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Last Updated: Thursday, 4 March, 2004, 04:25 GMT
Going good for Britain's bookies
By Jon Cronin
BBC news online business reporter

These are booming times for Britain's bookmakers.

Horse racing
Horseracing remains the bedrock of the industry

Profits at the country's top operators are soaring as betting shops cash in on their new found respectability.

Once seen as a refuge for second-hand car dealers and greyhound owners, the High Street bookmaker now welcomes a new breed of 'leisure' seeking punter, as likely to bet on the outcome of I'm a Celebrity Get Me Out of Here as the 2.30 at Chepstow.

In a tangible sign that investors in the City believe the going remains good for the industry, bookmaker William Hill has seen its shares more than double in value since they were first floated less than two years ago.

William Hill said on Thursday that its full-year profits had jumped to 170.8m in 2003, up from 32.4m the year before.

Meanwhile, Britain's biggest bookmaker, Ladbrokes, last week reported a 43% rise in profits.

The company has been at the forefront of establishing a new generation of more "gentrified" betting shops, offering improved air conditioning and disabled access, and in some cases going as far as introducing coffee and panini bars.

Changing habits

"Horse racing is the bedrock of the betting industry," says Ladbrokes chief executive Christopher Bell.

"However, it is true to say that customers' betting habits are changing, especially among our younger customers who like to bet on football, rugby and on novelty bets such as Big Brother and the Oscars."

Ladbrokes betting shop
Enjoy a coffee and croissant while you follow the tipsters

Among Labrokes' web literate punters, betting on the likes of David Beckham and Michael Owen has fast overtaken betting on horses.

"It's worth noting that online, where our customers tend to be less than 30 years old, football accounts for half of our business," says Mr Bell, who has been betting himself "since the age of six".

There are currently more than 8,200 betting shops in Britain, of which around 5,000 are owned by the sector's biggest players.

Their continued presence on the High Street is a lesson in how an industry learned to adapt to survive.

"The industry is doing well at the moment and the main reason for this is the introduction of the new tax system two years ago," says Tom Kelly, chief executive of the Association of British Bookmakers (ABB).

Lottery challenge

Before October 2001, punters had to pay tax every time they placed a bet. Depending on how lucky you felt, the taxman could either add his share to your initial stake or take a slice of your winnings.

Britain's big four bookies
Ladbrokes
William Hill
Coral
Stanley Leisure

With betting companies threatening to move offshore and foreign-owned websites knocking on the door, the bookies could see the writing on the wall.

They persuaded the government to stop taking deductions from their customers by taxing them on turnover, and instead tax individual companies on their gross profits.

The betting public approved and turnover for the industry as a whole has since more than doubled. "Effectively, the British punter is betting tax free," Mr Kelly says.

Tax, though, was not the first major challenge the industry had to tackle.

When the National Lottery was first introduced in 1994, the industry's profitability slumped by around 35% in the following year, according to the ABB.

Hi-tech future

Fixed odds betting terminal
Betting machines are boosting bookmakers profits

In response, bookmakers enticed customers back by offering a wider choice of betting prospects, including the chance to bet on the numbers in the Irish lottery (although betting on the UK Lotto is strictly forbidden)

More recently, the introduction of fixed odds betting terminals, offering additional games such as virtual roulette, have whetted the appetite of punters.

At Ladbrokes, betting machines accounted last year for two-thirds of the firm's total growth of UK retail gross win - basically the money the unsuccessful punter leaves behind.

It is a trend which has alarmed critics of the industry and forced companies to agree from April to a strict code of practice limiting the number of terminals in each betting shop - and more importantly the size of payouts.

The government's forthcoming Gaming Bill - which aims to liberalise Britain's tightly controlled casino industry - could see operators attempt to muscle in on the bookmakers' patch.

But Ladbrokes' boss remains bullish. "The betting shop, written off by many when the Lottery was launched, has shown it is here to stay."

You would have to offer him pretty short odds to suggest otherwise.




SEE ALSO:
Ladbrokes boosts sagging Hilton
26 Feb 04  |  Business
Gambling Bill 'may mean job cuts'
22 Jan 04  |  Politics
Bookie on track for profit boost
09 Jan 04  |  Business
Bookie's shares double in value
08 Jan 04  |  Business
The gamble that paid off
15 Jun 03  |  Business


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