RAISING THE STAKES

It has turned us into a nation of gamblers. But the National Lottery is pushing the rest of Britain’s gaming and betting industry into crisis. Although 90 per cent of us regularly enjoy a flutter, betting shops are shedding staff while bingo operators, casinos and even pools companies are pushing for legislative change in order to compete.

The Home Secretary is reviewing Britain’s gaming laws and a consultation paper is due this autumn. This follows growing pressure from all sectors of the business, culminating last month in a stark warning to the Government from the country’s bookmakers: act now, or risk losing millions of pounds in taxes raised through betting duty. The Bookmakers’ Committee is calling for a reduction in betting tax in the next Budget.

Meanwhile, the British Casino Association has stepped up its campaign demanding to be allowed to compete more effectively with overseas casino owners. It wants to be able to accept credit cards, serve alcoholic drinks after midnight and advertise. It published its own document in July, within days of a similar move by the Bingo Association of Great Britain.

“If nothing is done to help, the betting industry will lose 30 per cent of profitability with the closure of 2,000 shops and the loss of 6,500 jobs,” warns Tom Kelly, director general of the Betting Office Licensees’ Association. “The first 200 jobs went at Ladbroke Racing late last month.”

According to Henley Centre estimates, the recent introduction of Sunday racing and extra evening fixtures could have boosted betting shops’ turnover by 6.2 per cent this year. Instead it fell 1.5 per cent, thanks to the National Lottery.

By all accounts, 1995 looked set to be a bumper year for Britain’s gaming business. All sectors have enjoyed gradual relaxation of legislation in recent years. And the entry of big business over the past decade has eradicated the shadier practices once associated with the industry. This has resulted in interest from the City and new investment which has improved services and introduced a younger, more upmarket clientele. But the National Lottery has had a bigger impact than many predicted, chiefly because of the success of its Instants scratchcards.

The number of people regularly playing bingo was up by four per cent year on year in November 1994, with money spent up 12 per cent, says BAGB secretary general Joanne Matt. But the National Lottery has cut business by six per cent this year: in May, total admissions were down ten per cent year on year.

It’s the same story at Ladbroke Racing. “This year should have been the bookmakers’ best. It won’t be – almost exclusively because of the National Lottery,” says company spokesman Paul Austin. “As a result, we have had to take the unfortunate step of cutting costs.”

Can the National Lottery’s success really have taken so many by surprise? Experience overseas has shown scratchcards rapidly becoming bigger business than the on-line lottery. But there are other reasons behind this apparent outbreak of collective myopia. The rest of the gaming and betting business claims it never stood a chance to compete properly because of outdated and contradictory legislation (see boxes).

“Legislation was built on the premise that you were not allowed to stimulate demand for gambling,” says Matt. Yet the Lottery – “effectively State-sponsored gambling” according to Peter Byrne, group operations director at London Casinos International – has blown a hole in the system.

Matt says: “Fruit machines return more than 80 per cent of money spent in prizes. Scratchcards are no more than paper fruit machines. But their return is 50 per cent. If we proposed this as a new game today, no one would countenance it. How can Government regulate one area so loosely, yet police another so stringently?”

Deregulation is the gaming industry’s great white hope, although demands – and need – vary by business. Pools companies have enjoyed the greatest concessions, but are still under threat. According to research by the Gulbenkian Foundation, the National Lottery could cut pools income by 40 per cent.

A new priority for pools promoters is point of sale, after rules restricting promotional activities were relaxed earlier this year.

“We are now investing in a major retail push for the first time,” explains Littlewoods spokesman Mike Birkett. A new advertising campaign is under way to promote the latest innovations Quick Pix – a new method of play aimed at making pools easier for newcomers – and Playstations.

“Playstations are self-contained units to collect and fill in coupons,” he says. “We have tested 1,000 in the Granada TV region and plan to roll out 10,000 across the UK by September.”

Ease of play has become crucial to the gaming industry. Bookmakers have seen growth in telephone gambling, with people watching sporting events on TV at home, checking the latest odds on teletext and placing their bets by phone, says Austin.

And bookmakers are fighting back in other ways. The first strike came last month when John O’Connor, advertising manager at William Hill, launched an in-store poster campaign attacking the odds offered by Instants. Posters are being displayed by different chains. He hopes rivals will unite again this autumn to co-fund a national newspaper campaign. “It’s not just a matter of William Hill fighting back, it’s about the industry as a whole,” he says. “We can’t compete with a 20m jackpot, but we can talk about our products and their better odds.”

Extending the range of activities on which bets can be placed is key for both William Hill and Ladbrokes. Horse racing makes up 75 per cent of business which poses a problem – despite an increase in races, with Sunday and evening fixtures now allowed, the quality of events has been criticised. “Football is a key area as media coverage grows, as is golf because of its all-year-round presence,” O’Connor says.

