Paddy Power Betting Shop Closures as UK Faces Major Gambling Tax Shake-Up

Paddy Power has joined Evoke (William Hill) in expressing concern regarding potential changes in UK gambling tax legislation. And for players, that means fewer retail betting kiosks. Retail betting shops are not the only branch within the UK’s gambling sector that is feeling the pinch, as the upcoming legislative decision (in the Autumn Budget) is set to affect many different departments and institutions within and affiliated to the UK’s gambling industry.

The funny thing is that Paddy Power, just a week prior to the statement regarding betting shops, announcedthe opening of a new landbased sportsbook venue in the Hippodrome Casino in London’s Leicester Square. The overall betting industry in the UK is definitely shifting more towards online betting and platforms. But with Paddy Power’s bold decision to open the UK’s first ever landbased casino sportsbook, we could be looking at a different trend altogether. The trend of shifting from one-stop betting shops to an outright US-style sportsbook experience – carousels of TV screens, lounge chairs and full on entertainment.

UK’s Changing Gambling Scene: Betting Shops at Risk

Flutter Entertainment Ltd, the parent firm that acquired Paddy Power in 2016, announced on October 15 that it would be closing 57 betting shops across the UK and Ireland, potentially putting nearly 250 staff members at risk of losing their jobs. The company stated that it would look into options to redeploy staff to soften the blow, and this may not be the end of the saga. Flutter added that the shops would close next month, but it could be just the start of broader cutbacks on high street estate, in response to the upcoming potential tax increases in the UK.

Just before that, William Hill parent firm, Evoke, said that it would be looking into closures if the taxes rise. An anonymous source to the Sunday Times report said that this could range between 120 and 200 betting shop closures. Which, in the grander picture, represents an approximate 9% – 15% hit to William Hill’s entire betting shop presence across the UK (it has a total of 1,300 shops).

Retail betting shops have been on a steady decline, and with regulatory pressures, maintenance and staff costs, and advertising clampdowns, the industry may take a few additional punches across the next few months.

Upcoming Autumn Budget and Gambling Sector

The Autumn Budget is scheduled for Wednesday, November 26, and will be presented by Chancellor Rachel Reeves. For those who don’t know, this is essentially the government’s plan for the UKGC tax structure and any additional reforms to it. The Treasury this year has reportedly looked into ways to simplify the UK’s taxation on gambling by merging the current three tax rates on operators:

• 21% on Remote Gaming Duty: Online casinos and slots operators, including UK online casinos registered abroad
• 15% on General Betting Duty: Bookmakers and betting exchanges. Anyone who offers sports, horse racing or betting on events
• 15% on Pool Betting Duty: Pool-style bets, typically used in football pools, racing pools, tote betting or other collective/shared social betting pools

The idea is to roll these into one, and create a unified rate for all remote gambling operators. Reading between the lines, it effectively means operators who are taxed at the General Betting or Pool Betting rates are looking at an effective tax hike.

Therefore, it comes as no surprise that betting firms are looking to trim their operational costs, and the first area they will look to will be betting shops. For these have many associated fees, ranging from staff costs to maintenance, rental, bills, and even compliance costs. Online sports betting platforms cost a fraction of the price to run, and the revenue data indicates that they are taking over from traditional UK betting shops.

Horse Racing and Betting Shops At Biggest Danger

Betting shops are not alone in the firing line, the entire horse racing industry is also extremely concerned with the potential tax hike. On September 10, UK horse racing went on strike for 1 day, to protest the proposed tax hikes in a united effort. The horse racecourses went quiet for a full day, costing the British Horse Racing Association around £200,000 for cancelling all events on that day. The horse racing was back on for the next day, just in time for the St Leger Festival in Doncaster. And for that event, over 26,000 tickets were sold (a 11% uplift from the year before), in what was a strong response from the UK horse racing community.

But it doesn’t take away from the fact that horse racing in the UK relies heavily on the income stream from horse race betting operators, and that a blow to these would cause tremendous damage to Britain’s horse racing industry. Industry insiders have protested to the potential hike, citing the cultural legacy and societal benefits of horse racing, and how damaging the income from betting operators would cripple what has been a struggling industry.

Reaction to Paddy Power’s First UK Landbased Sportsbook

On October 2, Paddy Power opened the UK’s first casino-sportsbook venue at the Hippodrome Casino in London. The betting firm, who are the official UK NFL betting sponsors, is known for doing things a little differently, but this is a move with grander implications. It is essentially bringing an American-style betting experience, like the ones you can get in Las Vegas Strip Casinos, to the UK public.

The bookmaker also stated it will be planning trials of other sportsbook concepts across UK landbased casinos. These will supply practically any bet, from footie to horse racing to officially partnered NFL betting (which is gaining traction in the UK).

But here is the kicker. The sportsbook will only accept bets that are made within the venue. If you make any bets at UK Paddy Power high street shops, these will not be paid out in the Hippodrome Sportsbook.

Does the UK Need to Rethink Retail Betting?

It looks as though Paddy Power may be suggesting that a complete reinvention of the retail sports betting experience is needed. A Gambling Commission figure showed a drop in Gross Gaming Yield for betting shops, signalling a slow downward trend in that particular niche of the industry.

So maybe the UK does need a fresh new take on retail betting. The idea that punters can effectively place “takeaway bets” at kiosks is something Paddy Power wants to move on from. In its place, it wants to introduce fuller betting experiences. You aren’t placing a football bets at a high street shop and then heading to the pub to watch the Super Sunday matches. Instead, Paddy Power wants you to place the bets, watch the games and even grab a bite to eat at these American style sportsbooks. And this isn’t your standard pub-style experience, but a lavish atmosphere with cinema-style seating, theatrical TV displays, smart betting kiosks, and full on casino dining experiences.

What’s Next for Retail Betting in the UK

The push into digital platforms cannot be denied, with revenue and participation figures emphasizing the growing trend among UK punters. However, we cannot overlook the cultural and societal identity attached to retail betting, something that has served UK punters historically and even has community roots in smaller towns and settlements. Rising potential tax hikes will impact these and it is up to the betting firm operators and parent companies to determine the next course of action.

A lot of this will pivot on the crucial Autumn Budget, but the good news is that any upcoming tax reforms will not completely decimate retail betting. Paddy Power, at least, seems to think a broader and more extensive betting experience is required, and we will see whether this will be a one-off experiment, or whether the UK public will latch onto these experiences and it will become the start of a new era in UK retail betting