Nervy times for bookies, exchanges and pool operators
Interesting times for betting. Hanging over bookmakers is the impending minimum stake for FOBTs and the nerves are beginning to show.
Kenny Alexander, Chief Executive of GVC, who are in the throes of buying Ladbrokes Coral, has called for a speedy decision so that the business can move on, not least because it affects how much they pay for their new acquisition.
A week or so ago, and somewhat over-dramatically, Ladbroke Coral said that an imposition of a £2 minimum stake would have serious consequences for their sponsorship portfolio albeit that they qualified the statement to say the impact on their support of high-profile races would not be affected.
In contrast, Paddy Power Betfair, who are less exposed to the impact on retail betting of a minimum stake reduction and said last year it should be £10 or less, announced a £20m increase in its promotional spend to address a decline in market share.
There is acknowledgment that Paddy Power in particular has lost some of its cutting-edge marketing and has also lost ground in product development. The strategy will be to aim Paddy Power at the more recreational punter whilst the Betfair brand will target more serious players.
Meanwhile, Betfair Exchange has seen a ramping up of activity by its competitors, not least Betdaq and Matchbook. The former, owned by Ladbroke Coral, has introduced a flat-rate commission of 2% and Matchbook have been commission-free in the weeks leading up to Cheltenham.
This prompted Betfair to suggest such offers were unsustainable. That’s surely the problem of their competitors, but it does suggest Betfair are feeling the squeeze.
Betfair’s rivals have also been busy in increasing market awareness through sponsorship, most recently with Betdaq supporting a Saturday meeting at Kempton and Matchbook sponsoring Sandown’s Imperial Cup fixture.
Liquidity is clearly the key to playing the exchanges and maybe the dominance of Betfair is now facing a serious challenge.
Liquidity is just as important, if not more so, in pool betting where the cat has been set amongst the pigeons with the news that Tote owner Fred Done is selling a sizeable share to an investment consortium led by former banker Alex Frost who has on board a number of owners and breeders.
Their stated intention is to make considerable reductions in the take-out from the pools with the aim of returning to greater volumes of pool betting.
The move comes just a few months before the Tote loses its pool betting monopoly where the Racecourse Association backed Britbet is waiting in the wings. They’ll have exclusive racecourse presence on all but a handful of tracks but the Tote will still be running the Jackpot, Placepot and Scoop 6 and has deals with other bookmakers to offer Tote bets via Tote Direct, something which Britbet has yet to secure.
To make matters trickier for Britbet, the new Tote partnership is said to be offering racecourses the same payments as they get now plus a sponsorship package and bigger levy contribution.
As a start-up, Britbet is a risky proposition and its backers will be burning the midnight oil to consider their options, one of which could be to abandon their new enterprise and row in with the new Tote partnership.
As I say, interesting times.
