UK Gambling Industry Veers Towards M&As

peel-huntThe British gambling industry is putting its bets on the mergers and acquisitions table to wrench better profits in the future. A slew of large deals in 2015 include the Gala Coral and Ladbrokes tie up amounting to £2.3 billion, the merger of Paddy Power and Betfair amounting to £6 billion and the event of Bwin acquisition by GVC for about £1.1 billion. Nick Batram of Peel Hunt has opined that operators are searching ways to scale up for two principal reasons: to offset costs of technology, compliance and tax and also to find new avenues for growth in an increasingly competitive market.

Online growth

paddy powerThe majority of growth, which happened in the industry actually took place online. Consumers now prefer their smartphones as their medium to gamble, thereby hitting high street operators hard. The pain of latter is further compounded in the presence of a challenging regulatory environment. It is inclusive of the £50 maximum betting tariff every time on the gaming machines. People who wish to place more than £50 amount has had new restrictions to navigate.

Duties imposed on machine gaming are a high of 25 percent. Purchasing land centric assets were- and are- always expensive. These factors compelled Gala Coral to merge with Ladbrokes, creating the biggest bookmaker in the United Kingdom. The combined entity has approximately 4,000 betting shops scattered over British high streets. Predicted cost efficiency due to this deal is calculated to be £65 million.

Future is mobile

Paddy Power, the online betting shop, and a known high street gambling entity, published in its 2014 annual report the claim that about 90 percent of growth in the future will be in mobile space. The logic made it combine with Betfair, the website betting exchange, thereby making the new entity of the biggest in the world.