The UK gambling industry is hogging the headlines this morning. The Ladbrokes Coral half-year results largely accentuates the positive. The £7.8m fine imposed on 888 by the Gambling Commission undoubtedly accentuates the negative.
The Ladbrokes Coral investor presentation overview shows
- Good financial and operational performance
- Strong progress on integration and synergies
- More efficient, competitive and sustainable business
- Company is well placed to deliver on merger opportunities
- Dividend increase reflect progress to date and confidence in future
Encouraging start says CEO
CEO Jim Mullen said the results demonstrate an encouraging start for Ladbrokes Coral. Integration targets for the combined businesses have been met. The group has identified significant further synergies. Financials are on track to meet full year expectations.
The results as presented by chief financial officer Paul Bowtell in a morning call show net revenue of £1,204.2m. This is £542.4m or 82% ahead of last year. Operating profit, after charging £106.6m relating to non-trading items, is £51.7m, £14.0m or 37% ahead of last year.
This increase reflects the inclusion of the Coral business in the current year numbers. Integration has continued at pace, with the move to a single digital platform. The company says this enables improvements in operational efficiency and the building of new products.
Back office together
The majority of back office teams are now located together in Stratford and Gibraltar, says the CEO in his formal summary.
Total amounts staked over the counter (OTC) as outlined in the UK retail profit and loss account were down 3% to £11.565bn. Gross win margin slipped by three percentage points to 17.9%. UK operating profit was down 10% at £102.7m. Cost of sales fell by 5%.
Adds Mullen: The synergies from our recent merger step up substantially in the second half to deliver a full year saving of £45m. The business is in good shape and we have come a long way in a short time.” The group's share price slipped by 1.02% to 116.40 pence.
Six of the best for 888
Elsewhere, the Gambling Commission reported this morning that 888, one of Britain’s biggest online gambling firms, is to pay a record penalty package of over £7.8million as a result of serious failings in its handling of vulnerable customers.
The Commission says its action follows the discovery of significant flaws in 888 UK Limited’s social responsibility processes, which aim to protect consumers from gambling-related harm.
The Commission’s investigation found
- Due to a technical failure in 888’s systems, over 7,000 customers who had chosen to self-exclude from their casino/poker/sport platform were still able to access their accounts on their bingo platform
- The issue went undetected for a prolonged period of time, meaning customers were able to deposit £3.5million into their accounts, and then continue to gamble, for over 13 months
- While 888 did have self-exclusion procedures in place, they were not robust enough and failed to protect potentially vulnerable customers
888 also failed
888 also failed to recognise visible signs of problem gambling behaviour displayed by an individual customer, which was so significant that it resulted in criminal activity. The customer staked over £1.3million, including £55k stolen from their employer.
During a 13-month period the customer placed a large number of bets, gambling on average three to four hours a day. The lack of interaction with the customer, given the frequency, duration and sums of money involved, raised serious concerns. about 888’s
Sarah Harrison, chief executive at the Gambling Commission said emphatically that the safeguarding consumers is not optional. This penalty package reflects the seriousness of 888’s failings to protect the vulnerable, she added.
She says the package will ensure
- That those affected don’t lose out
- That the operator pays the price for its failings via a sum that will go to tackling gambling-related harm
- That independent assurance will be given to see that lessons are learnt
The penalty package includes
The penalty package includes repayment of the £3.5million of deposits made by the self-excluded customers and compensation of £62,000 to the employer from whom money was stolen.
A further £4.25million will be paid to a socially responsible cause to invest in measures to tackle gambling-related harm. In addition, for future assurance, the Commission has ordered an independent audit of 888’s processes relating to customer protection.
888's London-listed shares dipped on the news to around 3 pence to 264.75 pence. Aviad Kobrine, the chief financial officer, said in a statement: “The company accepts the conclusion of the review and is committed to providing players with a responsible as well as enjoyable gaming experience.”
Work needs to be done to tackle problem gambling
Just a week earlier, the Gambling Commission published new research demonstrating that more work needs to be done to tackle problem gambling.
Headline findings included
- 1.4% of gamblers were classed as problem gamblers (0.8% of the population), with 6.4% at-risk (3.9% of the population; similar to the rate published in the 2012 report)
- Problem gambling was more prevalent among people who had participated in multiple gambling activities in the past year, than those just participating in one
- 63% of adults (aged 16 and over) in Great Britain had gambled in the past year
- Men (66%) are more likely to gambling than women (59%)
- Most popular gambling activities were: National Lottery draws (46%), scratchcards (23%) and other lotteries (15%)
- Overall participation was highest among the middle age groups and lowest among the youngest and oldest age groups
- Those in employment or training were more likely to gamble (69%)
- Participation by those unemployed was at 56% and 57% for those retired
But UK problems low
Ladbrokes Coral CEO Jim Mullen said in his results commentary that levels of problem gambling in the UK are low by international standards. The results of the government's triennial review into stakes and prizes will not emerge before October, he noted.