UK-listed betting operator Ladbrokes is preparing to close another 50 betting shops as increased taxes and thinning margins take a bite out of retail profits.
The Sunday Times was first to break the news that Ladbrokes will announce the shop closures when it turns in its Q4 and FY 2014 report card on Thursday. The 50 shops due for the axe are in addition to the 90-odd closures Ladbrokes had previously announced. When the rubble clears, Lads’ remaining complement of UK betting shops will have fallen to around 2,150.
The announcement comes just ahead of the March 1 implementation of a hike in the Machine Games Duty. The rate is going up from 20% to 25%, and with fixed-odds betting terminals (FOBT) accounting for half of betting shop revenue, shops that were already struggling to clear a profit will have to go. Lads is far from alone in this regard, as rival William Hill announced the closure of over 100 shops last April.
News of the closure will be celebrated by the Daily Mail and the hordes of anti-FOBT campaigners who never fail to mention their ‘crack cocaine of gambling’ meme when discussing bet shops. (We’ve tried hard to push the ‘salted peanuts of gambling’ alternative but to no avail.)
UK councils have long advocated for more powers to be able to block new betting shops moving into their neighborhoods, even though bet shops are one of the only industries actually willing to occupy many vacant high street storefronts. Both the Association of British Bookmakers and the newly formed Senet Group have attempted to inject some reality into the betting shop discussion but it appears the taxman is winning.
As for Lads’ 2014 results, Morgan Stanley is forecasting revenue will be up 6% over 2013’s total but earnings will fall 7%. In addition to the increased machine duty, UK operators’ margins are having to adjust to the Dec. 1 imposition of the 15% online point of consumption tax.