It is possible to examine the gambling and betting industries and conclude that there’s lots of healthy competition, with hundreds of brands today vying for our attention. Some companies, though they might seem independent, actually are in fact part of the group, and you may never realize it. Like the majority of markets, there are in fact some major players, and the rest have to scramble for the remainder of the custom.
There aren’t only the old high street bookies like Paddy Power and Betfred that occupy the top spots in the most important betting company leagues. Numerous early bookmakers that are solely online have already defeated the previous physical-based players, such as Bet365 and the first and largest electronic exchange Betfair. Fusions of already huge companies like Ladbrokes and Coral and Betfair and Paddy Power have led to the creation of massive book publishers, and these giants have further merged to create collosus billion pound companies like Entain and Flutter Entertainment, who are growing into America.
Future of the bookmaking industry in UK is uncertain since it could become the sole monopoly of just a handful of huge companies, similar to the energy market.
In this report, we analyze the evolution of the UK gambling industry, as well as the magnitude of the earnings realized, and the rapid transition to online betting and gaming.
The size of the UK Gambling Industry
The UK gambling industry is currently generating around PS15 billion of annual revenues and was growing rapidly with around 8% per year, until the pandemic of 2020. Of this , more than one-third (PS6.8 billion) is made from online gambling. It is the approximate proportion of 60% casino and 40 percent betting on sports.
The whole industry contributes around PS8 billion to the UK Treasury each year. The industry directly employs more than 50,000 people (perhaps as high as 100,000 if you include indirectly employed workers).
Despite the steady shift towards online betting since the turn into the millennium, there’s at least 7600 betting shops in the UK (90% of which are managed by Coral, William Hill, Paddy Power, Ladbrokes and Betfred) with 648 bingo halls, 1448 arcades and 84 casinos that are located in the UK (52 operated through the Rank Group and 32 by Genting). There’s currently a region of 200,000 gaming machines operating in the UK as well, and of these approximately 40,000 are the controversial fixed odds betting terminals (FOBTs).
The National Lottery (and other lottery) revenue is also included in the overall gaming revenue. The total is PS4.15 billion of the total. With around PS300 million going back to charitable causes.
High street bookmaking accounts for a lesser amount, PS2.4 billion annually, making up over 54% all non-remote gambling revenue from the UK. Arcades, Family Entertainment centers casino, bingo halls and bingo halls, plus pool betting (such as the Tote) and on-track bookies comprise the remaining.
Casinos that operate in the real world generate more than PS1 billion in revenue annually. With the complete shift to casinos on the internet, in the real world, gaming machines such as slots make up just 21% of the casinos earnings, while table games like blackjack and roulette contribute the remaining 79 percent.
Casinos and online Betting and Casino
Around 58% of online gambling revenues come from casinos that are remote. Of this almost three quarters (72%) are derived from slot machines, and the remainder from table games and other games (an opposite in comparison to casinos that are located on land). Poker, which falls as a casino game, contributes only 3.5 percent of total revenues.
Sports betting is the 2nd most lucrative sector, generating about 38% of total online revenue. Around 46% comes from football betting. The remaining about 32% of it from horse racing and the rest from other sources. Virtuals also make an quite an appearance as the third most popular sport to bet on. This indicates that the trend is moving away from football and indicating that people diverting their wagering preferences, since footy used to hold around 54% of all online sports bets.
Other online sources of revenue include online bingo, exchange betting and betting on pools. Lotteries have not been included in this list.
In 2014 , the internet sector was responsible for 29% of the overall market share. By 2016 it had risen to 32% – in 2020, it was 44.5 percent. In fact, if we exclude lotteries, the internet industry took up 60% of remaining annual market share of gambling-related operations in UK that shows how fast the internet is taking over the gambling sector.
The Evolution of High Street into Online Betting
With the exception of the odd independent bookie and some of the stalls you see at racing tracks, most bookmakers now provide online betting. However, it wasn’t always have to be that way, and prior to the internet age getting into the business was a lot more difficult to do. For the full history of gambling, check out our dedicated page.
