In spite of its popularity as the world’s top online gambling market, the UK is now facing unprecedented challenges. David Brown, an individual who has steeped in the UK betting business since 1976 and was the former trading director for such prominent organizations as William Hill, Coral, and LadbrokesCoral, airs deep concerns. What he meant was that ” in the last 47 years, I have never been more dejected as I was now concerning the state of the UK sports betting industry.”
The earnings trajectory of 2023: A harbinger of the coming day
The losses that companies released as financial reports in the 2023 fiscal year may actually be the reason behind current economic conditions. It was meant to be a high flying and a period of soaring profits, kick starting with the 2022 Fifa world cup and a joyous festive season of horse racing. But what we got was a complete opposite.
With bet365, which was the UK largest gambling operators market share holder, being the first one to raise the concern. The dismal numbers revealed in the company’s trading update in early 2023 showed the profit was a whopping 88% less than the previous year’s.
Another warning sign from William Hill/888 was also on. Specifically, there is an omission at the beginning of 2023 from its revelation about the Christmas and World Cup earnings, which cannot be compared with the Russia 2018 net win figures.
In addition, Entain although being an known upcomer in the industry and even listed in the UK in 2021, its outlook kept downward moving throughout the year.
Besides the fact that year-over-year growth figures for each quarterly earnings report in 2023 have shown the growth to be slowing, the company’s future does not look bright. Goldman Sachs, in November, revised the rating of Entain from “buy” to “sell” which raised concerns over the entire industry.
As regards the fear of business growth, it also forecasts that the pro-forma quarterly online growth could go on with the trend of negative development in Q4 of 2023 and H1 of 2024.
The UK white paper: Building an environment of unpredictability
Operator earnings are low and that is only part of the overall industry picture. The emergence of the more serious problem surfaced as a result of the white paper published in April 2023 on which there are the affordability checks set to be implemented in 2024.
As they are designed now, these controls would push bettors towards the black market due to being intrusive.
The real issue, according to many stakeholders, is the growing divide between the GC and the industry in the approaches to the regulation of gambling.
For instance, the GC has said that only 3% of the accounts will be checked against the affordability criteria. A great portion of the current debate touches on the correctness of the figure.
Several critics of the GC have accused the GC of making a mistake not only in the projection of the number of accounts that would be affected by the affordability checks but also in its own calculation.
In brief, the accentuation is that the majority of the accounts in the remaining 97% is from “occasional” bettors.
These are individuals whose business is predicting only major events such as the Grand National and are unlikely to bet on any other event for 12 months.
In the event that the invasive checks get implemented by 2024, the vast majority of the regular punters that constitute the spine of the industry will certainly stop using the bookmakers.
The emergence of the black market
The present predicament has been a cause of the huge brisk business of the black market. Recently Yield Sec has declared the results of research that indicate UK illegal gambling systems have been targeting most prone players. I received the disclosed fact that the number of illegal operators in the UK from Yield Sec’ CEO, Ismail Vali. In 2021, there were 58 complaints, and in 2022 their number quadrupled to 224. In 2023 they doubled again to 231. Moreover, the criminal operators were assisted by more than 1000 partners to market and promote their operations. UK online gambling thus totaled illegal gambling in 4% of this market and the GGR which equals in the reduction of revenue and consequently less funds for the initiatives that guarantee responsible gambling (such as GAMSTOP).
Yield Sec’s latest research has found that there is also growing trend of ‘Google searches that try to get past self-exclusion systems’. Already in January 2024, there were over ten million online searches on Google utilizing the keywords “not on GAMSTOP” or similar that were tracked by Yield Sec. They suggest that the most vulnerable gamblers bypass the self-exclusion parameters put by licensed gambling companies by using the search results. This has led to at-risk gamblers going back to the offshore illegal operators that lack any oversight from the Yield Sec and GAMSTOP tools.
