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Betting Shops - UK - April 2015

“Betting shops need to address some significant gaps in their customers’ sporting knowledge as a pre-requisite for the revival of horseracing.”
– David Walmsley, Senior Leisure Analyst

This report answers the following questions:

  • Has betting on horses run its race?
  • Is the World Cup still a winner for betting shops?
  • What’s the next step in the march of the machines?

Despite the continuing rise of online gambling alternatives, betting shops continue to attract around £3 billion in consumer expenditure each year. However, the business has become increasingly reliant on its gaming machine segment to support shrinking over-the-counter trade, where football betting growth is not fully compensating for the long-term decline in horseracing. With the machine boom now threatened by tougher taxation and regulation regimes, betting shops may need to find new means of expansion, or even just of standing still.

This report examines consumers’ experience of betting shopsand multichannel gambling, gauges their attitudes towards the key products of horseracing and gaming machines, and assesses how operators can respond to the opportunities and challenges emerging.

Consumer expenditure in betting shops has become effectively flat as a consequence of decline in the horseracing-dominated OTC segment being balanced out by slowing growth in gaming machine revenues.

Operators continue to put all their OTC eggs in the expanding football betting basket, but are now also looking at diversifying their machine offer away from the controversial B2 products that are increasingly-heavily taxed and a potential target for tighter regulation under the next Government.

However, the single most important influence on the future of the industry could be the choice punters make between the two visions now on offer – an ‘omnichannel’ future in which shop and online experiences become identical and interchangeable, or a differentiated one in which the shop presents a far more participatory, social and experiential offer that stands alone on its own merits.

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Table of contents

  1. Introduction

      • Definition
        • Abbreviations
        • Executive Summary

            • The market
              • Figure 1: Forecast of consumer expenditure (GGY) in betting shops, 2009/10-2019/20
            • Odds lengthen on value growth
              • Football fails to halt march of the machines
                • Figure 2: UK betting shops gross gambling yield (GGY), by segment, 2013/14
              • Market drivers
                • Tax and regulation to force machines down a different street?
                  • Technology takes off as betting shops get digital
                    • Companies, brands and innovation
                      • Market leaders focused on football and customer experience
                        • Figure 3: Share of betting shop premises, by operator, September 2014
                      • The consumer
                        • World Cup fails to raise betting shop visiting rates
                          • Figure 4: Betting shop visiting habits, March 2015
                        • Changing the bet-and-go culture
                          • Figure 5: Betting shop activities done in the past 12 months, March 2015
                        • Knowledge and awareness gaps handicap horseracing
                          • Figure 6: Attitudes towards horseracing and betting, March 2015
                        • Machines’ public image problem reaches punters too
                          • Figure 7: Attitudes towards gaming machines in betting shops, March 2015
                        • Mobile devices to personalise the betting shop experience
                          • Figure 8: Experience of multichannel betting, March 2015
                        • What we think
                        • Issues and Insights

                            • Has betting on horses run its race?
                              • The facts
                                • The implications
                                  • Is the World Cup still a winner for betting shops?
                                    • The facts
                                      • The implications
                                        • What’s the next step in the march of the machines?
                                          • The facts
                                            • The implications
                                            • Trend Application

                                                • Trend: Access All Areas
                                                  • Trend: Extend My Brand
                                                    • Trend: Fauxthenticity
                                                    • Market Drivers

                                                      • Key points
                                                        • Tax more effective than planning in curbing clustering
                                                          • Figure 9: UK betting shop numbers, March 2009-September 2014
                                                        • Have we reached ‘peak machine’?
                                                          • Figure 10: Changes in average numbers of category B2 gaming machines versus total gross gambling yield, 2009/10-2013/14
                                                        • Core customers stay loyal in face of online competition
                                                          • Figure 11: UK consumers’ expenditure* on sports betting**, by segment, 2011/12-2013/14
                                                        • Shop technology starts getting mobile
                                                          • Figure 12: Personal ownership of laptops/netbooks, tablets and smartphones, December 2013-November 2014
                                                        • Weather a potential handicap for racing
                                                          • Figure 13: Horseracing fixture abandonments, 2011-14
                                                        • Problem gamblers: Small numbers, big issues
                                                          • Figure 14: Use of betting shops by GamCare clients, 2010/11-2013/14
                                                          • Figure 15: Senet Group responsible gambling messaging, January 2015
                                                        • Key demographics set to shrink
                                                          • Figure 16: Projected trends in the age structure of the UK male population, 2014-19
                                                        • Major event spotlight switches from sport in a year off for football
                                                          • Figure 17: Amounts wagered on UK General Elections (all channels), 2005-15 (forecast)
                                                      • Who's Innovating?

