Today we have a guest post from Nick Mckenna of Cleeve Racing. Nick has also provided a link to get free tips from Cleeve Racing.

In the UK in 2019 the UK betting industry was worth £14.3 billion pounds, that is £200 for every adult and child in the country. Given that almost everyone dreams of that big win that means they can say goodbye to the 9-5 life, what is the real price of those dreams?

Bookmaker profits are directly tied to you (and you, and you, and you) losing your money plain and simple… and whilst bookmaking is by no means the only corporate sector that profits are predicated in large part on societal loss…(think tobacco, fossil fuel, alcohol, fast food), it is an industry that is coming increasingly under the spotlight as more of the harm done by out of control gambling, is insidiously fostered by ‘insider’ and sharp practices by the operators.

The Gambling Commission is the Government regulator and is charged with keeping crime out of gambling, and to protect the vulnerable. It also advises the government on gambling-related issues. In 2019 it said publicly that it believed more than two million people in the UK either to be problem gamblers or at risk of gambling addiction. 

Bookies have been always been on the ropes, but especially in the last 3 years finding themselves under an increasing vociferous groundswell of media, political and regulatory pressure

It all started with industry deregulation enacted by the Blair government which released the shackles on bookmakers advertising and crucially allowed them to introduce FOBT’s into UK betting shops in 2001. The machines quickly gained a bad media reputation and became known as ‘crack cocaine machines’ for the addictive behaviours they induced in players and regular stories of individual tragedies. 

Within just a few years FOBT’s became responsible for a large percentage of bookmaker’s corporate profits. They became increasingly controversial and after furious lobbying for and against which ultimately ended with the resignation of Sports Minister Tracey Crouch, stakes were slashed from a maximum of £100 a spin to just £2. Which caused a general gnashing of teeth from the bookmaking industry who trotted out gloomy announcements of lay-offs and high street closures.

Given that it is estimated that over 50% of bookmaker profits came from FOBT’s it was staggering to see them taking the moral low ground and put their own profits (dressed as shop closures and staff lay-offs) over the mental well-being of vulnerable punters, after all the boom in numbers of high street betting shops was directly driven by profits from FOBT’s so these claims were morally bankrupt… is that really a surprise to you?

The surge in bookmakers revenue and profits was accompanied by being hit with large fines on the big names for failing to protect vulnerable punters including £11.6M against Betway and £5.6M against GVC (Ladbrokes/Corals), in fact, the evidence was that they were doing the exact opposite of this and actually targeting them.

Evidence came out that VIP customers make up a large part of bookmakers turnover with figures in the region of 80% bandied around, possibly the most ‘celebrated’ example shamed Ladbrokes who had been found to be comping a client that had stolen money from his clients’ accounts to fund his gambling habit. Ladbrokes gave him corporate hospitality, including free tickets to Arsenal games, tickets to see the Mayweather v Maidana fight in Las Vegas and an invite to their corporate box at Royal Ascot as well as two grands worth of business flights to the UK to watch the Arsenal v Tottenham game.

Ladbrokes secretly agreed to refund his victims to the tune of £975,000 as long as they signed a confidentiality agreement that barred them from contacting the authorities or gambling regulators. It does not really sound legal, does it?

The rise and rise of club football and the increase in live coverage meant the sport became the main cash cow for the major UK bookmakers. Big gambling brands saw the benefits of linking their names with the most popular teams so in the 2020 season over 60% of Premier League teams had a shirt sponsor linked to gambling.

This raised public concern that linking football and gambling in punters and younger people’s minds that had echoes with the public furore seen in the US fast food industry with advertising that was specifically designed to target ‘the customers of the future’. 

This social risk/business objective is underlined by the NHS announcing in 2019 that it was opening a series of specialist units to help problem losers – including, disturbingly, one for children and teenagers. Blair claimed his reforms would increase protection for youngsters. But research found that children as young as eight recalled betting advertisements and suggested 40% of children aged between 11 and 16 had gambled at least once in the previous 12-months.

Major bookmakers agreed deals with broadcasters giving them rights to allow account holders to stream certain matches for free, a move that both angered the FA and the rest of the industry and ended in a swift climb down. The welter of advertising before, during and after televised matches led to the Industry agreeing to abide by a ‘voluntary’ ban on TV advertising during in-play or ‘whistle to whistle’ on all live sports, however, there were suspicions that bookmakers felt they had to be seen to be taking pro-active action themselves to forestall more draconian regulatory action being taken against them. 

There is evidence that this has, in turn, led to a big increase in social media advertising which circumvents the TV rules and goes straight to punter’s mobiles… AKA the betting device of choice… I would argue that forcing bookmakers to become expert social media manipulators could be the most dangerous thing we could do!

In April of this year deposits by credit cards were banned by the Gambling Commission as it was linked to a high percentage of ‘problem gamblers’. It is beyond irony that bookmakers trumpet slogans like ‘when the fun stops… stop’, and ‘don’t gamble with money you can’t afford to lose’, then allow punters to fund their bets from debt!

While racing takes place behind closed doors there are no on-course bookies so the winner’s SP is now calculated by the Press Association using ‘average’ betting shows from 5 big bookmakers. This puts the industry uncomfortably close to directly influencing punter returns, we are yet to see what happens to overrounds, but given that they directly affect the gross profit from racing, it would be no surprise to see upward pressure. I’m sure it was a move welcomed by bookies, albeit in very hushed tones!

With the sporting lockdown, UK gambling revenue fell by over half as there were nothing to bet on, but it’s now reported that turnover has risen above normal levels since the restart. Bookmakers shares fell heavily in April but have since recovered to pre-virus levels, which is a bit odd given the risks that still look to be out there. 

The furlough comes to an end in October and many people getting paid to effectively sit at home find themselves without a job and an income. We are 100% certain to see a spike in unemployment, a U-shaped recovery followed by upward pressure on the tax burden as the Tories try and recoup record levels of spending during the Covid-19 crisis. Not the best business scenario by a long way.

Betting is a discretionary spend, with less money about it should naturally follow that punters tighten their belts, and there will be people out there that through the sports lockdown have realised just how much their ‘fun bets’ were costing them and quit the habit for good.

What is absolutely damning for the industry is that it is clear they pro-actively target losing punters to generate profits. Whether this happens through products such as FOBT’s or virtual racing, or through pushing boosted returns on 5-fold accumulators, or by offering poor value odds on exotics, they have effectively engineered a significant ‘edge’ over punters. While on the other side of the coin anyone who looks like they might be a winner is subject to stringent staking restrictions or account closure.

So, going back to the opening question I posed… can we trust bookmakers? 

Let me ask you another question… would you trust McDonald, Marlboro, Seagram or any other big consumer brand to have their customers best interests closest to their hearts? 

Don’t worry… it’s a rhetorical question!

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Nick Mckenna is a partner at the well respected and profitable Cleeve Racing, You can find out more about Cleeve Racing, including details of how to get free access here https://www.cleeveracing.com/