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UKGC Gambling Figures Show Rise In Online Betting and Sharp Drop In Yield From FOBTs

gross gambling yield oct 18 to sept 19

The last year or so has been a tumultuous time for the UK gambling industry as many changes have come in that have shaken up the industry online and offline.  This includes increased tax for online operators and £2 minimum stake restrictions for Fixed Odds Betting Terminals brought in April 2019.  Regulation has also increased with online companies needing to verify customers earlier along with pressure from the new Betting and Gaming Council and MP’s to improve the industry for the vulnerable and to prevent crime.

The new industry statistics released by the UK Gambling Commission this week shed some light on how the gambling industry is adapting to these rapid changes and we will cover the major findings here.

Notably overall gambling yield has decreased slightly by 0.5% from October 2018 – September 2019 compared to April 2018 to March 2019.  Most of this decrease however is due to lower revenue generated from betting shops, in particular from category B2 machines (i.e. FOBTs) that decreased by a dramatic 46.4%.

Despite the drop in gaming machine revenue many companies are still making healthy profits.  The report shows this is due to the continued growth of remote betting in all sectors, in spite of higher taxes and cost.

The number of employees in the industry decreased in the period from March 2019 to September 2019 as did the number of betting shops and gambling premises in general.  The amount given by lotteries to good causes increased across the board.

Remote casino and gaming machines (overall, including cabinets in arcades, casinos and shops) represent the highest sectors in terms of gross gambling yield, if lottery is excluded.  Gaming machine revenue remains at £2.5 billion in spite of stake limits for FOBT’s reducing to £2.

Online Gambling Covers Offline Loss

gambling figures percentage change 18-19

The chart above shows the percentage change for online and offline betting in overall gambling yield from October 2018 to September 2019 compared to April 2018 to March 2019.

What is striking immediately is the 46.4% reduction in yield for B2 machines due to the new restrictions on fixed odds betting terminals.  Category B3 machines, however, rose by 18.5%, these also have a maximum £2 limit and are found in bingo halls, arcades, casinos and other gambling premises – showing that the majority of the reduction is being felt in betting shops.

Statistic Oct 18 – Sept 19 % Change (vs Apr 18 – Mar 19)
Gross Gambling Yield (GGY) 14,500,000,000 -0.50%
GGY exc. Lotteries 10,500,000,000 -1.90%
Employees in the gambling industry 98,174 -4.40%
Gambling premises in Great Britain 9,745 -9.60%
Betting shops in Great Britain 7,315 -12.10%
GGY Gaming Machines 2,500,000,000 -11.80%
GGY Category B2 624,000,000 -46.40%
GGY Gategory B3 1,300,000,000 18.50%
GGY Remote Betting 2,100,000,000 4.30%
GGY Remore Bingo 198,000,000 12.50%
GGY Remote Casino 3200000000 3.90%
GGY Land Based Casinos 1,100,000,000 -0.60%
Contributions To Good Causes National Lottery 1,600,000,000 6.50%
Contributions To Good Causes Social Lotteries 345,000,000 3.70%

The reason the overall gambling yield only decreased by 0.5% despite this is due to the growth online with remote betting growing 4.3%, remote casino 3.9% and remote bingo by a striking 12.5% over the period.

Betting Shops Continue To Struggle

gambling employees premesis shops march vs september 2019

It is evident from the figures around gaming machines that revenues for betting shops have dropped sharply in the year covered in the data to September 2019.  This is reflected in the chart above that shows the number of betting shops decreased by 12.1% (from 8,200 to 7,315), that is over 1 in 10 shops closed during the period. The number of gambling premises overall decreased by 9.6% to 9,745 although this is almost all explained by shop closures.

The number of people employed by the gambling sector also decreased by 4.4% over the period.  This is again a reflection of shop closures and the resulting job loses.  Remote betting has actually increased it’s number of people employed but of course less people are required to run remote betting services compared to land-based premises.  Unfortunately most of those job loses will be betting shop workers in local communities.

Online Betting Still Dominated By Casino

remote betting ggy 18-19Remote casino still dominates the online industry in terms of overall gambling yield contributing £3.2 billion over the period and growing by 3.9%.  Overall casino makes up 58% of the industry compared to remote betting and bingo, as seen in the chart here.

Online bingo (12.5%) and remote betting (4.3%) grew more in percentage terms compared to casino but in absolute terms remote casino gambling yield still grew more over the period.

The rise in online bingo is of particular note and may be linked to the ever increasing closures of bingo halls combined with more engagement with younger audiences.

The Year Ahead

calculatorWhen the next lot of figures are released they should cover the period to March 2020 and should largely show a similar trend, with further increases in online revenues.  The overall gambling yield will likely increase as the the main effect of the FOBT limits have already been felt.  Still the offline industry is expected to shrink further as more shop closures have gone through over that period.

What will be more interesting is when the subsequent figures come out that cover the period from April 2019 when the world went into lockdown following coronavirus.  During this time all betting shops, arcades and land based casinos and bingo halls were closed and will struggle to regain customers on reopening.  Therefore we should expect a sharp fall in gaming machine revenues over that period.  The fact many shops will now likely stay closed or will close in the near future means another drop in betting shops and gambling employees should also be expected.

It has already been reported that online gambling has spiked during the lockdown period from the end of March 2019 onwards.  Most of this affect will be seen in remote casino and remote bingo growth.  Remote betting may see an overall reduction due to the cancellation of sports and events.

Given the challenges communities have faced during the coronavirus outbreak it is likely we will also see contributions to good causes rise further when this period is evaluated.

In summary the general trend is that gambling yields are increasing but this is entirely due to remote gambling, which is more than compensating for loses in the real-world sector.

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