The Yield Sec unveils a vast untapped regulatory realm with criminal operators resorting to exploitation of susceptible consumers as one of the default ways to break into that sector. The illicit market players are besting the legitimate operators by leveraging audiences that have been rejected by the legal industry thus they effectively reduce relative costs.
Ismail Vali, remarked: “Our analysis underlines the horrendous and derogatory expansion of such an illegitimate type of gambling operation in the UK over the period of three years. The existing evidence of the gaming options that are made for the purpose of disallowing and deceitfully enabling the vulnerable problem gamblers to bypass GAMSTOP self-exclusion is distressing and calls for a prompt and substantial intervention”.
Charting a Positive Course Through 2024
Britain has not lost its steadfast resolve to face difficulties, and it will do so again. Another regulated sector growing at a significant rate is UK retail presence. Playtech Sports is gaining momentum as it edges out existing online sportsbooks.
The company’s Self-Service Betting Terminals, SSBTs, are leading the charge of digital disruption, growing at double-digit rates. The SSBTs now present everything that an investor looks for online, but with seamless transactions.
Lee Drabwell, Managing Director for Playtech Sports, says that the referral of bookmaker terminals is becoming more relevant, especially after the COVID pandemic. He puts the comeback of consumers’ interest on playtech sports’s ability to render speed and promptness of placing the bets as they do online.
Drabwell makes the point that nowadays the customers no longer come to the counter and ask for the price as it was the case previously. Nowadays, they have a chance to get everything online which they can find in bookmaking shops via terminals. His statement is that all operators have fully accepted this, hence the increase in the number of clients of the opposite sex in the stores.
There is no doubt that Sportech’s SSBTs will be among the most important drivers of the market growth in 2024, ensuring that the offer caters to current demand. He argues that as suppliers keep investing in 2024, buoyancy in traffic would be experienced. He mentions the BoyleSports case of successful expansion to the UK as an example of that.
Jennings Bet is another beautiful example of investment and growth. Besides, according to Drabwell, almost all independent operators have added their terminals.
Looking Ahead: The Promising Future of Retail
Bearing in mind 2024 as the next focal point, the growth prospects for the retail sector look promising. Regardless of years of experience, as Drabwell passionately states, “There is room for growth and more,” suggests that demand will continue to grow; those businesses that will not invest in digital experience will be losing their market share to their rivals.
For example, in-play betting is one type of betting offered in betting shops considering the growing trend of popularity. Drabwell underlines that the number of bets placed in-play (live betting) has now reached more than 40%, a feature that can be carried out only in a betting shop via a terminal. In the shop, about 80% of all bets on football that is placed this way, while he expects this number to reach over 100% in a few years from now.
The achievements of their Bookie maker Betbuilder for football in shops show how the digital needs create retail success. Not only competition but innovation which adjusts to the rising offer not only attracts new customers but also satisfies existing ones.
“We are exactly replicating all the features of online betting on the high street.” Drabwell clarifies making betting odd-first. Additionally, such an impact multiplies when combined with the realisticness of an actual money win, which becomes a whole lot more appealing to the punters.
Playtech Sports’ tools and technology enable the operators to be at the forefront of consumer protection, which is critical as the gambling business grows and becomes regulated.
Mentioning Drabwell, there has been a booming increase of different sports like baseball, cricket, American football, basketball, etc. These events especially are luring shoppers into the shops where Betbuilders are providing bets of far diversity
‘Those who risk the most will certainly win the most!’, is a quote that Drabwell uses when asked about the likely frontrunners in 2024. Generally, any UK operator that decides to invest in retail or start using the Sportsbook Self-Service Betting Terminals of Playtech Sports can be considered a safe bet.
Placing emphasis on brand loyalty will be a crucial strategy
Service will determine operator’s performance well in 2024, and is what the Star Sports is characterized as. Company’s focus on the customer benefit is the driving force for their future growth expectations. As Flynn Goward, CEO of Star Sports, pointed out, the company did many notable improvements last year in their online channels (app) extensions, increased retail footprints and focused presence at more racecourses than in any other year.