                                                        • Key points
                                                          • Bringing the stadium to the shop
                                                            • Betting shops turn convenience stores
                                                              • A lunch date at Ladbrokes
                                                                • A pint and a punt
                                                                  • Bettors learn to earn
                                                                  • Market Size and Forecast

                                                                    • Key points
                                                                      • Growth levels off ahead of an uncertain future
                                                                        • Figure 18: Forecast of consumer expenditure (GGY) in betting shops, 2009/10-2019/20
                                                                      • Forecast
                                                                        • Figure 19: Forecast of consumer expenditure (GGY) in betting shops, 2009/10-2019/20
                                                                      • Forecast methodology
                                                                      • Segment Performance

                                                                        • Key points
                                                                          • World Cup fails to slow market’s movement towards machines
                                                                            • Figure 20: UK betting shops gross gambling yield (GGY), by segment, 2012/13-2014/15
                                                                          • Football swaps spikes for sustainability in 2014
                                                                            • Figure 21: UK betting shops’ over-the-counter GGY, by segment, 2013/14
                                                                          • Tax and regulation present two new challenges for machine growth
                                                                            • Figure 22: Gaming machine GGY in UK betting shops, 2009/10-2013/14
                                                                          • Segment forecasts
                                                                            • Figure 23: Forecast of OTC consumer expenditure (GGY) in betting shops, 2009/10-2019/20
                                                                            • Figure 24: Forecast of consumer expenditure on gaming machines (GGY) in betting shops, 2009/10-2019/20
                                                                        • Market Share

                                                                          • Key points
                                                                            • Duty rise sparks new round of shop closures
                                                                              • Figure 25: UK betting shops, by operator, 2012-14
                                                                              • Figure 26: Share of betting shop premises, by operator, September 2014
                                                                          • Companies and Products

                                                                            • Key points
                                                                              • William Hill Plc
                                                                                • Background
                                                                                  • Recent activity
                                                                                    • Financials
                                                                                      • Figure 27: William Hill retail key financials, 2013-14
                                                                                    • Promotional activity
                                                                                      • Figure 28: William Hill adspend*, by media type, 2012-14
                                                                                    • Strategy
                                                                                      • Ladbrokes Plc
                                                                                        • Background
                                                                                          • Recent activity
                                                                                            • Financials
                                                                                              • Figure 29: Ladbrokes UK retail key financials, 2013-14
                                                                                            • Promotional activity
                                                                                              • Figure 30: Ladbrokes adspend*, by media type, 2012-14
                                                                                            • Strategy
                                                                                              • Gala Coral Group Ltd
                                                                                                • Background
                                                                                                  • Recent activity
                                                                                                    • Financials
                                                                                                      • Figure 31: Coral retail key financials, 2013-14
                                                                                                    • Promotional activity
                                                                                                      • Figure 32: Gala Coral group adspend*, by media type, 2012-14
                                                                                                    • Strategy
                                                                                                      • Betfred Group Ltd
                                                                                                        • Background
                                                                                                          • Financials
                                                                                                            • Figure 33: Betfred Group Ltd key financials, 2012-13
                                                                                                          • Promotional activity
                                                                                                            • Figure 34: Done Bookmakers (Betfred) adspend*, 2012-14
                                                                                                          • Strategy
                                                                                                            • Paddy Power Plc
                                                                                                              • Background
                                                                                                                • Recent activity
                                                                                                                  • Financials
                                                                                                                    • Figure 35: Paddy Power UK Retail key financials, 2013 and 2014
                                                                                                                  • Promotional activity
                                                                                                                    • Figure 36: Paddy Power adspend, by media type, 2012-14
                                                                                                                  • Strategy
                                                                                                                  • Brand Communication and Promotion

