English bookmakers love the World Cup. Every four years English football fans get overly patriotic about the chances of their team winning the tournament and follow up that optimism up by backing England to win. The fact that England last won the trophy when television was in black and white shows just how much of a bookmakers’ benefit the World Cup is for the likes of William Hill and Ladbrokes from their English customers.
The 2014 tournament in Brazil will no doubt be another good one for the betting sector in the UK and there are several factors that will contribute to that.
Not least is the fact that a World Cup helps to fill the void in the summer months when the English Premier League is finished. Leaving aside the quality of the football, the tournament is the perfect vehicle for marketing betting services, attracting new customers, giving existing customers something on which to bet and generally using the football as a means to sell other gaming services to customers.
Another important consideration is the timing of England’s matches. The kick-offs for England’s group matches are quite good for the bookmakers.
England’s opening match against Italy kicks off at 23.00 in the UK, which is quite late in the evening, but it has the advantage of being on a Saturday night – so no work for most people the next day. England’s two subsequent group matches are at 20.00 (UK) and 17.00 (UK), which are both good times for aiding in-running betting turnover.
Since the last World Cup in South Africa the use of mobile and tablet devices for sports betting has increased dramatically. The rise of mobile betting is another factor that will go to make Brazil 2014 a great tournament for UK bookmakers.
Since the last World Cup in South Africa the use of mobile and tablet devices for sports betting has increased dramatically. The rise of mobile betting is another factor that will go to make Brazil 2014 a great tournament for UK bookmakers.
In fact, GBGC predicts that the 2014 World Cup will be the first tournament in which more money is bet in the UK on mobile devices than desktop computers.
But there does seem to be a bit more realism about England’s chances in the 2014 World Cup. The team is generally available at 28/1 to win the tournament, which is as big a price as England has been before the last few tournaments. Ladbrokes even offered 66/1 for England to win in a special offer in April which was very tempting even for the most pessimistic England fan. William Hill makes the group stage the 11/10 favourite as England’s stage of elimination, which does not bode well for England fans hoping for their team to have a good tournament.
It is also actually in the English bookmakers’ interests for the national team to progress in the tournament because it helps maintains interest from bettors and boosts turnover. From the bookmakers’ perspective, the dream tournament is always for England to make it to the final and then to lose on penalties after extra time. The team is very good at the losing on penalties bit of the equation, but less good at making it to the final.
At the moment punters in the UK are spoilt for choice as to who to bet with, how to place their bets, and the range of markets on which to bet – tournament winner, group stage performance, stage of elimination, goals scored etc, plus all the in-play options on each match.
But there does seem to be a bit more realism about England’s chances in the 2014 World Cup. The team is generally available at 28/1 to win the tournament, which is as big a price as England has been before the last few tournaments. Ladbrokes even offered 66/1 for England to win in a special offer in April which was very tempting even for the most pessimistic England fan. William Hill makes the group stage the 11/10 favourite as England’s stage of elimination, which does not bode well for England fans hoping for their team to have a good tournament.
It is also actually in the English bookmakers’ interests for the national team to progress in the tournament because it helps maintains interest from bettors and boosts turnover. From the bookmakers’ perspective, the dream tournament is always for England to make it to the final and then to lose on penalties after extra time. The team is very good at the losing on penalties bit of the equation, but less good at making it to the final.
At the moment punters in the UK are spoilt for choice as to who to bet with, how to place their bets, and the range of markets on which to bet – tournament winner, group stage performance, stage of elimination, goals scored etc, plus all the in-play options on each match.
As a result of this breadth of choice GBGC expects UK punters will wager around GB£ 925 million in total over the four weeks of the World Cup. William Hill’s Kate Miller has said: “We expect betting turnover of around GB£ 200 million. For us it will be like eight Grand Nationals or four Cheltenham Festivals all rolled into one.” In 2010 William Hill had total wagers on the World Cup of GB£ 115 million and a gross win of GB£ 32 million, at a healthy margin of 28%. So to hit a target of GB£ 200 million in 2014 suggests an increase in wager of some 75% over four years ago. The increased interest in in–play betting on football and use of mobile devices by UK punters could combine to help the bookmakers reach their targets.
And both UK bookmakers and punters will do well to fill their boots during the coming tournament because the World Cup in Brazil will be the last major football tournament before a regulatory watershed takes place in the UK betting sector.
And both UK bookmakers and punters will do well to fill their boots during the coming tournament because the World Cup in Brazil will be the last major football tournament before a regulatory watershed takes place in the UK betting sector.
