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Betting Shops - UK - March 2011

Horseracing is caught between a rock and a hard place in the betting shop market in that the volume of races that enables it to attract more than £5 billion of bets a year is also seen as the cause of its failure to attract a new audience by making it highly complex to follow and assess.

  • The recession is considered to have pushed the betting shop market into decline in recent years, but the first signs of a return to growth are visible with the market expected to increase in value by 2% in 2010-11 to £2.8 billion.
  • The balance of customer expenditure in the betting shop market is now reaching the point at which gaming machines are as valuable as traditional OTC trade.
  • Despite the ongoing decline of betting on horseracing, it remains by far the dominant player in the OTC mix, generating more than half of gross profit and turnover in 2009-10.
  • Those who bet on football are highly likely to be frequent betting shops visitors. 28% of these consumers visit once a month or more, compared with 11% of those who bet on horseracing. This reflects the appeal of horseracing’s flagship events that may only attract punters once or twice a year.
  • Some 21% of all consumers see betting shops as ‘unwelcoming’ places, and this figure does not even fall significantly amongst those who have been to betting shops (18% agree with this perception). Younger consumers and more upscale socio-economic groups are most likely to perceive shops as unwelcoming, although women are no more likely than men to do so.
  • Calls to action are still a strong driver of business for betting shops, with around one in five betting shop visitors say they only ever bet occasionally when something prompts them to.

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Table of contents

  1. Introduction

      • Definition
        • Abbreviations
        • Issues in the Market

            • How can betting shops stem the ongoing decline in horserace betting?
              • Can betting shops rely on continued machines revenue growth?
                • What is the potential of football betting?
                  • How can consumers be persuaded to bet more regularly?
                    • To what extent is online betting cannibalising the retail trade?
                      • What other sports provide the best opportunities for LBOs?
                      • Future Opportunities

                          • Trend: FSTR and HYPR
                            • Trend: Experience is All
                            • Executive Summary

                                • The market
                                  • Figure 1: Betting shops market size and forecast, 2005-15
                                • Downturn depresses the market but return to growth on the cards
                                  • Gaming machine revenues match OTC, while horseracing remains on top
                                    • Market factors
                                      • Machines’ future looking secure, while high-street proliferation continues
                                        • Macro-economic factors paint a mixed picture for the future
                                          • Companies, brands and innovation
                                            • Figure 2: UK betting shop market operators, by number of outlets, February 2011
                                          • Tote sale to bring big players closer
                                            • Major chains expand while independents fold
                                              • Simplicity, convenience and technology add to the appeal
                                                • The consumer
                                                  • Figure 3: Betting shop visiting habits, May 2009-January 2011
                                                • Regular visiting remains a minority activity
                                                  • Racing retains broadest levels of interest
                                                    • LBOs retain unwelcoming image
                                                      • Figure 4: Attitudes towards betting shops, January 2011
                                                    • What we think
                                                    • Internal Market Environment

                                                      • Key points
                                                        • Licence fees add to smaller shops’ cost burden
                                                          • Figure 5: Betting shop licence fees, February 2011 (rates payable from August 2009)
                                                        • Post-demand test land grab continues apace
                                                          • Taxation target to shift online?
                                                            • B2 cash cows can carry on milking
                                                              • When the Levy breaks...
                                                                • Prevalence survey eases problem gambling headache
                                                                  • Figure 6: Betting sector self-exclusions, 2008-10
                                                                • Isolated integrity issues leave offices largely untouched
                                                                • Broader Market Environment

                                                                  • Key points
                                                                    • Inflation risk threatens market’s resilience
                                                                      • Figure 7: Spending intentions towards leisure activities in coming year, March 2010
                                                                    • Less work = fewer bets
                                                                      • Figure 8: Employment and unemployment, by gender, 2005-15
                                                                    • Racing bettors retiring from shops
                                                                      • Figure 9: Trends in the age structure of the UK population, by gender, 2005-15
                                                                    • Upward mobility: More than an occasional opportunity for racing?
                                                                      • Figure 10: Forecast adult population trends, by socio-economic group, 2005-15
                                                                    • Television as a shop window for betting
                                                                      • Figure 11: Share of TV coverage, by most televised sports, 2006-10
                                                                  • Competitive Context

                                                                    • Key points
                                                                      • Horseracing loses ground – but web chases other targets
                                                                        • Figure 12: Gambling activities in the past year, by gender, 2010
                                                                      • Online headlines overshadow shop sector’s significance
                                                                        • Figure 13: Betting, online bingo and gambling, excluding the National Lottery, 2009-10
                                                                      • Betting shops gain from gambling’s mainstream leisure status
                                                                        • Figure 14: Consumer expenditure on selected leisure activities, 2005-10
                                                                    • Strengths and Weaknesses in the Market

                                                                        • Strengths
                                                                          • Gaming machines
                                                                            • New premises
                                                                              • Market leadership
                                                                                • Football betting
                                                                                  • Lower profile problem gambling
                                                                                    • Weaknesses
                                                                                      • Rising costs
                                                                                        • Decline of OTC trade
                                                                                          • Replacing the Levy
                                                                                            • Public image
                                                                                              • Economic outlook
                                                                                              • Who’s Innovating?

