We’ve all heard about the imminent cuts being made on the maximum stake on the infamous FOBT’s. Once at £100, the maximum bets on such machines will be reduced dramatically to just £2 with the government finally giving in to constant pressure from many protestors. Many argued that the maximum bet was far too high and you could gamble away all your savings in mere minutes, creating a significant gambling problem.
While many will see the cut as a big success, the bookmakers certainly won’t. It’s estimated that FOBT’s provide about 50% of the high streets revenue. In order to continue being profitable, either additional revenue needs to come in or costs must be cut, and that’s exactly what William Hill plan to do. In an open letter to roughly 2,000 landlords, William Hill have asked landlords to slash rents for their stores. With 2,300 shops on the streets, they argue that up to 900 of these may have to be shut down due to the lack of income.
“The change in regulations will mean that many shops will see costs rise significantly at a time when revenues will decline by in excess of 50% in many cases. We are therefore asking all our landlords to help us maintain our position at William Hill as the leading gambling operator on the high street so that our shops can continue to offer a great service to our customers and help maintain the viability of our high streets. We can’t afford to wait for things to happen as this will simply result in the creeping closure of more and more shops,” the company wrote.
At this point you’re probably thinking that there’s no way they’d agree to help, after all, if you asked your landlord to cut rent they’d likely say no. However, these are high street shops and these days it’s becoming increasingly difficult to keep such shops open and find new tenants. After all, a shop with reduced rent is better than an empty shop. Because of this, William Hill may actually find themselves in quite a strong position to negotiate better prices for rent. It’s also likely that other bookmakers will be looking to make additional savings as all of them will be affected significantly from the new changes. And while you might not care for the companies which make a living out of other peoples losses, don’t forget that a lot of jobs will be lost in the process. If William Hill close 900 shops, and other bookmakers also, we’re talking thousands of jobs on the line here. With the changes taking place very shortly I guess we’ll soon find out how these companies cope and what measures they’ll take to ensure profitability. Is this the beginning of the end for high street bookmakers? Is this another sector that’s destined to move solely to the online world? Be sure to stay tuned for more updates.