Chisholm Bookmakers have warned that the introduction of the National Living Wage may force it to lay off staff and close some of its betting shops. Directors also cited the high cost of horse racing media rights as a main cause for widening losses, and confirmed that a number of small shops closed during the year as rising costs made them unviable.
As reported in the Chronicle Live, for the second year running directors have reported “disappointing” financial results, with operating losses in the year ended April 30 2015 widening by 40% to £129,030 despite seeing a lift in turnover of 7.4% to £45.2m.
Looking ahead, the firm said it expects the introduction of the National Minimum Wage to have “a significant impact on the firm” but that it is always keen to maintain its number of shops, looking for better places to operate shops while also refurbishing existing shops.
A strategic report accompanying the accounts said:
“The high cost of horseracing media rights continues to be a significant drag on the performance of the company. Football betting continues to increase relative to the traditional betting mediums of horseracing and greyhound racing. We continue to be pleased with the performance of gaming machines.
“The company is keen to maintain the number of shops it operates and is always looking for better located premises to open new betting shops, as well as continuing with its programme of refurbishment of existing betting shops.
“Changes to legislation and regulation continues to present the highest risk to the business. The announcement by the Chancellor of a National Living Wage will have a significant impact on the business and is likely to lead to shop closures and a reduction in head count. It is anticipated that there will be similar problems for businesses throughout the North East and we expect the local economy to be particularly weak over the next few years.”
Gaming Machine (Circumstances of Use) Regulations were introduced before the end of the last financial year and had no impact on performance, the firm said. Meanwhile, the higher rate of MGD (Machine Games Duty) only impacted on one month of the year.
This year, however, the directors expect the duty increase to affect the entire year’s trading and, in turn, financial performance. Regulations came in during the period which restrict the amount anyone using fixed-odds betting terminals can stake, meaning they need to inform staff if they want to bet more than £50, or play from a registered account.
Directors at Chisholm said the reduction in the maximum “walk-up” stake has been well received:
“It is encouraging customers to play the machines for longer as the risks in doing so are now less. However, there is a significant risk that those in authority who seek to cause financial harm to the betting industry will focus on the lack of a reduction in gaming machine yield to advance their view that the measures are not reducing problem gambling.”
During the year the firm said it also made contributions of £5,000 to a national charity focused primarily on research and education programmes focused on combatting problem gambling in the UK.