| KN92004 |
| KEY NOTE BETTING AND GAMING : October 2004 |
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This report covers: betting,and,gaming,gaming machines,lotteries,casinos, licensed bingo, multiple bingo, linked bingo, football pools, interne betting,The National Lottery, betting duty, pool betting duty,Second European Directive on, Money Laundering, Criminal Records Bureau
Companies covered include: The Tote, William Hill, Camelot Group, GamCare, Harrah's Entertainment, HPS Group, The National Bingo Game Association, PartyPoker.com, The Rank Group, SkyBet, Totesport, Amuse UK, Autralasian Gaming Expo, The Betting Show, International Casino Exhibition and the Amusement Trade International, Victor Chandler, Coral Eurobet,Blue Square, Camelaot Group, Gala Group, Hilton Group, Virgin Games,Littlewoods, Novamedia, Las Vagas Sands, Isle of Capri, Sun International, Aspinalls, Paris Casino. Luminar Leisure, Australian, market, Asian, European, Italy, Denmark, and, Sweden, France, Germany, Greece, Spain, Accor Casinos, Boyd Gaming Corporation, Casinos Austria Group, Caesars Entertainment Inc, Harrah's Entertainment,SportOdds, Station Casinos, Tabcorp Holdings,
EXECUTIVE SUMMARY
| The UK betting and gaming industry, revered for its integrity and expertise, is currently regulated by some of the strictest gambling legislation in the world. Deregulatory measures were first drafted in 2001, but their implementation has been plagued by delays. The UK Government published the first draft of a Gambling Bill in November 2003, since when further clauses have been added — so that even the incomplete draft runs to more than 250 clauses. It is now widely expected that the long-awaited deregulation of the UK's betting and gaming market will come about in 2006. The Gambling Commission will be launched in 2005 and become operational early in 2006. |
| The fact that motivation for a change in the law has come from a combination of developments in technology and defects in existing legislation, rather than from consumer demand, has led some to question whether the UK public needs, or even wants, more opportunities to gamble. The Joint Committee on the Draft Bill recognises that almost all of the evidence it received points to the fact that the proposed legislation will increase the number of people in the UK with a gambling problem. Indeed, it is the casino sector, perceived as hard gambling, which is likely to benefit most from the changes, as restrictions on membership rules, situation, size, entertainment and alcohol are lifted. The sector will also be able to advertise casinos, rather than be restricted to a listing in newspapers, as is the case currently. There is also likely to be a flurry of investment in projects — by domestic and overseas operators — creating thousands of jobs. Deregulation will also swell the Exchequer's coffers, a reality that has not gone unnoticed by cynics. |
| It is the bookmaking sector that has been making record profits since the introduction of the controversial Fixed Odds Betting Terminals (FOBTs) in 2001, and latest figures from HM Customs and Excise show total betting stakes — excluding the billions of pounds spent on bingo, lotteries, traditional gaming machines and casinos — to have reached £29.1bn in 2003, compared with £7.5bn in 1999. However, the rate of growth will slow as the frantic, and exceedingly lucrative, rollout of FOBTs is completed. Meanwhile, the pools sector continues to decline, while there are plans to convert some bingo halls to casinos. Understandably, companies that operate exclusively in the bingo sector are none too happy about the fact that casinos, on the whole, will be able to offer bingo but bingo halls will not be permitted to offer casino games. It seems inevitable that they will become casualties of deregulation, as consumer spending is diverted to resort casinos. |
