ICE 2023 London: Area

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City Bet Club is a leading tipster service that predicts that UK operator Q4 2022 earnings report will be disappointing.

Operator brands will be hit with a triple punch. The issues of declining World Cup revenue compared to Russia 2018, a revamp of the winter sporting calendar in Qatar, and “intrusive affordability checks” are all expected to have an impact on both turnover and reported earnings.

Analyzing financial performance, it is likely that the World Cup has generated a strong margin-win by operators, despite the shock results. This makes it one of the “bookie-friendly” tournaments in history.

However, overall turnover will be affected by early-stage losses of punters in the Group Stage that continued throughout the tournament.

City Bet Club’s January 2023 trading analysis and financial updates by major UK brands shows this. Bet365’s announcement in this month is an important indicator of market health.

Bet365’s operating profits fell by 88% due to substantial investment in foreign jurisdictions. This is a clear indication that major operators don’t see the UK as a potential growth market.

Kindred, the owner of Unibet UK’s flagship brand, supports this view further. It reveals a surprisingly low sports margin in quarter three – despite “bookie-friendly” World Cup results. This could be due to excessive marketing and promotional spending, which can lead to a decline in gross win and margin.

The third indicator that World Cup turnover is below expectations is 888/William Hill’s trading update. This includes like-for-like gross wins performance in comparison to Russia 2018.

City Bet Club chose to highlight the metric “Player User Days” by comparing customer engagement performance for the delayed Euro 2020 and Qatar 2022. This data doesn’t bode well.

This is mainly due to the World Cup featuring 25% more matches and the absence of a heavy summer horse-racing program to compete with. The like-for-like comparison suggests a disappointing 22% increase.

The third punch, affordability checks, adds to the problem for UK-facing bookmakers. This points to a wider structural issue in this industry.

Leading commentators from the Racing Post and major betting exchanges highlighted the fact that “intrusive affordability checks” are a significant factor in reducing betting activity for UK operators.

Bookmaker profits directly affect horse racing’s income due to the levy. This is not only a problem for UK racing, but City Bet Club also sees it.

Arena Racing Company further confirms this view by estimating that the digital betting turnover in UK racing has fallen by PS800m between 2022 and 2022 with an estimated loss of income from bookmakers of PS40m.

David Brown, co-founder of City Bet Club and one of the UK’s most experienced trading directors, commented on the situation. He said:

I have been in the betting industry since 1976. With 47 years of experience, this is the most pessimistic outlook I have seen for the UK market’s health.

The World Cup saw record margins but word is spreading that the turnover is much lower than in Russia 2018. The industry saw a decrease in recycling of customer money after punters experienced many setbacks during the Group Stage. This was despite the bookies’ friendly results throughout the tournament.

“Traditionally, a major football tournament, a strong Christmas period, and a full-fledged racing program would put big brands in very good territory. The silence is telling the truth. We have yet to compare like-for-like turnover with the 2018 World Cup. This may indicate that all is not well.

“Last, but not least, is the uncertainty surrounding the government’s white paper on gambling. This is still to be made public. This could pose additional challenges for the UK gambling market. It will be a major determinant of how the industry progresses .”

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