It is possible to take a look at the gambling and betting industry and believe that there is plenty of healthy competition and hundreds of companies competing for our money. However, many companies, even though they may appear to be independent, actually are in fact part of the company and you might not be aware of it. Like the majority of markets there are some major players, and the rest have to be a bit shaky for the rest of the market.
It’s not just the traditional high-street bookshops like Paddy Power and Betfred that have the highest positions in the most prestigious betting leagues. Numerous early bookmakers that are solely online have already beat the traditional bookmakers that were based in the land like Bet365 and the first and largest electronic exchange Betfair. Fusions of already huge companies like Ladbrokes as well as Coral and Betfair and Paddy Power have resulted in massive book stores and the giants have also merged to form massive companies worth billions of pounds, like Entain as well as Flutter Entertainment, who are currently expanding into America.
Bookmaking’s future in the UK is uncertain since it could become an exclusive business of a small number of large companies, similar to the energy market.
In this article , we examine the growth of the UK gambling industry, as well as the amount of profits that are generated, and the gradual shift to online gambling and gaming.
The size of the UK Gambling Industry
The UK gambling industry currently earns approximately PS15 billion annually in revenue and was growing by around 8% per year up to the time of the pandemic in 2020. Of that total, more than one-third (PS6.8 billion) is generated by online gambling, which is an approximate split of 60% casino and 40 percent betting on sports.
The entire industry contributes around PS8 billion into the UK Treasury each year. It also directly employs more than 50,000 people (perhaps as high as 100,000 if you count indirectly employed workers).
Despite the continuous shift to gambling online since beginning of the millennium , there are at least 7600 betting shops within the UK (90 percent of which are owned by Coral, William Hill, Paddy Power, Ladbrokes and Betfred) and 648 bingo halls as well as 1448 arcades, and 84 casinos that are located in the UK (52 of which are owned by Rank Group and 32 by Genting). There’s currently in the range 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 included in the overall gambling revenue figures. The total is PS4.15 billion of the totalamount, with around PS300 million going back to charitable causes.
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Bookmaking on the high street accounts for a lesser amount, PS2.4 billion annually, accounting for more than 54% of the total revenue from non-remote gaming within the UK. arcades, entertainment centres for families centers bingo halls, casinos and arcades as well as the Tote, pool betting (such such as Tote) and bookies on track are the remainder.
Casinos that are located in the land generate more than PS1 billion in revenue annually. A complete change from casinos online, in the real world, gaming machines such as slots make up just 21% of casinos’ revenue, while table games such as blackjack and roulette account for the remaining 79 percent.
On-line Betting and Casino
About 58% of gambling revenue generated online comes from casinos that are remote. The majority (72 percent) are derived from slot machines, while the remainder comes from table games and other games (an opposite in comparison to casinos that are located on land). Poker, which falls under the casino category, only generates 3.5 percent of the total revenues.
Sports betting is the 2nd largest industry, accounting for around 38% of total online revenues. About 46% is football betting, approximately 32% comes from horse racing, and the remainder from other sources, including virtuals which make a quite an appearance as the third most popular betting sport. This indicates that the trend is moving away from football, which indicates that gamblers have diversified their bet choices as football used to account for around 54 percent of all online sports bets.
Other online sources of revenue include online bingo, exchange betting, as well as pool bets. The lottery industry is not included in this list.
In 2014 , the online industry comprised 29% of the overall market share. By 2016, it had risen to 32%, and by 2020, it was 44.5 percent. If we do not include lotteries, the online gambling industry accounted for 60% of the remaining annual market share of gambling-related actions in UK which shows how fast the internet is taking over the gambling industry.
The Evolution from High Street into Online Betting
In addition to the occasional independent bookie, and a few of the stalls that you can find at races, almost all bookmakers now offer online betting. However, it wasn’t always previously happen this way, and before the advent of the internet, getting into the business was a lot more difficult to do. For more information on the history of gambling, check out our dedicated page.
Pre-1960’s
Before 1960 in the UK it was unlawful to place bets on greyhound and horse tracks. Gambling was tightly regulated by the government. Even though there were some illegal operators however, you’d find it difficult to make bets away from the track.
Bookies could still place bets off-course by using loopholes in the law which allowed bets to be placed by telephone or via postal order. This was the way William Hill started out. If you had enough money, obviously there were plenty of possibilities available to you. Ladbrokes for instance, started as a book maker for men and celebrities. If however, you were a typical working class lad or lady there were a limited options available to you.
The majority of betting at the time was on dog and horse racing only. The betting on football was generally banned with the exception of pools with low stakes syndicate games like the football pools (which remain in existence in the present).
In the past, betting was simple as you had to visit a racetrack to bet (or gamble illegally in a backstreet gambling establishment). This was unless you had money to bet when the law wasn’t applicable to you, and you could place bets through a reputable merchant.
1960 Betting and Gaming Act and Betting Shops
In 1960, the government finally accepted the new era. People with a normal life had more money in their pockets , and they desired more control over the way they spent their money. The gambling act was the first to allow betting off-course and, by the next year, in May 1961, a plethora of betting establishments had were opened across the country , at a rate of 100 per week.
Betting on sports was largely limited to horse racing, and there were regulations in place, such as the ‘trebles rule’ in football. It meant that all football betting had to be accumulators that had at least three or more choices, or else you could not place bets. The only sport that you could bet singles in was race.
However, this new business was welcomed by the population of Britain and sowed the seeds that ultimately led to the UK becoming the largest gambler’s country (per head) in the world.
One of the first individuals to open these betting shops is Joel Coral and 10,000 shops were reported to have been opened in the first six months. The UK’s largest bookmaker on the high street, William Hill, initially was against opening betting shops in the belief that they were an affliction on society. The company resisted in 1966.
