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Ladbrokes & Betfred Claimed £148+ Million From Furlough Scheme

hmrc letter and moneyBack in April last year we wrote about big betting firms taking advantage of the UK furlough scheme designed to protect employees and wages during the various lockdowns.  William Hill at that point had decided to pay back what they had claimed through the scheme and Flutter brand Paddy Power decided not to claim from the scheme at all.  Entain, however, who own Coral, Ladbrokes, Gala and other brands were claiming furlough for their 14,000 shop based staff who could not work at the time and now we can reveal that Ladbrokes in total claimed £102 million from the scheme and Betfred at least 46.6 million.

This is all within the rules and the scheme was set up to protect jobs and wagers and for long periods of 2020 and 2021 bookmaker shops were not able to open.  What is the issue then?  Well, it turns out that Entain actually made up for any shop loses by soaring online revenues during that period and like William Hill people feel the fact they have made a profit they should return UK tax payers money claimed through the scheme.  As things stand Entain have said the claim is ‘under review’ but have no expressed an specific intent to pay the money back.

Entain Revenue Unchanged

ladbrokes coralThe size of the furlough claim from Entain puts them in the top 20 claimants for the scheme.  Despite this the group generated revenues of 3.6 billion in 2020, the same as the year before, and in the first 9 months of last year revenues grew by 8% with a 114 million profit, 12 million more than claimed through furlough.

Of course, during the government imposed lockdowns many people who would usually bet in shops switched to online and people who bet online generally had more time to engage in betting.  This allowed Entian, and other betting companies, to enjoy significantly increased online revenues despite enforced shop closures.  Combined with this the group have been pushing hard into the US market and have enjoyed significant growth from their BetMGM joint venture in America.

An Entain representative stated:

“The furlough scheme was a sensible and highly welcome policy intervention that helped us, as one of the country’s largest retailers, to maintain the livelihoods of more than 14,000 retail colleagues on full pay.”

“Whilst the virus is still with us and the outlook, although improving, is still far from certain, the Board will continue to keep the situation under review.”

The move to continue claiming furlough despite healthy online revenues more than covering for loses has annoyed many people.  The furlough scheme is ultimately paid for by the UK tax payer and while the money went into supporting jobs and wagers for UK employees a lot of people feel they have taken advantage of the system.  Betting companies are by no means cash strapped and in an industry the enjoys a gross yield of £15+ billion a year there is an argument that the claims are a slap in the face for people and companies who actually really struggled through the pandemic.  With Covid certainly not over there are those who think the money should be paid back to help further support vaccines and other government measures right now.

During this period Entain also managed to see significant growth in their share price thanks to two bids for the company from MGM, who they jointly run BetMGM with in the US, and later Draft Kings.

Betfred Enjoy Profits While Claiming Furlough

betfred shopBetfred are the biggest independent bookie remaining in the UK and unlike Entain they don’t have a plethora of different brands propping them up.  They are more reliant on their 1500 betting shops compared to companies like Entain to generate revenues.

Even Betfred, though, managed to make a profit of £205 million, an increase from £171 million, although revenue did fall from £621 million to £525 million in 2020.  Some of this additional profit can be explained by winning a court case against HMRC for historic VAT paid on FOBTs.

The Fred Done owned Done Brothers (Cash Betting) Ltd, of which Betfred is a subsidiary, claimed between £46.6M and £65.6M not including Oct/Nov 2020.

The group expressed gratitude to the job retention scheme saying,

“Thanks to the Government’s Job Retention [furlough] Scheme we have not had to make a single redundancy due to the pandemic and we will continue to invest in our shops on the high street.”

Although, this clearly sounds like they have no intention of paying any money back at least.

Should The Money Be Paid Back?

corporate man holding a lot of money looking upThere is nothing illegal about what Ladbrokes, Coral and Betfred have done.  The scheme was not discriminatory and there were no stipulations included that required companies to pay it back if profits were still made.  The aim of furlough was to protect jobs and arguments could be made that Betfred, Ladbrokes and others may have made redundancies if not for the scheme.  Also plenty of big companies in other industries claimed significant amounts through furlough and still made profits.

The specific issue with gambling companies is they make money in lots of ways, especially online, and were able to more easily move customers to remote verticals.  The lockdowns in themselves helped remote gambling grow at unprecedented levels simply because people had more disposable time and may have had more disposable income to use by not spending it on other things.  Big bookies made a huge amount from the British public during 2020 and 2021 and many feel it is a kick in the teeth to take hundreds of millions from the tax payer at the same time.

Indeed, a not insignificant proportion of money paid out through furlough to all employees across the country will indeed have found its way back in the hands of betting sites as many people used some of this money to bet with.

Whether they pay it back or not is entirely up to them but in an industry where reputation carries a lot of weight and people expect more from betting companies with regards to their social responsibilities there is an expectation that they should, especially as they have continued to make profits.

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