John O’Reilly said the UK market has been impacted by the industry’s stricter affordability checks. Over the next few quarters, these measures can be expected to continue. He said that this ensures a more sustainable customer base by impacting revenues in the short term. Itai Pazner said that the group’s financial performance in the UK reflects market conditions in the country.
In the famous warning of what happens when ambition outstrips means, Richard III said, “Now is the winter of our discontent.” As the country braces for a potential triple threat of recession, energy price shocks and generalised inflation, winter is certainly on the minds of those in the UK.
Inflation has become a global problem due to a mix of supply restrictions, fiscal and monetary policy, as well as energy interruptions, although it is most virulent in the UK. In August, annualised inflation reached 8.5% in the US, 8.6% in the Eurozone, just 6.5% in France, and 10.1% in Britain.
As our long, hot and doomed summer fades into the middle distance, Britain is blowing off its dusty old picture books of 1978 as it braces for the squeeze, and it is not much better elsewhere. The industry needs to be prepared.
If American multi-national Citi are correct in predicting 18% price increases by the end of the year, what will happen to the country’s gambling habits, as 30% of UK bettors would reduce their gambling activity in the face of cost of living increases?
With the leadership race entering its final stretch, the long-awaited Gambling Act white paper is also going to be knocking on the door soon, with the industry starting to think about just how hard these affordability checks are going to be.
Safe and responsible gambling is an incredibly important topic that is important for ensuring the long-term viability of the sector, but short-term adjustments will be painful, with self-imposed restrictions already biting.
There is Flatland
Britain is not a boomtown at the moment.
The UK is a mature gaming market with little room to grow and facing continuing regulatory uncertainty, so it is not surprising that many businesses reported stagnant revenues. Retail reopenings helped both Entain and Flutter, though retail revenue from the market dipped for Entain. The company blamed self-imposed social responsibility measures ahead of the white paper for its stumbles in the UK market.
The UK market has been impacted by affordability checks self-imposed by the industry, according to the board. Over the next few quarters, these measures can be expected to continue. This ensures a more sustainable customer base, whilst impacting revenues in the short term.
The UK revenue decline of 25% was the result of the newly combined 888-William Hill entity with newly increased exposure to the market. In anticipation of British legislative reform, the operator added increased social responsibility measures.
The market conditions in the UK are the main reason for the group’s financial performance in the period.
The proactive actions we have taken to increase player protections and drive higher standards of player safety have put the group in an even stronger position for the future, we believe.
New markets power the growth of most global operators, and the US is a rapidly developing jurisdiction where new customers and new markets have the potential to help out in downturns. The mature UK market is already saturated and close to its ceiling, and the only place to go is up.
According to the business’s Q2 financial report, customer engagement remains strong, and we continue to see no perceivable impact from broader macroeconomic pressures.
Even if there is no decline in places like the US, operators can’t count on continued rapid growth to balance out declines in mature markets like the UK.
The mountain is referred to as Mountain Energei
A third spectre at the feast threatens land-based gaming and retail betting, particularly in the UK, adding to regulatory uncertainty and reducing consumer spending.
As we enter the sixth month of the war in Ukraine, energy bills are rising and will go up this winter. It is easy to forget that businesses also face the same pressures, especially those with large venues to heat, even though energy consultant Auxilione predicts household energy to approach an average of £4000 pounds by January, which no doubt will be destructive to consumer spending.
John O’Reilly said that those costs will have a major impact on his business.
He said that the trading environment across the UK is likely to remain difficult in the months ahead with inflationary pressures squeezing consumer discretionary expenditure and cost increases, particularly in energy prices, putting pressure on profit margins.
The casino operator’s energy prices have risen from £13m in 2020-2021 to £23m in the same period of 2021-22, with a predicted cost of £46m in the years to come.
Not every retail operator will be able to bear the cost, as Rank is confident that it will be able to. The British Gaming Council (BGC) called on the next prime minister to intervene as businesses face 300% increases in bills compared to current rates. Businesses will be forced to close if there isn’t a solution, warned the BGC chairman.
He said that the cost of doing business is rising quickly. Continued energy price hikes might have disastrous effects on the hotel and leisure industries, including our members, if immediate action is not done shortly.
In cities and towns across the UK, casinos are a vital pillar of the hospitality and tourism sector. They face a new crisis, just like the rest of the sector, because they are struggling to build back after the global Pandemic.
The UK is not facing a uniquely bad parade of horribles when it comes to energy. Europe is ridden with energy shortages and rocketing prices, especially in Central European countries which are particularly dependent on Russian natural gas.
There are some reasons to be cheerful
But it is not all gloomy. The first winter World Cup will be a boon to sportsbook operators, as the end of the year will also bring it. We will experience the fabled “soft landing” that central bankers are aiming for, combining modest monetary tightening with modest employment shocks, as inflation will prove to be relatively transitory.
It is possible that that is not the right mindset. Hope can be its own kind of poison, and the last thing we want to be is in the position of Brian Stimpson in Clockwise.
Laura, it is not the despair. I have the ability to take the despair. It is the hope that I will not be able to stand.