The independent bookmaker: making it pay

The UK’s Triennial Review of gaming machines, including Fixed Odds Betting Terminals (FOBTs), is due to be published soon. Much of the attention has been centred on the implications for the large betting chains but the decisions will also affect smaller, independent bookmakers. GBGC asked an independent bookmaker if he was anxious about the outcome.  He said, “If it goes ahead, according to the worst scenario [GB£ 2 max stake], we would have to close half the shops we have on the first day of the new regime.”  


GBGC asked for the figures of one of his better shops to test his conclusion.

Revenue £000

OTC

150

FOBT

120

Total

270

Expenses

Rent & Rates

30

Staff Wages

70

Light/Heat

7

Provisions

2

Newspapers

2

FOBT rent

11

Telephone

1

SIS, Turf tv, TRP

36

Water

1

Advertising

2

Licence

0.5

Gambling Commission

1.4

Other licences

2

Levy

3.5

BGRF

0.5

MGD

30

Problem gambling

1

Betting tax

22.5

223.4

Profit

46.6

This is a good shop showing a profit of £46,600 a year. The figures do not include repairs and renewals or depreciation.  A shop requires a complete refit of £50,000 to £100,000 every eight years.  In a worst case scenario, if the FOBTs were lost as a source of revenue and without business moving to over the counter, this good shop would lose £73,400 a year.  Such a loss is not sustainable and the shop would close.

This would cause a loss to Government of £74,220 a year taking account of NI, corporation tax, gambling taxes and licence fees. The staff would lose their jobs. The bookmaker would be left with the liability of the lease, four years unexpired at £20,000 a year, £80,000 in all. 

What about horse racing? The new SIS rate card will probably take the £36,000 charge for media rights to about £40,000. When I had betting shops I recall paying something in the region of £8,000 a year for a full service, admittedly some years ago.  The escalation in horse racing media rights has only come about because of FOBTs. Without them, bookmakers would not have agreed to pay the figures they are paying now.

If the Government does decide to reduce the stake on FOBTs, shops will have to close because the overheads have grown disproportionality to any potential return. This situation will come about because of Government decisions.  The bookmaker has done nothing wrong. He has only used a machine that is permissible by current law. Just as the farmers were compensated by the Government when the decision was taken to cull their herds to stop the spread of disease, should not the bookmakers also be compensated if the DCMS curtails FOBTs? 


The Basel AML Index 2017

The Basel Anti-Money Laundering Index is an index that measures a country’s risk for money laundering and terrorist financing.  The index is used by the private sector as an established AML country risk rating and by the public sector – NGOs and academia – for research and policy measures.


The report states the following as to its method: “The Basel AML Index measures the risk of money laundering and terrorist financing by countries based on publicly available sources. A total of 14 indicators dealing with AML/CFT regulations, corruption, financial standards, political disclosure and the rule of law are aggregated into one overall risk score. By combining these various data sources, the overall risk score represents a holistic assessment addressing structural as well as functional elements in the AML/CFT framework.

Number one on the list (i.e. the highest risk) is Iran with a risk score of 8.6, with Afghanistan in second place with an overall score of 8.38. These two countries have occupied the top two spots for the last five years. The United States ranked 116th (4.85) and the United Kingdom is in 118th position with a score of 4.81 from a sample of 146 countries.

The least risky country, according to the index, is Finland with a score of 3.04. 

But there do seem to be some anomalies in the index. The Balkan countries of Montenegro (122) and Croatia (139) ranked better than both the UK and US, suggesting that they are more compliant with AML regulations.  Bulgaria, at 143 with a score of 3.87, is viewed as being more compliant and having less AML risk than the UK, USA, Norway, Australia, Germany, Singapore and the Netherlands.

A PDF of the report can be found here: 
https://index.baselgovernance.org/sites/index/documents/Basel_AML_Index_Report_2017.pdf


By Warwick Bartlett

Las Vegas: more than gambling

Having just returned from G2E in Las Vegas, my conclusion is that everyone should visit this place at least once in their lifetime.  There is nothing like it anywhere on the planet. It’s not just about gambling. Las Vegas is the complete entertainment package.


At G2E delegates heard that most future CAPEX in Vegas, as much as 75% of the total, would be on entertainment and non-gambling facilities, continuing a trend of developing shops and event venues.

There is also something to suit every budget. There is fine dining at the Wynn, Venetian, and Caesars. or old school American diners offering fast-food fare. Caesars is building a new Gordon Ramsey restaurant right at the front of the property. It is a huge restaurant!

Then there are the premium quality shows.  Celine Dion and Elton John perform at Caesars, Jennifer Lopez will be at Planet Hollywood in 2018, just as Britney Spears finishes her run there.

About 25,000 people turned up for G2E at the Venetian Resort and casino.  The Venetian is massive. On one day I never left the building and walked seven miles, according to my pedometer. It has 4,049 suites, the smallest occupies 650 square feet, the gaming floor is 120,000 square feet, add to that the adjacent Palazzo tower – 3,068 rooms with 109,000 square feet of gaming space. 

In Las Vegas 73.3% of Las Vegas Sands’ (LVS) revenue was from room, food and beverage with the remainder from gaming activities.  At LVS’ Venetian in Macau 81.9% was from gaming activity.

Gone are the days when food, beverage and room rates were cheap in Las Vegas to attract gamblers. Vegas has moved toward providing premium quality, and you pay for it. It is a business model that seems to work because occupancy at the LVS’ Las Vegas properties is 91.8% with an average daily room rate of US$233.

Within the Venetian Complex is the Sands Expo and Convention Center.  Opened in 1990 at a cost of US$ 1 million it occupies 2.2 million square feet. The Venetian Ballroom occupies 85,000 square feet. 

There is nothing comparable to this in the UK. In the UK we have EXCEL in London, yet most people choose to stay in central London where the restaurants and hotels are better. There is also the National Exhibition Centre on the outskirts of Birmingham. It is very large but with few hotels close by. There is no convention centre that integrates hotel bedrooms with a large expo hall.

The UK missed an opportunity with the super casino in 2005.  LVS, MGM and Caesars were all prepared to build something special in the UK until the government buckled to the pressure of the UK media.   As Brexit takes place, the UK will need to get its act together. The conference and trade show business model works. It provides, tourism, employment, profit and taxes. 

by Warwick Bartlett

Update to IGRG’s gambling code

The issues of social responsibility in gambling and of gambling operators taking responsibility for their affiliates’ activities were both prominent at last month’s KPMG Isle of Man e-gaming summit. Now the Industry Group for Responsible Gambling (IGRG) has updated its gambling industry code for socially responsible advertising.


The IGRG’s Chairman, John Hagan, explain the reason for the code’s latest revision:

“The advertising of gambling has probably never been more in the spotlight than it is at present and we await with interest the eventual conclusions of the ongoing DCMS review. In the meantime, pursuant to our own commitment to review the Code on a regular basis, I am glad that we have brought forward now some very worthwhile additions relating to advertising on social media, affiliate marketing and the referencing of www.begambleaware.org in print and broadcast advertising.”

With regard to marketing via social media, the code now includes the following stipulations:
A requirement that gambling operators carry the required social responsibility and age requirements on consumer facing marketing content on their YouTube channels.
A requirement that operators use the Twitter age-screening function when marketing to consumers. 
A requirement that operators age restrict all direct marketing video uploads to YouTube. 

The code now also recommends that gambling operators “use their best endeavours to ensure that all of the relevant Code requirements are also followed by affiliate marketers of all kinds.”

It is intended that this third edition of the code will be implemented by the end of 2017.

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