                                                                                                • Key points
                                                                                                  • New ways for consumers to jump on board
                                                                                                    • Cash a trump card in bringing the online into shops
                                                                                                      • Calling in at the office
                                                                                                        • Standing ovation for 3DTV?
                                                                                                        • Market Size and Forecast

                                                                                                          • Key points
                                                                                                            • Recession tips betting shops into decline
                                                                                                              • Figure 15: Consumer expenditure in betting shops, 2005-16
                                                                                                            • Forecast
                                                                                                              • Figure 16: Forecast of consumer expenditure in betting shops, 2005-15
                                                                                                            • Forecast methodology
                                                                                                            • Segment Performance

                                                                                                              • Key points
                                                                                                                • Machines ready to match bets
                                                                                                                  • Figure 17: UK betting shop expenditure*, by segment, 2006-11
                                                                                                                • Racing flags but remains clear OTC leader
                                                                                                                  • Figure 18: UK betting shop over the counter business, by segment, 2008-10
                                                                                                                • Segment forecasts
                                                                                                                  • Figure 19: Forecast of consumer expenditure on over-the-counter betting in betting shops, 2005-15
                                                                                                                  • Figure 20: Forecast of consumer expenditure on gaming machines in betting shops, 2005-15
                                                                                                              • Market Share

                                                                                                                • Key points
                                                                                                                  • Growth of giants distracts from decline of the independents
                                                                                                                    • Figure 21: UK betting shop market, by number of outlets, February 2011
                                                                                                                  • Tote sale opens fast track to top table
                                                                                                                  • Companies and Products

                                                                                                                    • Key points
                                                                                                                      • Betfred
                                                                                                                          • Figure 22: Financial performance of Betfred, 2009-10
                                                                                                                        • Coral
                                                                                                                            • Figure 23: Financial performance of Gala Coral’s Coral division, 2008-09
                                                                                                                          • Ladbrokes
                                                                                                                              • Figure 24: Financial performance of Ladbrokes’ UK retail segment, 2009-10
                                                                                                                            • Scotbet
                                                                                                                                • Figure 25: Financial performance of Morrisons Bookmaker, 2008-09
                                                                                                                              • Totesport
                                                                                                                                  • Figure 26: Financial performance of Tote in the UK betting shops market, 2009-10
                                                                                                                                • William Hill
                                                                                                                                    • Figure 27: Financial performance of William Hill’s retail segment, 2009-10
                                                                                                                                • Brand Communication and Promotion

                                                                                                                                  • Key points
                                                                                                                                    • Value-led market moves away from traditional media
                                                                                                                                      • Figure 28: Bookmakers’ adspend (excluding online-only operators), by media type, 2006-10*
                                                                                                                                  • How Often Do We Visit Betting Shops?

                                                                                                                                    • Key points
                                                                                                                                      • Core customers cut back – but keep on coming
                                                                                                                                        • Figure 29: Betting shop visiting habits, May 2009-January 2011
                                                                                                                                      • Can the betting occasion become routine?
                                                                                                                                        • Fun of the festival can put racing on the calendar
                                                                                                                                          • Figure 30: Betting shop visiting habits by participation in betting shop activities, January 2011
                                                                                                                                      • What Do We Gamble On In Betting Shops?

                                                                                                                                        • Key points
                                                                                                                                          • Horserace betting underplays its appeal to women
                                                                                                                                            • Figure 31: Participation in betting shop activities, January 2011
                                                                                                                                          • Can London Olympics open sports betting beyond football?
                                                                                                                                            • Sport better placed than shops to stimulate horserace betting interest
                                                                                                                                              • Figure 32: Participation in betting shop activities by participation in betting shop activities, January 2011
                                                                                                                                          • What Do We Think About Betting Shops?