| The advent and popularity of online gambling has made betting and gaming a truly global pursuit, albeit an illegal one in some jurisdictions. Following the Gambelli case (see Chapter 8 — The Global Market), it seems likely that Europe's state-run gambling monopolies will be outlawed in years to come. The future looks decidedly rosy for the already successful companies involved in the UK's betting and gaming industry with, it seems, their biggest threat being the entry of the giant US chains, which are already greedily eyeing up the market. |
TABLE OF CONTENTS
| Executive Summary 1 |
| 1. Market Definition 11 |
| report coverage 11 |
| MARKET SECTORS 11 |
| MARKET TRENDS 11 |
| General 11 |
| Lotteries 12 |
| Casinos 12 |
| Licensed Bingo 12 |
| Gaming Machines 12 |
| Pools 12 |
| Bookmaking 13 |
| Economic Trends 13 |
| Gross Domestic Product 13 |
| Table 1: UK Gross Domestic Product at Current |
| and Annual Prices (£m), 1999-2003 13 |
| Inflation 14 |
| Table 2: UK Rate of Inflation (%), 1999-2003 14 |
| Household Disposable Income 14 |
| Table 3: Average Annual UK Household Disposable Income |
| (£), 1998-2002 15 |
| Unemployment 15 |
| Table 4: Actual Number of Unemployed |
| Persons in the UK (million), 1999-2003 15 |
| Population 15 |
| Table 5: UK Resident Population Estimates by Sex |
| (000), Mid-Years 1999-2003 16 |
| MARKET POSITION 16 |
| The UK 16 |
| Table 6: Total UK Spending on Games of Chance as a Part of Total Consumer Expenditure on Recreational and Cultural Services (£m and %), 1999-2003 17 |
| Overseas 17 |
| 2. Market Size 18 |
| THE TOTAL MARKET 18 |
| Table 7: Total UK Net Expenditure on Games of Chance by Value at Current Prices (£m), 1999-2003 18 |
| by MARKET SECTOR 18 |
| Lotteries 18 |
| Table 8: The Number of Lotteries and Amount Staked |
| in Great Britain (number and £m), |
| Years Ending 31st March 2000-2004 19 |
| Casinos 19 |
| Table 9: Great Britain Casino Drop and House Win (£m and %), |
| Years Ending 31st March 2000-2004 20 |
| Regional Differences in Drop 20 |
| Table 10: London and Provincial Casino Drop (£m), |
| Years Ending 31st March 2000-2004 20 |
| Number of Visits to Casinos by Region 20 |
| Table 11: Number of Casino Visits in Great Britain by Region (000), Years Ending 31st March 2000-2004 21 |
| Distribution of Drop by Game 21 |
| Table 12: Distribution of Drop by Game in Great Britain (%), |
| Years Ending 31st March 2000-2004 22 |
| Licensed Bingo 22 |
| Table 13: Number of Bingo Clubs and Amounts Staked in |
| Great Britain (number and £m), Years Ending |
| 31st March 2000-2004 23 |
| Multiple Bingo 23 |
| Linked Bingo 23 |
| Gaming Machines 24 |
| Pools 24 |
| Table 14: Total Stakes on Football Pools (£m), |
| Years Ending 31st July 1999 to 2003 24 |
| Bookmaking 24 |
| Table 15: Total Betting Stakes (£000), 1999-2003 25 |
| 3. Industry Background 26 |
| RECENT HISTORY 26 |
| Control of the Industry 26 |
| Lotteries 26 |
| Casinos 27 |
| Licensed Bingo 27 |
| Gaming Machines 27 |
| Pools 27 |
| Bookmaking 27 |
| Industry Synopsis 28 |
| Table 16: Average Financial Results for UK Companies Involved in Betting and Gaming Activities (£000, % and £), 2003 28 |
| number of companies 28 |
| Table 17: Number of UK VAT-Based Enterprises |
| Engaged in Gambling and Betting Activities |
| by Turnover Sizeband (£000 and %), 2003 29 |
| Employment 29 |
| Table 18: Number of UK VAT-Based Local Units Engaged |
| in Gambling and Betting by Employment Sizeband |
| (number of employees and %), 2003 30 |
| Regional Variations in the Marketplace 30 |
| DISTRIBUTION 31 |
| Lotteries 31 |
| Casinos 31 |
| Licensed Bingo 31 |
| Gaming Machines 31 |
| Bookmaking 31 |
| HOW ROBUST IS THE MARKET? 32 |
| LEGISLATION 32 |
| In General 32 |
| Lotteries 33 |
| Casinos 33 |
| Licensed Bingo 33 |
| Gaming Machines 33 |
| Pools 33 |
| Bookmaking 33 |
| TRADE ASSOCIATIONS 34 |
| Association of British Bookmakers 34 |
| The Bingo Association 34 |
| British Amusement and Catering Trades Association 34 |
| British Casino Association 34 |
| National Association of Bookmakers 34 |
| National Bingo Game Association 34 |
| Pools Promoters Association 34 |
| Betting Trade Associations for the Interactive Gaming Industry 35 |
| European Associations 35 |
| European Gaming Organisation 35 |
