Why betting shops are thriving?
THE Hope pub in Peckham, a rundown part of south London, closed a few years ago. Beneath its faded sign, there is now a Paddy Power betting shop, its green shopfront offering punters the latest odds on football matches and horse races. There are seven more betting shops within walking distance. On an otherwise quiet morning, all of them seem busy.
Despite the rise of online gambling websites and pinched economic times, Britain’s bookmakers are faring well. Between 2009 and 2011 the number of high-street betting shops increased slightly, from 8,862 to 9,067. Last year their gross gambling yield–a measure of profit before operating costs–increased by 5%. In Southwark, the borough of which Peckham is a part, there are now 77 betting shops.
This does not reflect a revival of the working-class tradition of gambling on dog racing or horses. That is declining, even as licensing fees for screening matches and races have gone up. Instead, bookies are being kept alive by fixed-odds touch-screen casino machines (see chart). These can take thousands of pounds an hour in bets, either in cash or from a credit card. In a fiercely competitive industry, executives privately gush about how they allow bookies to make more money with fewer employees and overheads (betting shops have shed one-tenth of their staff in the past two years). Between 2006 and 2010 the number of machines doubled from around 16,000 to 32,000. Last year the yield they earned increased by 10%, to [pounds sterling]1.3 billion ($2.1 billion).
In Peckham, a group of Nigerian immigrants stands around a machine, debating strategies. One feeds [pounds sterling]20 notes into it, placing bets of around [pounds sterling]5 on a virtual roulette table every minute or so. “This is not a good game”, he says, “but sometimes you win”. A cleaner in the City, he claims to have won as much as [pounds sterling]1,500 on occasion. He has lost equally large amounts. He hangs out in the betting shop partly for the camaraderie.
According to research for the Gambling Commission, the industry’s regulator, he is typical of the new type of punter. The people who use betting-shop machines are more likely than other gamblers to work in low-paid jobs or to be unemployed. Many are immigrants–the Chinese in particular tend to gamble more–and most are men. Betting shops are thus booming in areas like Peckham, where the economic prospects are thin and where there are lots of migrants, even as the industry is squeezed elsewhere. Regulations which restrict the number of gambling machines a shop can contain intensify the move into poorer areas, as chains seek out areas with lower rents to open more shops.
This expansion is provoking a reaction from left-wing campaigners. Harriet Harman, the Labour Party’s shadow culture secretary and the local MP in Peckham, complains that the industry has created a “casino on every high street”. David Lammy, another London Labour MP, points out that his constituency of Tottenham has 38 bookmakers–but no bookshops. Both worry about the social costs of gambling and the health of high streets dominated by betting shops and payday lending outfits. So far 35 MPs, mostly from the Labour Party, are calling for a cap on stakes and prizes.
But perhaps the biggest threat to the bookies is not regulation but an economic recovery, which would drive them out of their low-rent havens. Industry folk say the number of shops may have started falling this year, as competition drives down yields and rents start to climb again. When prosperity returns, the odds might turn against the bookies.
Bettingxpert 