Punters and bookmakers may be disappointed about the postponement of the Cheltenham Festival but t...
Punters and bookmakers may be disappointed about the postponement of the Cheltenham Festival but things could be worse. In 1830 the Prestbury Park locals were so goaded by words on the evils of betting from a local priest that they burnt down the grandstand.
Times have changed. But still a spokesperson for bookmaking and casino group Stanley Leisure said that the company was in an "invidious position" at present. He suggested that it was hard to gauge how much Stanley will be affected by the foot-and-mouth crisis.
Bookmakers are also hesitant about making too many optimistic noises about the benefits that will accrue to them once changes to betting tax are introduced at the start of next year.
Analyst forecasts of projected turnover and profit rises suggest that boom time is just around the corner for the bookmakers.
A Merrill Lynch report on e-gambling suggests that Stanley Leisure and Hilton, owner of the Ladbrokes chain, could see profits rising anywhere between 25% and 100% because of the duty changes. More conservatively, leisure analyst at ING Barings Greg Johnson says that the duty changes will add 12% to Stanley's bottom line.
Yet as Williams de Bro‘ analyst Richard Finch says, the bookmakers have been unwilling to encourage speculation while the foot-and-mouth crisis continues. The recent problems with the racing programme will certainly have hit revenues. Up to the end of last week 39 meetings had been lost to the crisis. Finch suggests that it could means profits being hit by about 4%. But this, he says, could be "a classic buying opportunity".
A bumper April?
With the Grand National meeting going ahead as scheduled and the Cheltenham Festival now rescheduled for the week of 18 April, bookmakers could in fact be in for a bumper April.
With a fill-in of South African, French and German racing replacing in the shops it is not as if punters haven't had something to bet on. As Merrill Lynch analyst Phillip Hawkins suggests, this may even have boosted bookmakers' margins. "After all," he says, "people haven't got a clue what they are betting on."
The long-term upbeat analyst assessments stem from the widespread belief that people will bet more when duty goes. Analysts cite Ireland where the bookmakers enjoyed revenues up 40% when the government halved betting duty.
There is also the pervasive feeling that betting is becoming more socially acceptable.
It has also has entered the mainstream. Betting expert Ed Nicholson, once of Ladbrokes now at City Index, cites the introduction of the National Lottery as the turning point. "It was the best thing that could have possibly happened to betting," he says. "It made betting more acceptable and pushed the message that betting can be fun. Now odds and betting are coming to the fore in everyday life."
More general sports betting and especially football betting is another prime mover and is attracting a younger audience. As Nicholson says, with the explosion of football there has been a parallel explosion in football betting. "The bookies hit the jackpot," he says.
From dingy and smoke-filled high street betting shop the bookmakers are moving onto the internet or digital TV.
A growing market
Online betting in fixed odds and spread betting in the sports and financials fields is a growing market segment. Merrill Lynch predicts global online gaming will be worth £125bn by 2015. Half will come from interactive TV.
BSkyB, having bought Surrey Racing last year, has launched an interactive betting service that has attracted 20,000 customers in the first two months. At the company's results meeting last month, chief executive Tony Hall said that he hoped the service would attract the kind of punter who bets once a year on the National.
Sportingbet.com (see box) has done a deal with Telewest to launch an interactive betting service in the summer.
The changes aren't just in the betting shops. In the summer the government's gaming review will be reporting. It is widely expected that it will recommend updating the casino regulations to bring them in line with modern public sentiment.
Analysts expects Stanley, which operates a few UK casinos, to benefit. "The gaming review will be very good news for Stanley," says Johnson at ING Barings. Ultimately, while still waiting on the results of the review, Finch at Williams de Bro‘ says he has "great confidence" in Stanley's prospects.
The bookies may not be shouting about it and panic-stricken stock markets, pyres of slaughtered livestock and cancelled racings may not be the best backdrop. But investors in Hilton and Stanley Leisure could be forgiven for saying let the good times roll.