difficult to make bets away from the track.
Bookies could still take bets off-course through loop-holes in the law which allowed bets to be taken by telephone or by postal order. This was the way William Hill started out. If you had enough money of course there were always alternatives available to you. Ladbrokes for instance started off as a men’s bookmaker that served celebrities. If you were an ordinary working class man or lass however you had very many options to choose from.
The majority of betting was for horse and dog racing. Football betting was largely outlawed and only permitted for lower stakes pools betting syndicates, like the football pools (which remain in existence in the present).
In the past, betting was very easy as you needed to go to a race-track to bet (or do it illegally in a backstreet gambling den). This was, unless you had money to bet when the law wasn’t actually applicable to you. You could bet with discreet dealers.
1960 Betting and Gaming Act and Betting Shops
In 1960, the federal government finally took on the new age. People of a typical age had more disposable income in their pockets and desired more control over how to spend their money. The act on betting first allowed off-course gambling and by the next year, in May 1961, a multitude of betting shops had opened across the length of the nation at a pace of 100 a week.
Betting was still largely restricted to horse racing, with rules that were in place like the ‘trebles rule’ on football. The rule was that football bets had to be accumulators with at least three or more options, otherwise you were not allowed to bet. The only sport that you could put singles bets in was race.
Yet, the new business was embraced by the people of Britain planting the seeds that eventually led to the UK becoming the largest gaming country (per head) in the world.
One of the first persons to open one of these new betting establishments was Joel Coral and 10,000 shops are reported to have opened in the first six months. Ironically the UK’s now biggest bookmaker on the high street, William Hill, initially refused to open betting shops, stating they were a cancer on society. He changed his mind in the year 1966.
1970s and the 1980s
The bookmaker market grew rapidly after the legalization of high street betting. In the 1970’s, there were 15,000 shops across the United Kingdom.
This is the time when some of the most famous names we know today made and solidified their reputation. Britain’s oldest bookmakers, Ladbrokes, William Hill and Coral were making enough that they began to invest in other sectors of leisure.
1990’s
Despite the massive growth of bookies on the high street in the past 30 years, the industry had a restricted number of customers. The vast majority of people that patronized betting establishments were middle men, and the perception of stores as being seedy dark, smoky places brimming with cigarettes and vulgar language did not make a difference.
Bookies attempted to attract an increased customer base through the introduction of new features like live sports in stores and football-related coupons, which encouraged greater diversity in customers and bets. The removal of the ‘trebles rule’ on football in 1990’s proved to be a significant step towards helping bookies diversify their operations to allow punters to bet on singles in various sports.
An ever-growing improvement in image, more diverse bets and markets plus more live sports (especially Premier League football) and an ever-increasing disposable income and saw the fortunes for bookmakers rebound.
By the mid-1990’s the industry was firmly in lock-down, with five major companies ruling the industry, and a few independents across the nation. Many thought betting and gaming would remain the same forever. That was until the internet was invented.
New Millennium and the Internet
As the 1990’s drew to an end, a new threat began to emerge against the old system, online betting. This was more dangerous for the traditional bookies on high streets than you’d think.
The bookmaking market on the high streets was regulated by a variety of gambling and betting acts, and most importantly, bets were taxed (9p/PS1 placed). Online gambling however was a somewhat like the wild west. You could simply set up where you wanted, create your website and start accepting bets from your customers tax-free.
Even though avoiding tax on winnings and stakes in gambling was at the time technically illegal it was almost impossible to police. New companies along with the bookies of the past began to set up new websites, most of them located off shore on Gibraltar or Malta in order to make the most of the tax-free trade (most are still based there today).
In the late 1990’s as well as the in the early 2000’s, the market share for online shopping was very low and although the new unregulated online trade could be a problem, it wasn’t sufficiently widespread to prompt changes. The bookshops were still making enough from the high street despite the fact that tax-free companies were now taking a part of their profits.