Austin adds: “We also want to offer bets on the National Lottery and bingo.” In Ireland, bets can be taken on whether a number will come up in the lottery draw with “attractive” odds: 5:1 on one, 45:1 on two, he says. “It’s not a question of people betting with us rather than the lottery, but as well as.”

Bingo operators are also feeling the squeeze. Despite rapid investment by big operators in the Eighties, the industry is closing smaller clubs. “Large, state-of-the-art venues will survive because of their through-flow,” Matt says. “But smaller, local clubs – perhaps the only entertainment, especially for older women – are closing.” Six have folded in the past few weeks.

Matt is lobbying for the immediate lifting of advertising restrictions. She hopes this will be achieved through a Private Members Bill. Wider deregulation could include the introduction of smartcards, enabling greater flexibility in games offered and methods of payment. It may also include the launch of computer bingo, which is widely available outside the UK.

Casino operators claim they have suffered most – with the least relaxation of legislation. “There has been a tremendous expansion of casino gambling in almost every country, but UK operators feel left behind,” says Byrne. “We want to be able to advertise in appropriate sections of the press. It’s absurd we can’t even go into the Yellow Pages, or British Airways’ High Life magazine when BA flies in most of our overseas customers.”

But it’s not all gloom, says Mike Allison, managing director of Grosvenor Clubs, which operates 26 casinos outside London. “The National Lottery has developed the whole market, repeating a pattern experienced elsewhere in the world.” He now wants deregulation to enable him not just to hold on to existing clientele, but attract new business. It is a view endorsed by Burkitt. “Our potential market has effectively doubled,” he says. “We have catered for 13 million people playing our pools each week. There are now more than 22 million – more people in the market for a flutter.”

This is underlined by market research from Mintel which recently estimated that the gambling market has grown by 14 per cent in real terms between 1994 and 1995. Between now and the end of the decade, it will shift away from the under-25s to a more markedly upmarket, over 45-year-old clientele. But growth will slow significantly as the initial impact of the National Lottery wears off from 1996 onwards.

With the National Lottery now testing ticket sales in pubs, considering the potential of an additional TV draw midweek and perhaps even the launch of new scratchcards, the rest of the gaming business won’t ease up on the Government until it wins. For Britain’s gaming and betting operators, the stakes are high – and getting higher.

Casinos

The UK has 119 licensed casinos (21 are in London). Business is dominated by London Clubs International and Grosvenor, a division of Rank.

American Roulette is the most popular game.

Legislation: Little has changed in 30 years. Earlier this year, Casino Stud Poker and Super Pan 9 were allowed to supplement more traditional games; Saturday night hours have been extended to 4am Sunday. Now seeking: An end to the 48-hour ‘cooling off’ rule (which denies new members access for two days) and the lifting of a ban on advertising. Provincial casinos’ prime concern is the lifting of restrictions limiting fruit machines to two per establishment.

‘Drop’ staked at casinos 1993 to 1994: 2.23m (Mintel)

Bingo

First played by the Romans, bingo was officially designated a children’s game in 1778.

1,000 licensed UK bingo clubs are frequented by 2.8 million regular players.

Ownership is dominated by The Rank Organisation and Gala.

The National Bingo Game was launched in 1986, involving 700 clubs which combine daily to offer a 75,000 prize. An occasional Super Nova game offers up to 250,000.

Legislation is limited so far, including agreement in 1992 that operators could advertise locally, so long as there was no mention of prize money, and that the national game could advertise its national prize – so long as no details were given of where to play. New demands: Further relaxation of existing advertising restrictions and a reduction of betting duty – from ten per cent to five per cent.

Amount staked on bingo 1993 to 1994: 840m (Mintel)

Playing to win: An in-store poster campaign launched by William Hill attacks the odds offered by scratchcards

Betting

Legalised in 1960. There are 9,300 betting shops, dominated by Ladbrokes, William Hill, Coral and Stanley Leisure. Attention is now focused on developing prime locations. Coral recently opened the first airport betting office, at Gatwick.

Legislation: Regulations have been gradually eased. In 1986, live TV coverage and light refreshments were allowed. In 1993, evening racing started. Sunday racing, TV sponsorship and ‘open’ windows (enabling promotions at point of sale) allowed from early 1995. Changes sought: Lower betting duty; relaxation of remaining advertising restrictions; an end to the ban on fruit machines in betting shops; broadening of ‘bet-able’ activities

Betting stakes 1994: 7.25m (Mintel)

Pools

One of the most popular forms of gambling and one of the highest taxed: 37.5 per cent of total money staked goes to the Inland Revenue.

16 million people play each week, of which the largest pools company, Littlewoods, claims to cater for 13 million across its 24,000 outlets.

Legislation: Subtle concessions agreed since the launch of the National Lottery – roll-over prizes increased; play has been allowed for over-16s; promotion in retail outlets granted. Future changes sought: Further reduction in tax; easing of restrictions on broadcast advertising.

l Football pools total stakes 1994: 950m (Mintel).