Bookmaker William Hill has told the UK’s competition watchdog that the proposed merger of rivals Gala Coral Group and Ladbrokes would result in a “substantial lessening of competition” in the UK betting marketplace.
In a detailed submission filed last month, Hills urged the UK Competition and Markets Authority (CMA) to reject the proposed merger of Coral and Lads, much as the CMA did the last time these two parties tried to hook up in 1998.
Coral and Lads currently operate around 4k retail betting shops between them, and the CMA’s approval of a merger is expected to require the firms to sell off several hundred shops. Hills suggests that this divestment may address local competition concerns but “may not be capable of re-establishing the third national force which would be lost as a result of this merger.”
Hills acknowledges that the UK betting marketplace has undergone changes since 1998, particularly via the introduction of online gambling, but believes “those changes reinforce the concerns set out in 1998.”
Hills claims that online betting “represents a discrete revenue base with materially different pricing” from retail betting shops, and thus internet betting “will not form a sufficiently strong constraint” on the retail dominance of a merged Coral-Lads.
To support this claim, Hills cites previous Office of Fair Trading (OFT) rulings, including Betfred’s acquisition of the UK Tote, in which the OFT declared that the relationship between online betting growth and retail betting decline “is not strong.”
Similarly, in judging Rank Group’s acquisition of Gala’s brick-and-mortar casino business, the OFT found “insufficient evidence for online gaming to be considered a sufficiently strong constraint” on land-based casinos.
Hills says a study of Kantar data showed that 51% of UK gamblers had wagered only in betting shops, while 28.3% had only wagered online, leaving just 22.4% who had placed a bet via both channels. Hills argues that this demonstrates that there is ‘relatively little demand side substitutions” between online and retail betting.
Hills also warns that the retail betting industry has undergone a dramatic consolidation in recent years, with many independent bookies selling out due to their inability to turn a profit. This phenomenon is expected to continue as the government increases both taxes and regulation, which will only accelerate market concentration.
Hills also warns that the combined Coral-Lads entity would exert too much control over the country’s greyhound racing business. Hills claims that Coral and Lads control a combined 48.6% of the votes in the Bookmakers Afternoon Greyhound Service (BAGS), and could therefore wield monopoly control should some BAGS members fail to turn up to vote on various issues.
The CMA is currently conducting its Phase 2 investigation of the proposed merger, with provisional findings due in mid-April ahead of a June 24 statutory deadline.