| Gaming Regulators European Forum 35 |
| 4. Competitor Analysis 36 |
| THE MARKETPLACE 36 |
| Lottery Operators 36 |
| Casino Operators 36 |
| Licensed Bingo 36 |
| Gaming Machines 36 |
| Pools 37 |
| Table 19: Total Stakes Received by Littlewoods, |
| Vernons and Zetters Football Pools (£m), |
| Year Ending 31st July 1999-2003 37 |
| Bookmaking 37 |
| Online Bookmaking 37 |
| MARKET LEADERS 38 |
| Table 20: Leading Competitors Involved in Betting and Gaming by Turnover (£m) 38 |
| Camelot Group PLC 38 |
| Company Structure 38 |
| Current and Future Developments 39 |
| Financial Results 39 |
| Coral Eurobet Ltd 39 |
| Company Structure 39 |
| Current and Future Developments 40 |
| Financial Results 40 |
| Gala Group Ltd 40 |
| Company Structure 40 |
| Current and Future Developments 40 |
| Financial Results 40 |
| Table 21: Gala Group Ltd Financial Results (£000), |
| Years to 28th September 2002 and 27th September 2003 41 |
| Hilton Group PLC 41 |
| Company Structure 41 |
| Current and Future Developments 41 |
| Financial Results 41 |
| Table 22: Ladbroke Betting and Gaming Turnover and Operating Profit by Business (£m), |
| Years to 31st December 2002 and 2003 42 |
| London Clubs International PLC 42 |
| Company Structure 42 |
| Current and Future Developments 42 |
| Financial Results 43 |
| The Rank Group PLC 43 |
| Company Structure 43 |
| Current and Future Developments 43 |
| Mecca Bingo 43 |
| Table 23: Mecca Bingo — UK Admissions |
| and Spend per Head (000 and £), 2002 and 2003 44 |
| Grosvenor and Hard Rock Casinos 44 |
| Blue Square 44 |
| Financial Results 45 |
| Table 24: Financial Results for the Gaming Division of |
| Rank Group PLC by Turnover and Operating Profit (£m), |
| Years ending 31st December 2002 and 2003 45 |
| Stanley Leisure Group PLC 46 |
| Company Structure 46 |
| Current and Future Developments 46 |
| Financial Results 47 |
| The Tote 47 |
| Company Structure 47 |
| Current and Future Developments 47 |
| Financial Results 48 |
| Table 25: Turnover of the Tote (£000), |
| Years Ending 31st March 2003 and 2004 48 |
| William Hill PLC 49 |
| Company Structure 49 |
| Current and Future Developments 49 |
| Financial Results 49 |
| OUTSIDE SUPPLIERS 49 |
| Betting Systems 49 |
| Equipment 50 |
| Security 50 |
| Recruitment and Consultancy Services 50 |
| MARKETING ACTIVITY 51 |
| Main Media Advertising Expenditure 51 |
| Table 26: Main Media Advertising Expenditure on Betting |
| and Gaming† (£000), |
| Years Ending June 2003 and 2004 51 |
| Clubs and Associations 51 |
| Table 27: Main Media Advertising Expenditure on Clubs |
| and Associations (£000), Year Ending June 2004 52 |
| Lotteries and Telephone Lines 52 |
| Table 28: Main Media Advertising Expenditure on Lotteries |
| and Telephone Lines (£000), Year Ending June 2004 52 |
| Bookmakers 53 |
| Table 29: Main Media Advertising Expenditure by Bookmakers |
| (£000), Year Ending June 2004 53 |
| Football Pools 53 |
| Sports 53 |
| Table 30: Main Media Advertising Expenditure on Sports (£000), Year Ending June 2004 54 |
| Recent Promotions 54 |
| Camelot Group PLC 54 |
| GamCare 54 |
| Harrah's Entertainment 54 |
| HPS Group 54 |
| The National Bingo Game Association 55 |
| PartyPoker.com 55 |
| The Rank Group 55 |
| SkyBet 55 |
| Sponsorship 55 |
| Totesport 55 |
| Exhibitions 55 |
| Amuse UK 55 |
| Australasian Gaming Expo 55 |
| The Betting Show 56 |
| European I-Gaming Congress and Expo 56 |
| G2E 56 |
| International Casino Exhibition and the Amusement Trade Exhibition International 56 |
| Racino, Canada 56 |
| 5. Strengths, Weaknesses, Opportunities and Threats 57 |
| THE total market 57 |
| Strengths 57 |
| Weaknesses 57 |
| Opportunities 58 |
| Threats 58 |
| by market SECTOR 59 |
| The Lottery 59 |
| Strengths 59 |
| Weaknesses 59 |
| Opportunities 59 |
| Threats 59 |
| Casinos 60 |
| Strengths 60 |
| Weaknesses 60 |
| Opportunities 60 |
| Threats 61 |
| Licensed Bingo 61 |
| Strengths 61 |
| Weaknesses 61 |
| Opportunities 61 |
| Threats 62 |
| Gaming Machines 62 |
| Strengths 62 |
| Weaknesses 62 |
| Opportunities 62 |
| Threats 62 |
| Football Pools 63 |
