One of the top two UK betting operators on Monday offered evidence that the economic downturn is for the moment leaving some parts of the gambling industry relatively unscathed.
William Hill, one of the more familiar names of British high streets, with more than 2,250 betting shops, said its total gross win - the amount it retains after bets are paid out - rose by 9 per cent in the past few months, against the prior year.
Gross win from its shops was up 10 per cent in the 15 weeks ending October 14. While gross win from high rollers fell 30 per cent, the interactive business was up 21 per cent.
“We are not seeing a slowdown,” said Ralph Topping, chief executive. “The business is doing well, but we would never say we are recession-proof.”
William Hill admitted the comparable period last year was weak, and the boost to its share price on Monday - rising nearly 15 per cent - owed perhaps more to the deal it announced on Monday with software provider Playtech, which promises to transform the company into the Europe's leading online gambling business.
The deal marries William Hill's prowess in sportsbook betting with Playtech's wizardry in casino and poker software.
Playtech has bought up a number of marketing operations, gaming brands and websites for $250m, placed them with William Hill's online business and is getting in return a 29 per cent share of the online division.
William Hill said with the Orbis technology platform for its online sports betting business on track for launch next month, the online division's pro forma 2008 net revenues were £190m ($325m) and earnings before interest, tax and amortisation were £75m.
Still, its trading raises the question of whether gambling is a defensive stock more capable than others of withstanding the worst excesses of recessions.
Sportingbet, the UK-based online gambling company, last week also came out with good numbers, its net gaming revenues up 23 per cent.
Both argue that gambling was for many people a “low-ticket item”, not so vulnerable in an economic downturn than more difficult spending decisions, such as buying a car.
"Our average bet is £8.50," said Mr Topping.
Bookmakers are a resilient bunch, says Warwick Bartlett of Global Betting & Gaming consultants.
In the 1992 recession, betting shop turnover dropped by 2 per cent against an inflation rate of 9 per cent, and within two years the UK National Lottery was launched as a fierce competitor in attracting punters' money.
“The industry becomes more creative when needs must,” says Mr Bartlett. “From the last recession, numbers betting, fixed odds betting terminals and virtual racing emerged.”
This time around, the online gambling industry is entering into a downturn having begun to emerge from one confined to itself.
That downturn was brought about two years ago when European-based companies were brought low by the combined weight of US prosecutors and legislators, forcing their exodus from the lucrative US market.
It regrouped around Europe, enabling them to diversify businesses across a wider spread of markets, and offering greater protection from the vagaries of regulation.
William Hill was on Monday trumpeting the benefits of the Playtech deal providing a better balance of revenues from the UK and continental Europe.
That experience has helped the industry to appreciate that online gambling is not so much a competitor for land-based businesses such as bookmakers, more a partner.
William Hill's big push into online gambling is a reflection both of its chronic failure in the past to develop an interactive business and of a wider belief in the industry that the internet is in the longer term a better bet than land-based businesses.
In the short-term, it and other British bookmakers can still expect to suffer from recessionary consequences.
“Although inflation today is much lower than 1992 we still expect to see a drop in revenue, from 3 per cent to to 5 per cent in retail betting over the counter as the credit crunch unfolds and starts to hit consumer spending,” Mr Bartlett says.
