The UK betting industry is quite literally a billion pound business. William Hill, the biggest UK bookmaker measured by revenue, made £1.609 billion in 2014. Ladbrokes, the second biggest, made £1.158 billion in revenue. Whatever people say about the betting business, there can be no doubt: it pulls in big, big money.
However, because of tighter industry regulation, in the form of of a new code of conduct issued by the government, together with high overhead costs, has meant that high street bookmakers and online gambling websites are shutting up shop, leading to a number of high profile mergers.
888 Holdings own some of the biggest online gambling sites, including 888 Casino and 888 Poker. However, they have been subject to rival takeovers in the last few months, with a £700 million offer from William Hill, which was rejected for being too low by 888’s shareholders. However, a proposed merger between 888 and other online gambling company Bwin.Party was on the cards, until GWC and Amaya jumped in and offered a takeover of Bwin. However, this was rejected, leading to GVC bidding on their own, without Amaya. They won with a £1.116bn valauation of bwin.
Ladbrokes and Gala Coral, meanwhile, plan to merge, creating a £2.3bn business, making it the biggest bookmarker in the UK, overtaking William Hill. This new business would be called ‘Ladbrokes Coral’, and would have almost 4000 shops, under the separate Ladbrokes and Coral brands, although it is expected that regulators will force at least 600 of these shops to close, as to not stifle competition.
Paddy Power, the Irish bookmaker – one of the largest in Europe – and Betfair, the online betting exchange, are also on course to merge, which would create one of the world’s biggest online gambling companies. It would be known as Paddy Power Betfair, take in £1.2bn in sales, and merge Paddy Power’s high street presence with Betfair’s online exchange for betting, which revolutionised the industry in 1999 with the introduction of allowing players to bet against each other.
So what does this mean for the high street and internet? Well, it means that the consumer has less choice over who to give their money to when it comes to betting. On the high street, you’ll have William Hill, Ladbrokes/Coral (which will be the same company) and Paddy Power, who are easily the smallest, with only 107 shops in the UK and 212 in Ireland. You’ve then got Betfred, who have over 1000 shops across the UK, who haven’t been mixed up in the consolidation process that the others have been going through.
Meanwhile, on the internet, you’ll have a bit more choice. With GVC acquiring Bwin.Party, that leaves one less choice, while Betfair and Paddy Power’s merger reduces it even further. However, 888’s merger of Bwin failed, so they’re still independent, and William Hill have an online component, albeit smaller than other offerings.
Consolidation was always a fear in the betting industry, due to high taxes and regulation, and now it’s happening. Less choice for consumers is bad, but companies that stay afloat is good, even if they’re owned by a larger organisation.