The UK gambling industry has lost the PR battle. So says Simon French of Cenkos Securities in a note to investors on 21 August 2017. He cites the deluge of articles in the Observer, Guardian and the leader in the Times on the same day where the headline says, “Children exposed to huge rise in gambling adverts” It is hard to disagree with Simon’s conclusion.
Tracey Crouch MP, the Minister responsible for gambling at the DCMS, still hopes to publish her findings on the Triennial review in October 2017. According to press reports, however, the Treasury has expressed a concern that to limit stakes or prizes on Fixed Odds Betting Terminals (FOBTs) will cause the closure of shops and a loss of Treasury income (taxes). Simon French notes that “the Treasury, at the very least, looks at gambling tax revenues as an overall pot rather than by product lines. Therefore, any fall in one-part of the industry is likely to be counter-balanced by increases in the other, notably land-based casinos and online”.
GBGC has previously warned of the dangers of one side of the gambling sector campaigning against another. Simon Thomas of the Hippodrome Casino in Leicester Square, London, has led a campaign against the competition that FOBTs provide to his establishment. It would be ironic to say the least if his business was one of the many called upon to make up the tax shortfall for the Treasury’s loss of income from reduced FOBT stakes.
One of the more balanced articles on gambling can be found in the Sunday Times business section written by Luke Johnson. He writes about the differences between speculation, investment and gambling. Johnson himself has owned bookmakers, bingo clubs and, slot machine arcades and greyhound tracks. He was chairman of Channel 4 and today is part-owner of Patisserie Holdings.
The USA is the home of high risk investment in new technologies. Tesla, the electric car maker, has raised £10 billion in debt and is yet to make a profit. The USA, however, is the richest country in the world and adopts and invests in new technology quicker than most other countries. Countries that are cautious, where investors prefer bonds over equities, have much slower growth.
So, gambling or investment, whatever you would like to call it, does have a good element to it. Gamblers can comprehend risk much better than those that do not gamble. It is the measurement of risk that enables investors to take stakes in companies that will grow and provide jobs.
As Luke Johnson says in his closing paragraph “I’m afraid that those who need to be sure about everything are doomed to an unhappy and stunted existence. I would rather rank among the plungers, be they investors, speculators or gamblers”.
By Warwick Bartlett