At the heart of the changes is the UK government’s decision to switch the UK’s internet gambling regime to a point of consumption tax. From the final quarter of 2014 any e-gaming operator wishing to take business from UK-based customers will be required to hold a licence issued by the UK Gambling Commission. Alongside this licensing requirement will come the obligation to pay UK remote gaming duty at 15% of revenues. Many current operators currently targeting the UK do so from low-tax offshore jurisdictions like Gibraltar and Malta under the White List set up, which will be ended by the new point of consumption tax. Paying 15% on revenues is an immediate increase in an operator’s cost base and the big players are already looking at ways to mitigate this new cost. Speaking in an investor call earlier this year, William Hill’s CEO and CFO stated:
“We believe, at this point, we can save GBP15 million to GBP20 million against what we would otherwise have spent in 2015… Across the business there’s very strong bottom up examination of costs and headcount taking place over the course of the next two months. We’ll see what that yields.”
“We believe, at this point, we can save GBP15 million to GBP20 million against what we would otherwise have spent in 2015… Across the business there’s very strong bottom up examination of costs and headcount taking place over the course of the next two months. We’ll see what that yields.”
Marketing and affiliate costs will come under great scrutiny as firms look to cut costs. William Hill was explicit about this fact:
“We’re going to be looking at our marketing monies … There will be areas of cost sharing through the profit share type arrangements we have with some software suppliers and affiliates and so on. Those are in the mix.”
This is also likely to mean that the bonus culture that drives internet gambling marketing in the UK will be diminished to the detriment of customers. Under the new UK point of consumption tax bonuses and free bets given by sports books will be liable for the 15% tax rate too. The reason for this is that free bets given in UK betting shops are already liable for the tax and the government did not want to create a discrepancy.
Having to take a 15% hit on sports book free bets is going to both limit the use of bonuses and reduce their generosity.
“We’re going to be looking at our marketing monies … There will be areas of cost sharing through the profit share type arrangements we have with some software suppliers and affiliates and so on. Those are in the mix.”
This is also likely to mean that the bonus culture that drives internet gambling marketing in the UK will be diminished to the detriment of customers. Under the new UK point of consumption tax bonuses and free bets given by sports books will be liable for the 15% tax rate too. The reason for this is that free bets given in UK betting shops are already liable for the tax and the government did not want to create a discrepancy.
Having to take a 15% hit on sports book free bets is going to both limit the use of bonuses and reduce their generosity.
UK customers have done very well from bonus and money-back offers in the past but after the 2014 World Cup they could notice a reduction in the offers with which their favourite bookmaker tries to entice them to open an account or have a bet.
Under a 15% betting tax regime operators also cannot afford to sustain “unprofitable” accounts. “Unprofitable” could mean one of three things – (1) the account is winning too much from the sports book, (2) the account does not bet sufficiently frequently or (3) the account bets in such low stakes so as not to be worthwhile for the operator once tax is deducted. These have always been issues for sports books but they can afford to be more tolerant of all three scenarios when they are paying little gambling tax. But when the tax is hiked up to 15% and costs suddenly become a key concern, then the tolerance levels are reduced dramatically.
Under a 15% betting tax regime operators also cannot afford to sustain “unprofitable” accounts. “Unprofitable” could mean one of three things – (1) the account is winning too much from the sports book, (2) the account does not bet sufficiently frequently or (3) the account bets in such low stakes so as not to be worthwhile for the operator once tax is deducted. These have always been issues for sports books but they can afford to be more tolerant of all three scenarios when they are paying little gambling tax. But when the tax is hiked up to 15% and costs suddenly become a key concern, then the tolerance levels are reduced dramatically.
A recent free bet promotion (on the face of it a simple offer of “money back if the favourite wins”) from one UK sports book came with 18 terms and conditions attached, two of which were:
“Please note that some customers may be excluded from this promotion due to staking restrictions.”
“We reserve the right to withhold, restrict or cancel this offer from individual account holders in accordance with its eligibility, promotion abuse and internal trading risk policies at its own discretion and without prior notice.”
“Please note that some customers may be excluded from this promotion due to staking restrictions.”
“We reserve the right to withhold, restrict or cancel this offer from individual account holders in accordance with its eligibility, promotion abuse and internal trading risk policies at its own discretion and without prior notice.”
After this summer’s World Cup punters should expect further restrictions and knock backs on their bets under the new regime and they won’t have to be big staking high-rollers to experience it. By the time the World Cup rolls into Russia in 2018 the UK betting landscape will look very different. Some of the smaller firms will have left the market, there will be consolidation of the remaining operators and the type of betting markets the bookmakers can offer under a 15% tax regime will be reduced.
But some things will be reassuringly the same – England will still lose on penalties*.
But some things will be reassuringly the same – England will still lose on penalties*.
*England World Cup Penalty Shoot Out Record
Played 3; Won 0; Lost 3
1990: West Germany – England (4-3) (semi-final)
1998: Argentina – England (4-3) (round 2)
2006: Portugal – England (3-1) (quarter-final)
Played 3; Won 0; Lost 3
1990: West Germany – England (4-3) (semi-final)
1998: Argentina – England (4-3) (round 2)
2006: Portugal – England (3-1) (quarter-final)