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Prior to 1960 in UK it was illegal to bet away from greyhound and horse tracks. Gambling was heavily regulated by the government and although there were some illegal operators in the past, generally you’d find it difficult to place bets that were not on the track.
Bookies did still make bets off course by exploiting loopholes in the law that allowed bets to take place via phone or through postal order. This is the way William Hill started out. If you had enough money, of course there were always alternatives available to you. Ladbrokes for example started out as a book maker for men and prominent clients. If you were however an ordinary working class man or lass there were a few choices available.
However, the majority of betting at the time was on dog and horse racing. Football betting was in general outlawed, except for lower stakes pools betting syndicate games like football pools (which remain in existence even today).
Prior to 1960, betting was straightforward as you had to visit a racetrack for it (or do it illegally in a backstreet gambling place). That is unless you were wealthy, in which case the law was not applicable to you and you could bet through discreet merchants.
1960 Betting and Gaming Act and Betting Shops
In 1960, the government officially took on the new age. Normal people had more disposable income in their pockets and they wanted more choice in how to spend their money. The gambling act was the first to allow off-course betting and by the following year, May 1961, an array of betting establishments had were opened across the nation at a pace of 100 per week.
The betting market was mostly restricted to horse racing, and there were rules in place such as the ‘trebles’ rule on football. It meant that all football bets had to be accumulators with at least 3 or more selections otherwise you couldn’t bet. The only sports you could place singles upon was horse racing.
Still this new industry was well-liked by the citizens of Britain planting the seeds that ultimately led to the UK becoming the biggest gambling country (per head) in the world.
One of the first persons to open one of these new betting stores is Joel Coral and 10,000 shops are reported to have opened within the first six months. The UK’s largest bookmaker in the high street, William Hill, initially was against opening betting shops as they considered them to be an affliction on society. The company resisted in 1966.
1970s and the 1980s
The bookmaker industry grew exponentially during the years following the legalization of high-street betting. By the 1970’s there were 15,000 shops operating in the United Kingdom.
At this time, some of the most famous brands we are familiar with today earned and built their brand. Britain’s oldest bookmakers, Ladbrokes, William Hill and Coral were making enough that they began investing in different leisure industries.
Despite the immense growth of bookies on the high street during the last three decades, the industry was still dominated by a limited clientele. The majority of gamblers who patronized betting shops were middle class people and the image of the shops as shady dark slums brimming with fumes and foul language did not assist in changing this.
Bookies attempted to attract a larger customer base by introducing new features, including live sporting events in shops and new football coupons , to attract more diverse bets and customers. The removal of the ‘trebles rule’ for football in the 1990’s proved to be a significant step towards helping the bookmakers expand their business to allow punters to place bets on singles on various sports.
A steadily better image, wider range of bets and markets as well as more telecast sports (especially Premier League football) and an ever-increasing disposable income was the reason why the fortunes of bookmakers rise again.
By the mid-1990’s the industry seemed locked down with five major companies ruling the industry, and a few independents across the country. Many believed that gambling and betting would continue to be this way for the rest of their lives. Then the internet came along.
New Millennium and the Internet
As the 90’s came to a close , a new threat emerged to the old established order, online betting. This was more dangerous to the established high street bookies than you’d think.
High street bookmaking was regulated by different gambling and betting laws and most importantly, wagers had to be taxed (9p/PS1 staked). Gambling online was somewhat like the wild west. You could establish your business wherever you wanted, create your website and start accepting bets from customers – tax free.
Although avoiding tax on betting stakes and winnings was, at the time, technically illegal, it was impossible to monitor. The new companies and the old high street bookies were beginning to launch new websites, most of them situated off shore on Gibraltar or Malta and Malta, in order to avail of tax-free trade (most are still in Gibraltar and Malta to this day).
