Gambling Commission industry stats: What came out of the report?

UK gambling industry (excluding Northern Ireland), has been given a boost following the fears of what June’s Brexit vote may cause, after some encouraging statistics were published by the Gambling Commission (GC).

Dates were adjusted for the latest accounting period, with results being shown for October 2014 to September 2015, as opposed to the standard April-March accounting period. This is most likely as a result of the change in legislation in November 2014, meaning that all operators offering real-money services in the UK required a UK licence from that point, and figures from that month onwards can now be included.

The bottom line figure was £12.6bn in total gross gaming yield (GGY) being reported as a combined total for all sectors, up from £11.2bn for April 2014 to March 2015. Here are the main pointers that can be taken from the figures overall:

A negative slant on industry stories is becoming clearer

When reporting the figures, the Guardian ran the headline: “British gamblers lost a record £12.6bn last year,” and it takes few guesses to work out which particular area of the industry it placed its focus on, which we will come on to later.

For the Daily Mail, the headline was: “Gambling losses increase sharply to £12.6bn,” stating that the total was a rise of more than a third on five years ago, though did not mention that online figures for overseas operators over an annual period were not included until this report. Again, a key focus was placed on one particular betting product.

The Financial Times ran the headline: “Gamblers caught on £12.6bn losing streak,” but did appear to provide more balance, using quotes from Ladbrokes and the Association of British Bookmakers.

Of course, you can make up your own mind on what the angle being taken by each media outlet is, but what is evident is that any potential successes for this industry are not likely to result in a metaphorical pat on the back from the UK national press across the board.

B2 machines are more important than ever

Wherever you stand on the argument about regulation of FOBTs, it is undeniable that they form an integral role in the business of land-based operators in the UK.

In a previous article, Gambling Insider looked into the importance of FOBTs to betting locations. This showed that off course B2 gaming machine GGY had ascended from £1.05bn in 2008/2009 to £1.66bn for 2014/2015. The last figure was reflective of a 54% share of total UK off course bookmaker GGY. This had steadily gone up from 38% in 2008/2009.

While we cannot see a direct year-on-year comparison for the latest figures, they do show that the £1.7bn in off course GGY generated by B2 gaming machines, up by 2% from March 2015, accounts for 56% of the £3.06bn total off course GGY for the sector.

Given that the number of betting shops has retracted by 2% to 8,809, shops are increasingly reliant on B2 gaming machine revenue, despite the fact that the number of B2 gaming machines available in shops also decreased, as the 34,707 total is down by 0.5%.

The forecasts were about right

Up until this point, assessing the size of the UK i-gaming industry has been complicated, with no central source of information providing all results as we see in the three US states that have regulated online gambling, for example.

In November, Barclays Research and H2 Gambling Capital’s data showed that UK online gross win was approximately £3bn for 2014 and would increase to c.£3.5bn for 2015.

The GC’s data showed that remote gambling made up 29% of the sector with £3.64bn GGY. While the GC’s reporting dates are not quite in line with Barclays Research and H2 Gambling Capital’s calendar year periods, this shows that the figures are at least not far away from being right on the money. The prediction was that the online market would generate over £5bn for 2020.

For retail, the 2015 forecast was approximately £3bn, pretty much in line with the GC’s total of £3.06bn GGY.

Gambling software is the place to be

The online figure inclusion could explain a hike in gambling software revenue. The total for October 2014 to September 2015 was £282.7m, up from £165.6m for April 2014 to March 2015. That figure itself was up from £46.9m the previous year. We can now see numbers that can explain why a company like OpenBet can be bought for £270m as this sector continues to grow.