                                                                                                                    • Key points
                                                                                                                      • Adspend focus puts brands ahead of channels
                                                                                                                        • Figure 37: UK betting shop operators advertising expenditure*, 2012-14
                                                                                                                    • The Consumer – Betting Shop Visiting

                                                                                                                      • Key points
                                                                                                                        • World Cup optimism wide of the target
                                                                                                                          • Figure 38: Betting shop visiting habits, 2011-15
                                                                                                                        • A working man’s pastime
                                                                                                                          • Figure 39: Past-year betting shop visiting, by employment status, March 2015
                                                                                                                        • Shop visiting a non-starter for the young
                                                                                                                          • Figure 40: Agreement with the statement ‘I have never visited a betting shop and probably never will’, by age, March 2015
                                                                                                                      • The Consumer – Betting Shop Activities

                                                                                                                        • Key points
                                                                                                                          • Few incentives to stay in-store
                                                                                                                            • Figure 41: Betting shop activities done in the past 12 months, March 2015
                                                                                                                          • Football just the job for younger bettors
                                                                                                                            • Figure 42: Past-year participation in horserace and football betting, by age and employment status, March 2015
                                                                                                                          • Shop bettors are singles, not accumulators
                                                                                                                            • Figure 43: Repertoire of betting shop activities done in the past 12 months, March 2015
                                                                                                                        • The Consumer – Attitudes Towards Horseracing and Betting

                                                                                                                          • Key points
                                                                                                                            • Racing of only occasional interest at best
                                                                                                                              • Figure 44: Attitudes towards horseracing and betting, March 2015
                                                                                                                            • Horseracing lacks the familiarity of football
                                                                                                                              • Figure 45: Experience of knowledge barriers to betting on horseracing, by age, March 2015
                                                                                                                            • Lapsed visitors take their racing knowledge with them
                                                                                                                              • Figure 46: Experience of knowledge barriers to horserace betting (net) vs interest in betting on major racing occasions only, by experience of betting shop visiting, March 2015
                                                                                                                            • Key demographics turned off by racing
                                                                                                                              • Figure 47: Agreement with the statement ‘I find horseracing boring’, by gender, March 2014
                                                                                                                          • The Consumer – Attitudes Towards Gaming Machines in Betting Shops

                                                                                                                            • Key points
                                                                                                                              • Machines’ bad publicity seeps into shops
                                                                                                                                • Figure 48: Attitudes towards gaming machines in betting shops, March 2015
                                                                                                                              • Electronic gaming for a digital generation
                                                                                                                                • Figure 49: Agreement with positive statements about gaming machines in betting shops, by age, March 2015
                                                                                                                            • The Consumer – Multichannel Betting

                                                                                                                              • Key points
                                                                                                                                • Smartphones to create a more personal shop experience
                                                                                                                                  • Figure 50: Experience of multichannel betting, March 2015
                                                                                                                                • A media takeaway to reward appointment betting
                                                                                                                                  • Being more than a cashpoint in a multichannel world
                                                                                                                                  • Appendix – Market Size and Forecast

                                                                                                                                      • Figure 51: Forecast of consumer expenditure (GGY) in betting shops, 2014/15-2019/20
                                                                                                                                  • Appendix – Segment Performance

                                                                                                                                      • Figure 52: Forecast of OTC consumer expenditure (GGY) in betting shops, 2014/15-2019/20
                                                                                                                                      • Figure 53: Forecast of consumer expenditure (GGY) on gaming machines in betting shops, 2014/15-2019/20

                                                                                                                                  Companies Covered

                                                                                                                                  • Gala Coral Group Ltd
                                                                                                                                  • Ladbrokes Ltd

                                                                                                                                  Betting Shops - UK - April 2015

                                                                                                                                  US $2,478.79 (Excl.Tax)