Star Sports has been moving fast to grasp new avenues, taking the place of old odds on the Newbury National Hunt and at Ascot Racecourse. We currently run around 150 days a year over horse racing and greyhound race. Our unique position in the market allows us to receive the largest size of bets, while making sure we deliver best service to all the sizes of punters.
Whereas other companies see challenges, Star Sports sees opportunities. Through their endeavor, they are harvesting fruits with the rest of their energy since they are trying every possible means to expand their brand. Goward says: “As rivals pull back from the high street and the course, we are booking their real estate and pitches.”
Goward saw a rise in the number of big hitters on the betting rings, thus the matchday on-course cash stakes escalated compared to the days when talk of affordability checks was not done. Howard proposes that the fact that bookmakers on course were somewhat overlooked due to their limitation to six or seven races a day is likely the biggest reason why they are failing.
Nevertheless, according to Goward, it is not easy to put movements to ensure affordability in the public domain, specifically on a big scale like Cheltenham in March. He reveals the dilemma of taking charge of this process when chasers in the Champion Hurdle are on the mad rush to outdo one another to get the price they want.
Commitment to Success
Goward, who is a customer-centric person, is extremely proud of the niche Star Sports has helped to build in the retail, on-course, and online channels. “Oh! Definitely, I can confidently assure you that we mean business. We are one of the best brands out there; this is so far as service delivery is concerned,” he says. And the conclusion is an important piece for Goward for their recipe’s success: to remain visible. He highlights his main insight in one sentence by saying, “our success is mainly built on our exposure to the real-world shows, such as the major meetings and the Greyhound Derby.” This helps them in their standing in the industry.
“We rely on our distinct personality but with the extraordinary service from our knowledgeable and cheerful staff, the team at Star, is one thing to be proud of,” Goward concludes. Not only that, they also make a dedication to pay back the sport they are passionate about. Brighton being the area they are from, they have been the sponsors of the Brighton Summer Racing Festival and the Greyhound Derby over the years which are very dear to Ben Keith’s heart.
This philosophy is especially pertinent when we look into possible future investments for the near future. They get their momentum from the aggressive strategies to take over the other marketers throughout the year 2024. “Our future direction is to work on the improvement of our product offerings, placing bets, and marketing awareness so that users will find the Star brand attractive and decide to stick with us as their number one betting firm.”
Addressing the Gap Between the GC and the Industry
Finding did not provide a comprehensive analysis on the long-term implications that the initiatives implemented by companies like Playtech and Star Sports in 2023 could have for the protection of the UK gambling industry in 2024. The gap that is becoming increasingly evident between the Gambling Commission (GC) and the industry requires a solution. Almost fifty years in the industry for David Brown who is relentlessly striving to fill the above space.
He points out the mutual opinion from many bookmakers, the racecourse bookmakers in particular, that the GC is unable to grasp the fundamentals of betting and mind trademarks of betters. In spite of it is a great fact that none of the seven new appointed commissioners have previous experience in gambling industry.
Hence, one needs to reflect on the methods of dealing with the matter in 2024. In the view of Brown, the first move is to be at the point of anchoring worthy points otherwise debatable, and then to see how differences and obstacles are carried out.
Brown’s collaboration with this industry for almost 50 years has proven its resilience as witnessed first hand. He trusts that the industry will have overcome past challenges and will do so against the present turbulence. Now more than ever he does believe that companies management should take the lead.
Goward reinforces these thoughts, underscoring the implication of resilience. “As for our ability to stand up to adversity, we, the Star, are particularly well known,” he points out. “On the other hand, it is critical to keep in mind that the imposition of regulation is not free from the risk of adversely affecting the gambling/racing industry as well.”
He underlines that although everybody supports safe gambling and maintaining the AML regulations within the industry, the need for concise guidelines is pressing and clear because it is not yet clear what this would mean in practice.
