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Gambling industry avoids worst of downturn
By Roger Blitz
Published: October 21 2008 03:00 | Last updated: October 21 2008 03:00
Downturn, what downturn? That was the defiant message coming out of bookmaker William Hill yesterday, as it offered evidence that the economic misery starting to grip the nation is for now leaving some parts of the gambling industry relatively unscathed.
William Hill, with more than 2,250 betting shops, said its total gross win - the amount it retains after bets are paid out - rose 9 per cent in the past few months, against the prior year.
Gross win from its shops was up 10 per cent in the 15 weeks to October 14. While gross win from high rollers fell 30 per cent, the interactive business was up 21 per cent. "We are not seeing a slowdown," said Ralph Topping, chief executive. "The business is doing well, but we would never say we are recession-proof."
William Hill admitted the comparable period last year was weak, and the boost to its share price yesterday - of nearly 14 per cent - owed perhaps more to the deal it announced yesterday with software provider Playtech.
Still, its trading and confidence about the outlook raise the question whether gambling companies should be considered defensive stocks more capable than others of withstanding the worst excesses of economic upheaval.
Sportingbet, the UK-based online gambling company, last week also came out with good numbers, its net gaming revenues up 23 per cent. Both argue gambling is for many a "low-ticket item", not so vulnerable to recession as more difficult spending decisions, such as a new car. "Our average bet is £8.50," said Mr Topping.
Bookmakers are a resilient bunch, says Warwick Bartlett of Global Betting & Gaming consultants. In the early 1990s recession, betting shop turnover did fall by about 2 per cent. But that modest slippage came against a very tough background - with inflation running at 9 per cent and the UK national lottery being launched as a fierce competitor for punters' money before the slump was over.
"The industry becomes more creative when needs must," says Mr Bartlett. "From the last recession, numbers betting, fixed-odds betting terminals and virtual racing emerged."
Foot and mouth in 2001, which stopped horseracing altogether, was a stiff test for the industry, but it got through with numbers betting - bookmakers' take on the lottery formula - and virtual horseracing.
This time round, high-street businesses are confronting the declining economy alongside the online gambling industry, which has just begun to emerge from a downturn all of its own. Online companies' problems were brought about two years ago when Europe-based operators were dragged down by the combined weight of US prosecutors and legislators, forcing their exodus from the lucrative US market.
The online gambling industry regrouped round Europe, enabling companies to diversify businesses across a wider spread of markets, and offering greater protection from the vagaries of regulation. William Hill was yesterday trumpeting the benefits of the Playtech deal as giving the business a more promising springboard into continental European business.
The nadir reached after the exodus from the US has helped the industry to appreciate that online gambling is not so much a competitor for land-based businesses such as bookmakers, more a potential partner.
William Hill's big push into online gambling is a reflection both of its failure in the past to develop an interactive business and of a wider belief across the industry that the internet in the longer term offers better prospects than old-fashioned betting shops.
"It's a quick fix, but it's a very good fix and very opportunistic," says Andrew Lee, analyst with Dresdner. Ultimately, Mr Lee points out, the bigger companies are getting bigger and outperforming the smaller ones, and the barriers to entry are getting higher.
Short term, William Hill and other UK bookmakers can still expect to suffer recessionary consequences, says Mr Bartlett. |
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发表于 2008-10-23 09:21
