Trading up: Could a new trade body remedy the sector's ills?

If one trend has come to characterise the gambling industry over the past five or so years it’s M&A, be it blockbuster mega-mergers or bolt-on acquisitions. Indeed, consolidation has very much been a running theme. And now it seems two of the largest trade bodies representing the industry – the Remote Gambling Association (RGA) and the Association of British Bookmakers (ABB) – are getting in on the act by combining forces to create a brand new, all-encompassing organisation.

A unified voice for online and retail in the UK would, in theory, mean the new mouthpiece is better equipped to lobby government and stand up for the industry as it comes under siege from politicians, regulators and the media. The London- and Brussels-based RGA, which can count heavyweights bet365, GVC, Paddy Power Betfair, The Stars Group and William Hill among its members, began life in 2005 as a result of a merger between the Association of Remote Gambling Operators (ARGO) and the Interactive Gaming, Gambling and Betting Association (IGGBA). The ABB, on the other hand, represents 80% of the high-street bookmaking industry in the UK.

Rumours that the RGA and ABB were planning some sort of merger first surfaced roughly six months ago, yet nothing was ever officially confirmed. It was around the same time that RGA CEO Clive Hawkswood, who had been at the helm since the organisation’s formation, announced he was quitting. In an interview with EGR Intel late last year prior to his departure he acknowledged there was “logic” to the RGA entering into a potential merger. RGA’s interim CEO, Wes Himes, declined EGR Intel’s invitation for an interview for this article, although he did make it clear that it isn’t a merger but rather the formation of a new association.

Situations vacant

One of the sector’s worst-kept secrets was all but confirmed in February when job adverts were posted on the website of London-based recruitment outfit Ellwood Atfield. It revealed a CEO and a ‘chair’ were being sought for ‘NEWCO’, the working title for a new body representing the gambling sector, supplanting the RGA and the ABB. As well as being the faces of the new organisation, the job descriptions stated candidates should have experience in the gambling space or another highly regulated industry, together with a track record of successfully influencing the political process within Westminster, Whitehall and Brussels.

However, consultant Steve Donoughue, a 25-year veteran of the industry who has advised almost all gambling’s various UK trade bodies over the years, fears the creation of NEWCO is being done, as he puts it, “on the cheap”. “Let’s get a high-paid CEO, a high-paid chairman, and that will basically be it. Because what I’m not seeing is any other resources. The problem you have if you cost-cut is things don’t work; you need resources,” he says.

“Quite frankly, we are in an industry that makes a lot of money. And one thing which is going to stop this industry from making a lot of money is increases in regulation and taxes, and it is your trade association that is going to stop that. So, it strikes me as a false economy.”

Furthermore, it wouldn’t surprise Donoughue if Ellwood Atfield hasn’t found itself snowed under by a deluge of CVs. “That job advert wants a lobbying superstar [but] if you are the biggest swinging dick in the world of political lobbying, are you going to come to this industry? It’s the same issue we have attracting decent CEOs. If you are a top-rank CEO, why are you going to come here?” He adds: “You only have to look at the mediocre level of lobbying that we have in the industry – we are not served by the brightest and the best and that’s because we don’t attract the brightest and the best, I’m afraid.”

Members only

The UK boasts a multitude of trade bodies representing various facets of gambling: the main ones include the ABB, the RGA, the National Casino Forum, Bacta (British Amusement Catering Trade Association) and the Bingo Association. There is speculation NEWCO will invite other trade bodies to subsume themselves into its organisation, while independent responsible gambling body Senet Group will provide a consistent voice on responsible gambling, in a similar fashion to how the Portman Group leads on responsible alcohol standards.

These main gambling trade bodies haven’t always seen eye to eye, however, and because they have their own voices, agendas and inconsistent messaging – such as around responsible gambling – it has raised the government’s hackles. Furthermore, the ABB didn’t exactly cover itself in glory when it came to fighting bookmakers’ corners regarding fixed-odds betting terminals (FOBTs) in shops. Following a review into the controversial machines, the government slashed stakes from £100 to £2 per spin – the worst-case scenario for high-street bookmakers. “Amateurish verging on negligent” is how Donoughue sums up the ABB’s efforts.

“The public trust issue is one that is central to the industry’s future, so we need to tackle the public perception of the sector” – Ciaran O’Brien, William Hill

Thousands of shops are expected to close as a result of the stake reductions. While the ABB has floundered, the RGA has become a far bigger and more powerful trade body alongside the rise of online and mobile gambling over the years. According to Gambling Commission data released last May, online gambling accounts for 35% of the entire UK industry and is worth some £4.9bn. Before the UK introduced the 15% PoC tax in December 2014, the Treasury didn’t collect a penny in gaming tax from UK-licensed offshore operators, so the government largely ignored the RGA. Taxation and scale have afforded the organisation greater influence.

All aboard

William Hill, a member of the RGA and the ABB, is one of those backing plans for a new trade body. “There has been some speculation about a new organisation being a ‘super lobby’ group but, frankly, that isn’t what it should be about,” says Hills communications director Ciaran O’Brien. “The issue has moved beyond anything lobbying can tackle and there is a widespread realisation among operators, large and small, that the entire sector has suffered from the battles of the past. The public trust issue is one that is central to the industry’s future, so we need to tackle the public perception of the sector.”

Likewise, Jay Dossetter, head of CSR and corporate communications for GVC, says the group is fully supportive of a new trade body to represent an industry that employs 100,000 people and contributes £14bn to the UK economy. “It is vital that the industry speaks with a shared voice to protect the interests of our customers, employees and shareholders and promote a more positive image of the sector,” Dossetter explains. “Only through more effective dialogue with government, regulators and the third estate will we be able to ensure the operation of a safe and secure environment where customers can enjoy a positive gambling experience.”

One obvious advantage of being a member of a single association, as opposed to two separate entities, is cost savings. Yet GVC and Hills wouldn’t confirm or deny whether cost-cutting was a major driver behind the push. For now, the priority for NEWCO is filling the two figurehead roles. The CEO position is sure to come with a princely six-figure salary but, as one source put it, “it’s a horrible job” due to the regulatory and political headwinds the industry faces right now – and more bad news is anticipated. In addition, improving the industry’s image, as well as gaining public trust, is no easy task.

O’Brien says the industry has taken some good first steps with the voluntary whistle-to-whistle ban on betting advertising around live sport in the UK. Nevertheless, he urges voluntary regulation not to stop there. “Self-regulation must play a bigger role in the future if the industry is to get ahead of this debate for the first time in many years.” As for Donoughue, who accuses high-street betting shop CEOs of being “myopic” over the FOBT row, the task in hand for NEWCO is straightforward and urgent: “As an industry we are getting a kicking and we need a very good trade association to try to fight back.”