Betting Business Bulletin 2nd October 2017

Bookmakers come under friendly fire from Paddy Power Betfair chief

It has been another tumultuous week for the betting industry, which came under friendly fire from one of its own in Breon Corcoran and not so friendly fire from the Labour Party.

Corcoran, the outgoing chief executive of Paddy Power Betfair, dealt a blow to his fellow betting shop operators by supporting a major reduction in gaming machine stakes, calling for them to be reduced to £10 or less.

He wrote to Department for Digital, Culture, Media and Sport minister Tracey Crouch last week to say the subject had become “toxic” to the industry and that lack of decisive action would lead to continuing uncertainty for the sector.

The Association of British Bookmakers (ABB), of which Paddy Power Betfair is a member, said Corcoran’s viewpoint did not match the majority of its members, while Greg Knight, managing director of independent bookmakers Jenningsbet, described it as being driven by “blatant commercial consideration”.

The results of the government’s long-awaited review of gaming machines – better known as FOBTs – are expected to be released in November.

Campaigners have called for the maximum stake on the machines, which have become the largest source of revenue for some operators’ retail chains, to be reduced to £2 from £100 to tackle problem gambling.

It has been reported that the government is mulling options including £2 and a figure of around £20 and £30, while the status quo is unlikely to survive.

Retail bookmakers have argued that a major reduction in stakes would lead to the closure of many betting shops, thousands of job losses and also impact on racing’s finances.

However, in the letter, Corcoran said: “Whilst we are not aware of any evidence which links stake size to problem gambling, we are acutely aware of the increasing reputational damage to the gambling industry that has followed the lack of progress in this area.

“We believe that this undermines the role of the sector as a provider of entertainment, employment, and tax revenue, in addition to being a much-needed supporter of sports such as horseracing.

“We now believe that the issue has become so toxic that only a substantial reduction in FOBT stake limits to £10 or less will address societal concerns. I am confident that we could operate our retail business successfully and profitability under such circumstances. Other well-run operators should be able to do the same.”

It was recently reported that analysts at Barclays had estimated that a reduction in stake to £2 would cost Ladbrokes Coral £449m in revenues, William Hill £284m and Paddy Power Betfair £55m.

Corcoran’s letter drew an angry response from Knight whose Jenningsbet brand is the largest independent chain in Britain employing 500 people nationwide.

He condemned Corcoran’s move as a “cynical attempt” to drive competitors out of business, adding: “I am confident that DCMS will see it as the blatant end game to a long-term commercial strategy that it is.”

He went on: “Corcoran is well aware that the industry could not survive a drastic cut to stakes and the independent sector in particular would be rendered obsolete.”

Knight claimed that Paddy Power Betfair would “benefit enormously” if retail customers were forced to migrate online.

Watson weighs in

The political pressure on the sector was ratcheted up further at the Labour Party conference in Brighton last week.

The party’s deputy leader Tom Watson warned operators they could have to pay a compulsory levy to fund the treatment of problem gamblers as well as unveiling a review into the NHS’s ability to deal with gambling addiction.

However, both the ABB and Remote Gambling Association said they were not opposed in principle to a statutory levy.

Watson, who also renewed his call for a ban on gambling advertising on football shirts, told delegates a Labour government would “finally confront problem gambling” and “introduce a compulsory levy” to pay for its treatment.

He accused some gambling companies of “targeting our poorest communities”, while also claiming they were using data to “deliberately target low-income gamblers and people who have given up gambling”.

He went on: “Gambling addiction is an illness and it is about time that it was taken seriously.”

Together with shadow health secretary Jonathan Ashworth, Watson said he was launching “a thorough review of gambling addiction in this country and current provision for treatment on the NHS”.

He added: “Our review will look at how to best fund NHS treatment and help free problem gamblers from the destructive cycle of addiction.”

Robertson warning to government over gambling review

There was, however, some rare political support for bookmakers last week as Conservative MP Laurence Robertson called for the government to take an “evidence-based” approach to their gambling review.

Robertson, whose Tewkesbury constituency includes Cheltenham racecourse, claimed the racing industry would be placed at risk if the government decides on a major reduction in FOBT stakes following its gambling review.

In a letter to the Racing Post Robertson, who acknowledges he has received hospitality from bookmakers and racing bodies in his role as co-chair of the All Party Parliamentary Group on Racing & Bloodstock, said the debate on the issue had been polarised “by labelling those trying to help racing by seeking to protect its main income stream as being ‘on the side of bookmakers’.”

He continued: “Such accusations miss the point and prevent constructive debate on the issue by seeing the two as ‘sides’.

“Bookmakers are not rivals or opponents of racing, but rather they are customers, and yet so many fail to appreciate that the fortunes of bookmaking and racing are closely intertwined.

“A failure to support bookmakers at this crucial time not only puts those businesses at risk, but also the sport of professional horseracing.”

Robertson claimed a reduction in FOBT stakes would cause betting shop closures and a consequent fall in racing’s income from the levy and media rights.

He added: “I’m afraid this point is lost on so many people, including MPs, who simply do not know of the connection between betting and racing. And here lies the danger.”

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