| Strengths 63 |
| Weaknesses 63 |
| Opportunities 63 |
| Threats 63 |
| Bookmaking 63 |
| Strengths 63 |
| Weaknesses 64 |
| Opportunities 64 |
| Threats 64 |
| 6. Buying Behaviour 65 |
| HOUSEHOLD EXPENDITURE 65 |
| Table 31: Average Weekly Household Expenditure |
| on Gambling Payments as Part of Expenditure on |
| Recreational and Cultural Services by Gross Income |
| Decile Group (£), 2002/2003 65 |
| Expenditure by Age 66 |
| Table 32: Average Weekly Household Expenditure |
| on Gambling Payments by Age of Household Head (£), |
| 2001/2002 and 2002/2003 66 |
| Expenditure on Lotto 67 |
| Table 33: Weekly Expenditure on the Lotto |
| (% of respondents), 2004 67 |
| FREQUENCY OF PARTICIPATION IN BETTING AND GAMING 67 |
| The National Lottery 67 |
| Table 34: Frequency of Participation in Lotto |
| (% of respondents), 2004 68 |
| Participants of the Weekly Saturday Draw by Sex and Age 68 |
| Table 35: Participants of the Weekly Saturday Draw |
| by Sex and Age (% of respondents), 2004 69 |
| Other Leisure Activities 69 |
| Table 36: Participation in Leisure Activities |
| (% of respondents), 2004 70 |
| Government Gambling Survey 70 |
| 7. Current Issues 72 |
| CLOSURES, MERGERS AND ACQUISITIONS 72 |
| Attheraces 72 |
| Victor Chandler 72 |
| Top Ten Bingo Ltd 72 |
| Coral Eurobet Ltd 72 |
| BOARD AND SENIOR MANAGEMENT CHANGES 73 |
| Association of Remote Gambling Operators 73 |
| Blue Square 73 |
| Camelot Group PLC 73 |
| Gala Group Ltd 73 |
| The Gaming Board for Great Britain 73 |
| The Hilton Group 73 |
| Rank Group PLC 74 |
| The Tote 74 |
| Virgin Games 74 |
| NEW PRODUCTS 74 |
| Camelot 74 |
| Littlewoods 74 |
| Novamedia 74 |
| Sporting Index 74 |
| Virgin Games 75 |
| MATTERS AFFECTING THE INDUSTRY 75 |
| Deregulation 75 |
| CHANGES IN TAX AND DUTY 76 |
| Casinos' Gaming Duty 76 |
| Table 37: Rates of Gaming Duties Payable by Casino Operators |
| (% of gross gaming yield) Pre- and Post-Budget 2004 76 |
| Bingo Duty 76 |
| Gaming Machines 77 |
| Gross Profits Tax on Betting 77 |
| The Horserace Betting Levy Board 78 |
| Fixed Odds Betting Terminals 78 |
| Investment Projects 78 |
| Las Vegas Sands 78 |
| Isle of Capri 78 |
| Sun International 79 |
| New Development for Manchester 79 |
| Aspinalls 79 |
| Paris Casino 79 |
| Luminar Leisure 79 |
| Accusations of Unfair Competition 79 |
| Fraud 80 |
| Under-Age Gambling 80 |
| Health Hazards 81 |
| 8. The Global Market 82 |
| THE US MARKET 82 |
| THE AUSTRALIAN MARKET 82 |
| THE ASIAN MARKET 83 |
| THE EUROPEAN MARKET 83 |
| Italy 83 |
| Denmark and Sweden 84 |
| France 84 |
| Germany 84 |
| Greece 85 |
| Spain 85 |
| PRINCIPAL GLOBAL COMPETITORS 85 |
| Accor Casinos SA 85 |
| Boyd Gaming Corporation 86 |
| Casinos Austria Group 86 |
| Caesars Entertainment Inc 86 |
| Harrah's Entertainment Inc 87 |
| Las Vegas Sands Inc 87 |
| MGM Mirage 87 |
| The Mandalay Resort Group 88 |
| SportOdds 88 |
| Station Casinos Inc 88 |
| Tabcorp Holdings Ltd 88 |
| 9. Forecasts 89 |
| introduction 89 |
| Gross Domestic Product 89 |
| Table 38: Forecast UK Growth in Gross Domestic Product |
| in Real Terms (%), 2004-2008 89 |
| Inflation 89 |
| Table 39: Forecast UK Rate of Inflation (%), 2004-2008 89 |
| Population 90 |
| Table 40: Forecast UK Resident Population by Sex |
| (000), 2004-2008 90 |
| Unemployment 90 |
| Table 41: Forecast Actual Number of Unemployed |
| Persons in the UK (million), 2004-2008 90 |
| Forecasts 2004 to 2008 91 |
| Table 42: The Forecast UK Betting and Gaming Market by Value at Current Prices (£m), 2004-2008 91 |
| FUTURE TRENDS 91 |
| 10. Company Profiles 93 |
| Camelot Group Plc 94 |
| Coral Eurobet Ltd 96 |
| Hilton Group Plc 98 |
| London Clubs International Plc 100 |
| The Rank Group Plc 102 |
| Stanley Leisure Plc 104 |
| William Hill Plc 106 |
| Further Sources 108 |
| Associations 108 |
| Publications 109 |
| General Sources 109 |
| Government Publications 109 |
| Other Sources 110 |
| Bonnier Information Sources 111 |
Text © 2002 Key Note
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Last updated by Amanda Porteous November 2004
