I may be guilty of stating the bleedin’ obvious but the online betting industry is fast moving to a place where small and mid-size operators who are reliant on the uk market for their revenues are likely to be about as rare as a race featuring two Rich Ricci-owned animals.
Such is the brand dominance enjoyed by a small number of household name firms – and crucially, the now eye wateringly prohibitive costs of trying to muscle in on the media channels these firms dominate – that competing, maintaining your share of market and, certainly, growth, are all becoming harder by the week.
Outside the elite firms, meaningful bottom line growth must be near impossible, particularly when you factor in the pressure on margins from trading practises that have now become standard in most places (BOG+, Acca Insurance etc) and the rising cost of product fees, levies and taxes.
Free bets now carry a POCT levy which I am sure will ultimately harm growth until the firms devise a new way to sell the same thing for free…oh and there’s no Euros or World Cup this year so the summer months look bleak. It’s not all doom and gloom though as there’s still a load of racing festivals to enjoy, but they’ll all feature a string of winning favourites that the whole planet has backed and permed in multis.
Paddy Power Betfair recently divulged to the stock market that their combined 2016 marketing budget was £300m. That will likely rise to between £350-£400m in 2017. You can take it that Bet365 will be in the same ballpark and Ladbrokes Coral are likely to be around the £200m mark. So these three companies alone are likely to fire around £1bn worth of marketing spend at customers this year. Of course, it won’t all be spent in the UK but a significant portion of it will be as Premier League football is the biggest driving force behind international growth for these firms. Add Skybet and William Hill into the mix and..well..the figures are staggering.
You simply have to wonder what room there is for any other operators, particularly smaller ones to flourish in the UK now. And yet there is seemingly no shortage of firms lining up to spin the wheel.
On one hand you have big businesses like Unibet, GVC and Bettson (none of whom have any organic footprint in the UK) all ready to start throwing it about. You also have SunBets who will undoubtedly ramp up their activity this year and newcomers like Black Type making a pitch. On the other hand you have existing tier 2 and 3 operators spending as aggressively as they can to maintain their share and try to grow.
It seems inevitable to me that 2017 must bring some more deals, with big operators swallowing up the smaller ones or with a super merger of several smaller operators across product verticals teaming up to rival these big guns. There are too many players on the pitch and not enough bibs.
I’ve said it privately and been shot down and laughed at, so I’ll say it again here and you can all have a go.
Media assets are fast becoming so scarce in betting don’t be surprised to see a Premier League club or a big name foreign club gobbled up by a betting company soon.
“Bet365City” is only a few short hops away from where Stoke City is now (they are both owned by the same family) and with the money being spent on shirt deals, stadium rights and betting partnerships already, I think it’s only a matter of time before these types of corporate deals are getting done, if allowed.
Happy New Year all!