Bookies saddle up for Lottery charge

Ladbroke Racing’s decision to bring in packaged goods marketer Claire Potter as its first director of marketing (MW last week) signals the next stage in the bookies’ fightback against the National Lottery.

It is a clear indication that Ladbroke is preparing for the day, in the near future, when it will be free to advertise and market its wares. And it will employ Potter’s fmcg experience at Perfect Pizza and Golden Wonder to help it compete.

The betting chains have been hit hard by the Lottery and by shifting leisure patterns among the population. Last year, Ladbroke’s profits from its betting chain and Vernon’s Pools collapsed from 97.7m to 58.1m.

There are about 9,500 betting shops in the UK, and it is predicted that up to 700 may close this year. The explosion in scratchcard sales since the launch of Lottery Instants 18 months ago has contributed to a decline in wagers at betting shops of some 15 per cent. But even before the Lottery launch, turnover for the betting shops was lagging behind inflation.

Betting on horses is not what it used to be. Young, working-class men are less likely to head for the bookies than their fathers were. The operators believe that if they can wring more concessions from the Government, they will be able to take on the National Lottery more effectively.

After intense lobbying, the betting chains won the right to unblock their windows last January, allowing potential punters to see in – and those inside to see out. Since then, they have won the right to install fruit machines and sell instant-win cards, but there is little evidence that these moves have made much difference to their falling profits.

The chains are turning to marketing as a possible saviour. Further moves to deregulate gaming and betting are afoot. If the current moves are successful it will mean that bookies can, for the first time, advertise the addresses of their shops in print. But they will, for the moment at least, still be prohibited from using broadcast media.

Greater deregulation will mean that the chains can announce their whereabouts – at present, they are not even permitted to put their names and addresses in the telephone directory.

The latest tranche of deregulation was announced last February by Home Office Minister Timothy Kirkhope. It follows other moves to liberalise betting and gaming – such as lifting the ban on broadcast advertising for the football pools in January 1995.

After a consultation period which ended in May, the Home Office is poised to make recommendations to the House of Commons Standing Committee on Deregulation. It will recommend giving permission to open casinos in a further 13 locations, to increase payouts from gaming machines and to allow bingo operators to advertise on television. The recommendations could be introduced as amendments to the Deregulation Act and could come as early as next month in the Queen’s Speech.

But the betting chains want more. They believe that deregulation is only one step on the way to their ultimate goal, to have total marketing parity with the National Lottery. They also want to be able to take bets on the outcome of the National Lottery draw. At the moment they can take bets on the Irish, but not the UK Lottery.

A spokesman for the William Hill chain, which owns 1,700 betting shops around the UK, says: “Clearly, allowing us to print the addresses of our shops is another move to sweep away 35 years of restrictions, but I can’t pretend it will be an earth-shattering move.

“We don’t believe there is a strong case for any restrictions on advertising, and we believe we should be on the same terms as the National Lottery. We don’t think that sort of permission will be forthcoming,” he adds.

But it will still be difficult to draw people away from buying scratchcards or playing the Lottery.

The bingo operators, by contrast, are looking forward to a future where they can advertise on television and radio. The rationale appears to be that betting on the horses can be potentially harmful to punters, while bingo is less threatening.

The bingo operators are already planning how they can make TV advertising work to their advantage. Last month, Gala Clubs, owned by Bass, appointed J Walter Thompson Manchester to start developing a 5m television campaign to attract new players.

Both the bingo operators and the bookies are seeking to widen their appeal to consumers. The bingo operators are doing this by building out-of-town leisure complexes offering everything from bowling alleys to hot dogs, with luxury bingo halls thrown in for good measure. Crucially, it places them in a more modern environment. These leisure complexes are attracting a younger profile audience for bingo, and the 18 to 24-year-olds are now the largest group of users.

When the bingo halls start advertising on television, this could create even more problems for the betting shops, as they face the increased competition. But it could also give greater weight to being allowed to advertise on TV. The betting chains are hoping that concessions on print advertising will rapidly turn into concessions on television advertising. But the authorities still profess a moral unease about liberalising what they call “hard gambling”.

But the situation is not too desperate for the bookies. They still account for an estimated 30 per cent of the 26bn which will be wagered in the UK this year.

The problem comes from the in-built bias towards the Lottery, with its heavy advertising support, which means that it will increase its share of this spending to almost 5bn. But with the Government poised to relax further the tight controls on the Lottery’s betting and gaming rivals, they may be able to claw back some of the lost ground.