As UK Gambling Bosses Prosper, is the Market Poised for a Downturn?

Posted by Harry Kane on Sunday, June 13, 2021

While the recent year has been a turbulent one for the iGaming market (particularly from the perspective of declining sports betting revenue and an increasingly stringent regulatory climate), the recent figures suggest that the UK’s army of gambling bosses have yet to be adversely affected by this.

In fact, this demographic has profited considerably during the course of the last 12 months, boosting their own personal wealth considerably while seeing the value of their respective shares soar incrementally.

We’ll explore this further in the article below, while asking whether or not the iGaming market in the UK could be poised for a downturn?

How Much Did UK Gambling Bosses Bank in 2020?

In cumulative terms, the bosses of the UK’s various, market leading gambling brands have added up to £4.9 billion to their personal wealth through the previous 12 months, with iGaming verticals such as slots and live casino gameplay driving this trend.

More specifically, listed betting stocks including Flutter (the owner of Paddy Power and Betfair) and Ladbrokes-owner Entain have seen their share value increase by around 70% since the beginning of 2020, with these particular brands having also benefitted from their successful moves in the burgeoning US marketplace.

Then there’s Bet365, which is owned and operated by Denise Coates and her family. This firm, which was valued at a hefty £6.5 billion at the end of 2019, has since recorded sustained stock market growth and now boasts an estimated worth in the region of £10 billion.

But how do these figures translate into personal financial gains for owners? Well, in the case of the Coates family, the projected increase in company value would increase their cumulative wealth by a staggering £4 billion, with this finding underpinned by published profits of £800 million in the year ending April 2020.

This was the remaining profit after £607 million had been paid out in senior management salaries and bonus payments, while the company also posted an incredible £3.4 billion of cash and investments on its 2020 balance sheet.

Coates herself banked £469 million in pay and dividends through 2019/20, taking her total earnings to £1.3 billion since the beginning of 2016.

Interestingly, Coates is not the only billionaire owner to profit during the recent gambling boom. For example, brothers Fred and Peter Done (who founded the £1.1 billion high street bookmaker Betfred) enjoyed a bumper 2020, having acquired a 6% stake in William Hill (worth £225 million) and recorded estimated annual profits in excess of £100 million.

Of course, their wealth also rocked thanks to a lucrative takeover by US giant Caesars Entertainment, which looked to leverage Betfred’s proprietary technology to claim large shares of the burgeoning US market.

Then there’s Flutter chief executive Peter Jackson, whose personal wealth was boosted by a share value increase of £1.6 million. Jackson also scooped £7.5 million in pay and bonuses, helping him to enjoy a genuinely lucrative year.

We’ve already touched on the impressive performance of Ladbrokes owner Entain since January 2020, with shares increasing by a whopping 72% during this period.

This excellent performance has directly benefited former Entain boss Kenny Alexander, whose personal stake value has increased by more than £13 million in the last 14 months. His successor, Shay Segev, also saw his own shareholding increase by £10.9 million, while both individuals earned £1.7 million and £303,000 in pay and bonuses respectively during the same period.

The Calm Before the Storm? The Haves and the Have-nots in the Industry

While these numbers tell a story of sustained growth and prosperity, the enormous growth accrued by gambling aristocracy in the UK contrasts sharply with the wider market climate and the rising focus on gambling-related societal home.

For example, the UK government recently closed its detailed consultation for a review of iGaming legislation and current licensing criteria, with this promising a huge shakeup that could revolutionise the industry and place a significant squeeze on operators’ turnover (and in some instances, profitability).

A £2 slots betting cap has been pledged by regulators, for example, which would dramatically reduce the amount of revenue generated by brands in the UK (although profits will remain untouched as individual win sizes will also be reduced accordingly).

Similarly, another proposal pledges to ban iGaming advertising across both offline and digital marketing channels, making it more difficult for brands to promote themselves effectively and target brand new customers.

However, this may not directly impact on the market leading brands referenced in this post, who already boast internationally renowned names and a global consumer base.

We’re also likely to see a £100 monthly spending cap imposed on the vast majority of players, with more stringent verification and earnings checks used to identify players who are able to wager more than this amount.

Theoretically, this could impact on the lucrative VIP schemes operated by casino brands, which typically generate a disproportionate amount of revenue and sustain operators on an annual basis.

From an ethical perspective, the most recent earnings of gambling bosses also contrast starkly with the research undertaken by Gamble Aware, which found that an estimated 1.4 million Brits are now categorised as problem gamblers. What’s more, nearly three-times this number are harmed through having a partner or relative who demonstrates problem behaviour, creating a wider level of societal harm that’s incredibly hard to ignore.

Certainly, this is not a good look for the industry as a whole, as it suggests that large corporations and their executives are profiting directly from the failure of others to regulate their activity and spend inside their means.

Of course, this is only part of the story that underpins rising gains in the iGaming space, but it has the potential to change opinions, drive reforms and inspire robust regulation across every single online vertical.

In this respect, there remains a sense that a bumper 2020 could represent the calm before the storm in the UK’s iGaming market, which may be poised for a downturn and sustained regulatory crackdown in the near-term.