In the latter part of the 1990’s and in the early 2000’s, the market share on the internet was relatively small and, although the unregulated trade on the internet could be a problem, it was not widespread enough to cause changes yet. The bookshops were still making enough profit from the market even as tax-free brands were now taking up a part of their profits.
Victor Chandler and Tax
In 1999 Victor Chandler (now BetVictor) relocated his book-making business from shore to Gibraltar to protest the tax rates on betting in the UK, selling the 41 of his shops to Coral. This allowed Victor to provide betting opportunities for international customers, particularly from Asia, without paying UK tax. It also allowed UK punters to place bets without paying the 9p/PS stake tax.
It is believed it was this choice that prompted the current UK chancellor at the time, Gordon Brown, to remove the tax on betting in 2001. The report states that even though he eliminated the tax directly borne by the punter , the new tax were levied on bookies’ profits made in the UK and at this point the ship was mostly out of the water and most traditional bookies were operating their online operations via overseas.
2005 Gambling Act
Eventually the government realised the status quo could not last for ever. This wasn’t just about taxing businesses either Anyone could have websites in other countries and this offered little protection to 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. The Gambling Commission was established to issue and supervise new UK gambling licences , which are required pursuant to the latest Act for any company wanting to provide gambling services (both online and offline) throughout the UK.
The overnight change in the world of online betting, with all companies having to be licenced to operate legally in the UK.
The bookshops of the past were the best of both worlds. They had their original high-street operations, and was not growing as fast as it was in pre-online days, wasn’t declining as some had expected. It appeared that offline and online betting was on the rise and the big old firms were in the best position to profit from this.
However, they weren’t able to do the freedom to do it their way. Already , a few companies that started in the late 1990’s and the early 2000’s were starting to challenge the previous model, including Bet365, Betfair and 888. Between them by 2010 they had taken over a significant part of the online market.
In the second decade of century witnessed a significant shift, online betting overtook high street bets. A growing number of people were able to access the internet, specifically in the mobile phones. Together with the lack of stigmatism in betting online vs the high street, the industry saw the biggest growth in the 1960’s.
It wasn’t all win-win for the big bookies The 2010’s also saw a whole host of brand new businesses launch into the market. A lot of these brands were not shackled by the expense that come with running many shops on the high street or employing a large number of people. In addition, by focusing on niche markets they were able to compete against larger corporations. This has led to been numerous mergers and acquisitions in recent years as bigger companies seek to get hold of competitors and new innovations.
2014 Gambling Act Amendment
By 2014 , the majority of gambling was done online through companies based in non-UK markets. The consequence was the UK government losing out on many tax dollars.
The 2014 amendment to the gambling act was introduced due to various reasons, including a greater concentration on responsible gambling as well as safeguarding vulnerable individuals. The most important reason was that it was honest however was to allow the government to raise taxes on the industry.
The act introduced the new point of consumption tax for UK licensed betting sites as well as bookies. This meantthat regardless of whether they are you are based within the UK or otherwise, any business that intention to provide gaming services to customers in the UK were required to pay taxes on their UK earnings. This made it easier for everyone and, to be honest, was a stumbling block for the larger operators.
However the law on gambling is scheduled to be revised again to keep up with advancing technology, so there could be more information to be shared very soon.
Mergers and Acquisitions
Acquisitions and mergers aren’t something new for bookmakers Many have been purchasing smaller independents for a long time. The recent trend however of large companies merging is unprecedented and perhaps represents a new era of publishing.
As with all free markets the main challenge in the near future will be maintaining competition. When markets are fresh (as betting online was during the the latter half of 1990, and into 2000) there are many new markets for companies to fill. With time, however, money is a factor and the larger operators are able to buy smaller companies, either to integrate their offerings or simply to cut off the market.
There is no time to judge however there is a clear possibility a number of betting firms will take over the market, and, similar to like what has occurred in the banking and energy markets, may begin to collude. This is an issue for the punters as well as new businesses looking to venture into the market.