                                                                                                                                            • Key points
                                                                                                                                              • Attraction about more than just looks
                                                                                                                                                • Figure 33: Attitudes towards betting shops, January 2011
                                                                                                                                              • Shops still home to the occasion bet...
                                                                                                                                                • ...but calls to action hit on a different crowd
                                                                                                                                                  • Getting football match bettors onto the transfer list
                                                                                                                                                  • Betting Shop Gambling Repertoires

                                                                                                                                                    • Key points
                                                                                                                                                      • Occasional bettors with a singular focus
                                                                                                                                                        • Figure 34: Repertoire of participation in betting shop activities, January 2011
                                                                                                                                                      • Racing misses out on multiples
                                                                                                                                                      • Betting Shop Target Groups

                                                                                                                                                        • Key points
                                                                                                                                                          • Figure 35: Betting shop target groups, January 2011
                                                                                                                                                        • The Blinkered
                                                                                                                                                          • Good Sports
                                                                                                                                                            • Happy Shoppers
                                                                                                                                                              • Horse Traders
                                                                                                                                                              • Appendix – Broader Market Environment

                                                                                                                                                                  • Figure 36: GDP, PDI, consumer expenditure and savings, at constant 2010 prices, 2005-15
                                                                                                                                                                  • Figure 37: GfK NOP Consumer confidence index, January 1988-December 2010
                                                                                                                                                                  • Figure 38: Forecast adult population trends, by lifestage, 2005-15
                                                                                                                                                              • Appendix – Market Size and Forecast

                                                                                                                                                                  • Figure 39: Forecast for consumer expenditure in betting shops, best- and worst-case scenarios, 2010-15
                                                                                                                                                              • Appendix – Segment Performance

                                                                                                                                                                  • Figure 40: Forecast for over-the-counter betting revenues in betting shops, best- and worst-case scenarios, 2010-15
                                                                                                                                                                  • Figure 41: Forecast for gaming machine revenues in betting shops, best- and worst-case scenarios, 2010-15
                                                                                                                                                              • Appendix – How Often do we Visit Betting Shops?

                                                                                                                                                                  • Figure 42: Betting shop visiting habits, by demographics, January 2011
                                                                                                                                                              • Appendix – What Do We Gamble on in Betting Shops?

                                                                                                                                                                  • Figure 43: Participation in betting shop activities, by demographics, January 2011
                                                                                                                                                              • Appendix – What Do We Think About Betting Shops?

                                                                                                                                                                  • Figure 44: Attitudes towards betting shops, by demographics, January 2011
                                                                                                                                                                  • Figure 45: Attitudes towards betting shops, by most popular attitudes towards betting shops, January 2011
                                                                                                                                                                  • Figure 46: Attitudes towards betting shops, by next most popular attitudes towards betting shops, January 2011
                                                                                                                                                                  • Figure 47: Attitudes towards betting shops, by current betting shop visitors, January 2011
                                                                                                                                                                  • Figure 48: Attitudes towards betting shops, by lapsed and non-betting shop visitors, January 2011
                                                                                                                                                                  • Figure 49: Attitudes towards betting shops, by participation in betting shop activities, January 2011
                                                                                                                                                              • Appendix – Betting Shop Gambling Repertoires

                                                                                                                                                                  • Figure 50: Repertoire of participation in betting shop activities, by demographics, January 2011
                                                                                                                                                                  • Figure 51: Participation in betting shop activities, by repertoire of participation in betting shop activities, January 2011
                                                                                                                                                                  • Figure 52: Attitudes towards betting shops by repertoire of participation in betting shop activities, January 2011
                                                                                                                                                              • Appendix – Betting Shop Target Groups

                                                                                                                                                                  • Figure 53: Target groups, by demographics, January 2011
                                                                                                                                                                  • Figure 54: Betting shop visiting habits, by target groups, January 2011
                                                                                                                                                                  • Figure 55: Participation in betting shop activities, by target groups, January 2011
                                                                                                                                                                  • Figure 56: Attitudes towards betting shops, by target groups, January 2011

                                                                                                                                                              Companies Covered

                                                                                                                                                              • Association of British Bookmakers Ltd (ABB)
                                                                                                                                                              • Barcrest Group
                                                                                                                                                              • Chester Zoo
                                                                                                                                                              • Cinema Advertising Association
                                                                                                                                                              • Department for Culture Media and Sport
                                                                                                                                                              • Fédération Internationale de Football Association
                                                                                                                                                              • Football Association (The)
                                                                                                                                                              • Gala Coral Group Ltd
                                                                                                                                                              • Gambling Commission
                                                                                                                                                              • Government Actuary's Department (GAD)
                                                                                                                                                              • Horserace Betting Levy Board
                                                                                                                                                              • Hull City Football Club
                                                                                                                                                              • Inspired Gaming Group
                                                                                                                                                              • Ladbrokes Ltd
                                                                                                                                                              • Paddy Power Plc
                                                                                                                                                              • Sports Industry Research Centre
                                                                                                                                                              • Tesco Plc
                                                                                                                                                              • Tote
                                                                                                                                                              • William Hill
                                                                                                                                                              • York Capital Management

                                                                                                                                                              Betting Shops - UK - March 2011

                                                                                                                                                              £1,750.00 (Excl.Tax)