The gambling industry in the UK has grown steadily over the past decade. Between 2011 and the end of 2019, the gross gambling yield (GGY) for Great Britain rose by approximately £6 billion to £14.3 billion. During this same period, the industry has seen a concurrent fall in employment levels, with a reduction in the overall workforce of 14.7% since 2011.
The year to the end of 2019 saw the sharpest drop, down 12.6% over a twelve-month period. During this time, there was also a smaller drop in GGY, the first-ever annual fall in profits. Gambling comes under the remit of the Department for Digital, Culture, Media & Sport (DCMS), and was the only sector in the brief to see employment shrink over the period. These trends have been driven by a number of factors, many of which may have critical consequences in the years to come.
Remote Workers for New Casinos
One major reason for the drop in employment is the increased market share for online operators. During 2019, the remote betting, bingo, and casino sectors all saw a rise in profits, while others fell. Online gambling continues to be profitable, but as more and more of the overall activity takes place online, the workforce can be expected to shrink further. Online operators need fewer employees; in 2019, well over half of all UK gambling enterprises had a total staff of fewer than ten people. More than 40% employed just four or fewer.
Online casinos and betting sites not only benefit from requiring fewer employees, but they can also operate with minimal premises. So far during 2020, many companies have learned that remote working is entirely possible. As new casino operators enter the market, it seems likely that many of them will employ the majority of their staff to work from home. All that is needed is minimal technical setup and an internet connection, so the starting costs for new online casinos are minimized. Remote work opens up other possibilities for both employer and employee. The owners of new casino sites are free to employ the best workers, no matter where in the country they live. Employees also have more options, without the need to relocate or commute.
High Street Bookies Take a Blow
Another major contributor to the drop in UK gambling employment was the decline of the high street bookmakers. Betting has always had the largest share of the UK gambling market, but in 2019, there was a sharp decline in the number of betting shops in operation. It is estimated that they were closing down at a rate of four per day, and projections suggest that the overall number of establishments will be reduced by around a quarter by next year. William Hill, a company in operation since 1934, was forced to close 700 shops with a loss of several thousand jobs.
The cause of the closures is no secret. In April 2020, the government undertook a major crackdown on fixed-odds betting terminals (FOBTs), slashing the maximum bet from £100 to just £2 per stake. While this move has been hailed by many as a much-needed measure to curtail problem gambling, it spelled disaster for employment in the betting sector. As shops saw up to a 60 percent drop in profits, the closures were inevitable.
Government Crackdown Continues
It seems that the government have not yet finished making widespread reforms to the gambling industry, which is bound to have further consequences for employment going forward. Scrutiny continues, with criticisms of the effectiveness of the UK Gambling Commission from parliamentary groups and the National Audit Office. It seems that the recent reforms – which include the action on FOBTs, and the banning of credit cards at online casinos – do not go far enough for many MPs.
The increased taxation, tightening of regulations and negative media coverage all contributed to the shrinkage of the market last year by about £300 million. A small reduction proportionally, but the first-ever since the regulated market was set up. Already in 2020, some online operators have pulled out of the UK market, finding the costs of compliance unsustainable. Further actions, including a proposed total ban on gambling advertising and a £2 cap on online casino game stakes, could have grave consequences for the industry.
Impact of COVID-19
With employment in the sector already lagging, the COVID-19 outbreak dealt a further blow to the brick and mortar establishments. A recent DCMS survey revealed that around half of the gambling operators who responded had doubts about their ability to recover from the closure period. Although bookies reopened in June, with casinos to follow in early July, it may be too late for some.
At least it is not all bad news for the beleaguered online sector. With no premises to shut down, and able to continue operating using a remote workforce, online casinos have been in a better position to weather the storm.
The next twelve months will be crucial for the UK gambling industry. As the dust of the pandemic settles and new reforms come into place, we can expect more disruption in the sector. Watch this space.