Thu, Sep 19, 2019

Rolling the Dice: The Stresses and Strains Leaving the Gambling Sector in Peril

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The UK has a somewhat unique relationship with gambling. We have high streets full of bookmakers, gambling adverts with Hollywood celebrities during Premier League football matches and national events like the Grand National that are inextricably linked to ‘having a flutter.’ However, the gambling sector is under unprecedented social and economic pressure.

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Public opinion is shifting against an industry often seen as taking advantage of punters. The controversy around Fixed Odds Betting Terminals (FOBT) has led the UK Government to introduce legislation reducing the maximum stake to £2 to reduce the social harm caused by betting machines. While the move has been welcomed by campaigners who assert that the machines encourage reckless betting, it will also have a significant impact on the gambling business.

Industry statistics appear to indicate that gambling firms’ high-street betting empires were in decline before the stake cut, as more and more people switch to online gambling, often owned by the same businesses. But this process of migration from off to online is, like so many other industries, putting strain on our high streets and is putting thousands of jobs on the line.

As has been widely reported, Betfred, one of the UK’s most prominent bookmakers, warned that it may have to cut 4,500 jobs as 900 of its shops would fail to turn a profit with maximum stakes of £2.1 Similarly, William Hill may shut 700 stores as it looks to offset £820m loss from the FOBT reform.2

While the gambling industry faces significant financial risks due to the loss of FOBT stakes over £2, the industry also faces a reputational issue as both regulators and the public appear to believe that it is not doing enough to stop problem gambling. The industry has introduced a number of initiatives to alleviate the issue, such as BeGambleAware, the charity funded by betting companies to promote responsible gambling and to minimize harm.3

Another recent step was backing the ban on betting adverts during live TV sports events.4 Anyone who has watched a Premier League football game will know that before, during and after half time there is a bombardment of gambling adverts offering live odds on the game. This has provoked fears of a significant rise in underage gambling addicts, but the acceptance of the ban from major gambling organizations shows a growing willingness to address negative issues in the industry.5

Although the rise of online services has been largely detrimental to the UK high street, the gambling sector has caught the online wave and surfed it to success. While the number of betting shops on the high street declined by 1.8% between March and September 2018, the total gross gambling yield (GGY) rose 4.5% from March 2017 to March 2018, highlighting that online gambling has really hit the jackpot.The total GGY for the remote gambling sector, primarily encompassing online betting, rose 13.7% from March 2017 to March 2018, and now represents a 37.3% market share of the sector.6 

The gambling sector faces an uncertain future. From the financial implications of the FOBT stake reduction legislation to the banning of advertising during live TV sports events, there are some serious challenges that the sector needs to overcome. However, the sector has also made a largely successful transition to an online model, and while this may have an impact on its high street presence, online and remote gambling may present a route for successful, sustainable growth.



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