1970s and the 1980s
The bookmaker business grew exponentially during the years following the legalization of betting on high-streets. In the 1970’s, there were 15,000 bookmakers in the United Kingdom.
It was during this time that some of the most famous names we recognize today built and established their name. The oldest bookmakers in Britain, Ladbrokes, William Hill and Coral were making enough that they started investing in other sectors of leisure.
1990’s
Despite the enormous popularity of the high-street bookies during the last three decades, the business was confined to a small customer base. 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 make a difference.
Bookies aimed to build an increased customer base by introducing new features like live sports in their shops, and brand new football coupons that would encourage diversification of customers and betting. The elimination of the ‘trebles rule’ for football in the 1990 was a huge step to help bookmakers expand their business and allow punters to bet on singles in various sports.
An ever-growing improvement in image, a wider selection of markets and bets and more sports that are telecast (especially Premier League football) and an ever-growing disposable income has seen the fortunes of bookmakers increase again.
In the late 1990’s, the industry was in a state of lockdown with five major companies ruling the scene, as well as some independents throughout the nation. A lot of people believed that gaming and betting would remain the same forever. This was before the internet was invented.
New Millennium and the Internet
As the 1990’s came to a close , a new threat was emerging in the traditional order: betting online. This was more hazardous to the traditional bookies on high streets than you could imagine.
Bookmaking on the high street was regulated by a variety of gambling and betting laws and, more importantly, betting was taxed (9p/PS1 placed). The online gambling industry was a somewhat like the wild west. You could set up your site wherever you wanted, create an online site and begin taking bets from clients – tax-free.
While avoiding tax on winnings and stakes in gambling was technically illegal, it was impossible to enforce. New businesses, along with the traditional bookies started to establish new websites, mostly located off shore within Gibraltar or Malta in order to make the most of tax-free trade (most remain in Gibraltar or Malta in the present).
In the 1990’s and in the early 2000’s, the market share of online retailers was extremely low, and even though the unregulated online market was of concern, it wasn’t widespread enough to trigger changes. The book stores were still earning enough money from the high streets despite tax-free new brands were taking a portion from the profit.
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 and sold his 41 stores 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. This also permitted UK punters to place bets without having to pay the 9p stake tax.
It is believed that it was this choice that prompted the former UK chancellor at the time, Gordon Brown, to remove the tax on betting in 2001. He claimed that despite removing the tax directly paid by the gambler, new taxes were imposed on bookies’ profits made in the UK and at this point the ship was largely gone and the majority of traditional bookshops operated online via overseas.
2005 Gambling Act
The government eventually realized that the status quo could not last for long. It wasn’t just about taxing businesses either as anyone could create an online presence in another country and this provided no protection for UK customers as per the law.
In 2005, the UK government established a brand new independent body that is accountable to the Department of Culture, known as the Gambling Commission. The Gambling Commission was established to issue and oversee the new UK gambling licenses that are required in the law of the current Act for any business that wants to offer gambling services (both online and offline) within the UK.
In the space of a few hours, this has changed the face of betting on the internet and all businesses now needing to have a licence to operate legally in the UK.
2010’s
The bookshops of the past were the best of both possible worlds. They had their original high-street operation that, although not expanding at the same rate as the pre-online days, was not declining as many had hoped. It appeared that both offline and online betting was booming and the large old firms were in the ideal position to profit from this.
However, they weren’t able to do the luxury of doing things their way. There were a handful of companies that were established in the latter half of 1990 and the early 2000’s were starting to surpass the old orders, specifically Bet365, Betfair and 888. In 2010, they had taken over a significant portion of the market online.
In the second decade of new century saw a major shift that saw online betting take over high street bets. A growing number of people could access the internet, especially via mobile phones. In addition, due to the absence of stigmatism associated with betting on the internet vs. the high street, the industry experienced its greatest growth since the 1960’s.
There was no win-win situation for the major book stores The 2010’s also saw a plethora of brand new businesses launch into the market. A lot of these companies were not bound by the cost of managing a large number of high-street stores or having lots of employees. In addition, by focusing on specific markets, they could compete with larger companies. This has resulted in resulted in a number of mergers and acquisitions over the last few years , as larger companies attempt to take over rivals and develop new products.
2014. Gambling Act Amendment
In 2014, the majority of gambling transactions were conducted online by businesses based outside of the UK market. This resulted in the UK government paying significant tax revenues.
The amendment to the gambling act of 2014 was introduced for various reasons, including a greater emphasis on responsible gambling and safeguarding vulnerable individuals. The primary reason for this was honesty however was to allow the government to increase taxation of the gambling industry.
The law introduced the new point of consumption tax on UK licensed betting sites and bookies. It meant that, regardless of whether they were located within the UK or not, any merchants the intention of offering betting services within 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 regarding gambling is expected to be amended to keep pace with the latest technology, and there may be more news to share in the near future.
Mergers and Acquisitions
Acquisitions and mergers aren’t something new for bookmakers and they have bought smaller independents for a long time. The recent trend however of big corporations merging is a first and is a new phase in publishing.
Like all markets that are free, the biggest challenge for the future is to maintain competition. If markets are brand new (as betting on the internet was in the late 1990’s and early 2000’s) there are a variety of new areas for businesses to fill. With time, however, money is a factor and the larger players are able to pick smaller players to integrate their offerings or simply to eliminate the competitors.
It’s too early to tell, but there is a strong possibility that a few betting firms will take over the market, and, similar to like what has occurred in the energy and banking markets, may begin to collaborate. This is an issue for gamblers and companies that are looking to get into the market.