If there is a song which occasionally typifies the relationship betting and gambling companies have with regulators and governments when they end up pushing the boundaries of what is acceptable according to the limits of their licenses than it is perhaps the old standard ‘I fought the law’.
Lest we forget, the lyrics of the song go on to add ‘… and the law won’. Such would certainly seem to be the case in Australia where the leading corporate bookmakers – William Hill, Ladbrokes and the Paddy Power Betfair-owned Sportsbet among them – have for the past year or more been pushing the outer edges of the regulatory envelope with their so-called click-to-call in-play betting efforts.
Much as the companies involved have consistently claimed they are acting within the letter of the law, the authorities have taken the opposite line and suggested that at the very least these operators are guilty of going against the spirit of the online in-play ban if not the actual letter of the law.
The stand-off continues – at least for another two or three months until the next general election in Australia at the start of July after which the current Turnbull government said it will move to complete its crackdown on online in-play and credit betting. That crackdown – particularly with regard to the click-to-call loophole – was called for in the government’s response to the Barry O’Farrell Review of the Impact of Illegal Offshore Wagering which was published in late April.
The government response from the minster of human services Alan Tudge was clear. “The government does not intend to further expand the online betting market by legalising online in-play betting,” he said.
“We think that there are enough problems in gambling already without creating the ability for someone to bet on every moment of every game in every sport across Australia, all from your living room.”
The corporate bookmakers are understandably incredulous about why the Australian government has taken what they view as a draconian measure that will only drive in-play business offshore and do nothing for sports integrity in Australia.
Responding to the news, Ian Fletcher, chief executive of the Australian Wagering Council, which represents nearly all of the corporate bookmakers with Ladbrokes the notable exception, said the O’Farrell review had missed a historic opportunity.
“Sports themselves made clear that they needed in-play wagering to be integrated into the onshore, regulated world; failure to do so means the integrity and enforcement gap they identified gapes wider with each passing day,” he said.
Referring to what he called the “archaic” laws relating to in-play, Fletcher pointed out that click-to-call services were merely responding to demand. “These products have been available in the Australian marketplace for over 12 months, with significant uptake and use by customers who now view the innovative technology as an accepted and expected way, in today’s modern digital age, of placing their bets.”
It is clear how valuable click-to-call is to the corporate bookmakers. Though online market leader Paddy Power Betfair doesn’t give a direct figure for what the telephone business is worth in terms of revenues, it does say that telephone revenues – “predominantly in-running” – rose 49% compared to 2014. The company doesn’t break out what percentage of total revenues were due to the telephone business but we do know it outpaced total revenues which grew 43% year-on-year to €320.8m.
Similarly, while William Hill hasn’t broken out its in-play revenues in Australia, it did talk in its annual results statement in February about its performance during the recent Australian Open tennis where in-play turnover rose 680%. It has clearly had an impact in the first half, with the early May trading statement saying that amounts wagered rose 8% (although net revenues were down 22% continuing the recent downward trend).
More clearly in positive territory so far this year is Ladbrokes Australia where staking rose 51.5% in local currency terms while net revenue rose 38.4% in the three months to March. This follows on from a decent 2015 performance during which net revenues for the Australian division rose 70% to £53.2m with operating profit stable at £2.5m. The company said it had achieved its outperformance due in part to its in-play innovations and that 10% of stakes was generated by its in-play operations.
Despite the importance of Australian revenues to all these businesses, there is little by way of analyst comment about what the proposed clampdowns will mean for the business. All we have seen publicly is a leaked letter from the investor relations team at William Hill to analysts suggesting the timing of the election means the changes are “unlikely to impact 2016 significantly”.
Against the apparent implacability of the Liberal government’s positon, the bookies will likely have no choice other than to close down their click-to-call operations and pack away any further ambitions to expand in-play operations in Australia. Their only solace is that the prohibitionist mood music regarding in-play is yet to spread to other jurisdictions.