Victor Chandler and Tax
In 1999 Victor Chandler (now BetVictor) relocated his book-making business from shore to Gibraltar in protest against the tax rate on betting in the UK and sold his 41 bookshops to Coral. This enabled Victor to offer betting opportunities for clients from all over the world, especially from Asia and Asia, with no UK tax. It also enabled UK punters to bet without having to pay the 9p stake tax.
It is believed this decision that spurred the current UK chancellor, Gordon Brown, to remove the tax on betting in the year 2001. Saying that although he removed the tax that was paid directly by the gambler, new taxes were levied on bookies’ profits earned in the UK and at this point the ship was mostly out of the water and the majority of traditional bookshops were operating their online operations from abroad.
2005 Gambling Act
Eventually the government realised the status quo couldn’t continue for long. This wasn’t only about taxing corporations Anyone could have a website abroad and this was not a guarantee for UK users under the law.
In 2005, the UK government created a new independent body that is accountable to the Department of Culture, known as the Gambling Commission. This body was set up to issue and regulate the new UK gambling licences as required in the law of the current Act for any company wanting to provide gambling services (both offline and online) throughout the UK.
The overnight change in the world of online betting, with all companies having the ability to obtain a licence legally in the UK.
2010’s
The old high street bookies had the best of all worlds. They still had their old high-street operation that, was not growing as fast as it was in pre-online days, wasn’t declining as many had hoped. It appeared that both offline and online betting was on the rise and the big old businesses were in the best position to profit from this.
Still they didn’t have it all their own way. There were a handful of companies that began in the latter half of 1990 and early 2000’s were beginning to beat the old orders, specifically Bet365, Betfair and 888. By the time they reached 2010, they had taken over a significant portion of the market online.
Second decade in the new century witnessed a critical switch in the way that online betting surpassed high street wagers. A growing number of people could access the internet, especially in the mobile phones. Combined with the lack of stigmatism associated with betting on the internet vs. the high street, the industry saw its highest growth rate since the 1960’s.
The 2010’s weren’t all about win-win for the major book stores in 2010, the decade also saw a number of companies launch into the market. A lot of these companies weren’t weighed down by the costs of running a load of high street stores or by having a lot of employees. In addition, by focusing on niche markets they were able to compete against larger brands. The effect of this has been a lot of mergers and acquisitions in recent years as the bigger operators try to hoover up competition and introduce new ideas.
2014 Gambling Act Amendment
By 2014 , the majority of gambling online was carried out by companies that were based in markets outside the UK. The result of this was the UK government paying many tax dollars.
The amendment to the gambling act of 2014 was introduced due to various reasons, like a greater focus on responsible gambling and protecting vulnerable players. The main motive was being honest is to allow the government to tax the industry.
The act brought in an entirely new point of consumption tax for UK licensed betting sites as well as bookies. This meantthat regardless of whether they are situated in the UK or not, any merchants the intention of providing gaming services to customers in the UK were required to pay tax on their UK earnings. This made it easier for everyone, and to be frank was a stumbling block for the already bigger operators.
However the law on gambling is set to be revised again in order to keep pace with advances in technology, so there could be more information to be shared very soon.
Mergers and Acquisitions
Mergers and acquisitions aren’t the only thing that bookmakers do Many have bought up smaller independents for many years. The recent trend however of big corporations merging is a first and is a new phase in bookmaking.
Like any free market, the main challenge in the near future will be maintaining competition. When markets are relatively new (as betting on the internet was in the latter half of 1990, and into 2000) there are a variety of new markets for companies to be able to. With time, however, money is a factor and the larger companies are able to purchase up smaller players, either to make their products available or simply to eliminate the competitors.
The future is uncertain but there is a strong chance that some betting firms will monopolize the market and, just as has happened in energy and banking markets, might begin to collaborate. This is a bad thing for players and the new companies seeking to enter the market.