Roulette machines pass horses in race for punters' stakes
Takings from touch-screen roulette machines in Ladbrokes' betting
shops have edged ahead of earnings from traditional horse-racing bets - the
first product to do so in the group's 122-year history.
The average weekly sum
per machine lost by punters playing in Ladbrokes' UK betting shops rose by
18.2% to £676 during the first six months of 2008. Meanwhile, traditional
over-the-counter takings rose by 0.9%, to £251.8m, with horse racing
accounting for just under half of that figure, increasingly losing share to
other sports bet offers, particularly football.
Takings from Ladbrokes'
8,100 machines for the half-year were £142.5m, benefiting from recent
deregulation that allowed the bookmaker to advertise on television and to open
for late-evening trading. Seven years ago about two-thirds of Ladbrokes' shop
takings were from horse racing. But machines and football have attracted a new
generation of punters, with a sharp contrast in betting habits between those
under 35 and the over-35s.
Wallace, finance director, warned investors that seven years of growth from its
machines was now likely to slow as the market matures. He expects machine
takings to rise 11% for the second half of 2008, prompting concerns among some
analysts about growth prospects for betting shops. Its rival bookmaker William
Hill has also warned of slowing machine growth.
Gross win from the
Ladbrokes' online bookmaking, poker and casino operations rose 23% to
£96m, but the group in effect gave away £9.4m in free bets,
promotions and bonuses as well as spending £19m on marketing to recruit
and retain players. As a result, operating profit for the e-gaming division was
almost flat at £26.2m.
Chris Bell, chief executive, said he did
not expect aggressive promotions on the high street to reach the levels seen on
the internet. Nevertheless, the group in June launched a reward points-based
loyalty card scheme, which has already seen £1m in free bets redeemed by
Bell and John O'Reilly, head of e-gaming, have lobbied
Treasury officials to substantially lower the 15% gross profits tax charged on
online sports bookies based in the UK, arguing that their web business will
ultimately struggle to compete against rivals based in offshore tax havens.
William Hill and other high-street chains are making a similar case to
Treasury officials but they and Ladbrokes so far remain committed to a
"gentlemen's agreement" under which the leading UK bookmakers promised in 2001
to bring their online businesses onshore, in exchange for the replacement of
betting duty with a lighter tax on gross profits.
That tax change,
overseen by Gordon Brown when he was chancellor, led to the rapid proliferation
of roulette machines in betting shops. These proved to be so lucrative that
leading chains saw their share prices quickly double.
yesterday its operating profit for the first half of this year fell 11.8% to
£170m, largely reflecting a sharp drop in the traditionally volatile
high-roller custom at the telephone betting division. Takes for the first three
months of the year were strong but then faded with a run of good results for
punters at Royal Ascot and the Euro 2008 football tournament.
it was a testament to the growing popularity of football betting that Euro 2008
had attracted bets totalling £30m - more than Euro 2004, despite the
absence of home nation interest. However, he admitted profits were much lower
as the ultimate victors, Spain, were well backed whereas Greece's surprise win
four years earlier proved highly lucrative.
Backstory Touch-screen roulette machines - with jackpot
payouts of £500 - arrived in betting shops in the mid-1990s and took off
when tax changes in 2001 made low-margin games more lucrative. In 2003 Lord
McIntosh, then sports minister, said the machines were "unlawful", a claim the
government dropped. The 2005 Gambling Act brought them within a regulatory
regime. A survey for the Gambling commission last year found one in nine
players were problem gamblers or addicts. Ministers still insist the machines
are "on probation".