Saturday saw a small group of people protest against the proposed opening of Manchester’s 26th betting shop in the city centre.
I was asked to comment this morning for BBC Radio Manchester on whether betting shops are a good or bad thing for the high street.
On the positive side a new betting shop, like the one proposed, in a prime retail area is likely to employ between 4 and 5 people. It will pay around £40,000 per year in business rates. It will also contribute about £100,000 in tax to central government. Finally, according to a report by Ladbrokes, 80% of their shops open in vacant premises. So the argument is that it’s better a retail unit is occupied and paying business rates and tax than just left empty.
The recent growth of retail betting shops on high-streets demonstrates that they are successful in attracting people in to spend their money. £200 million in Manchester alone according to city centre councillor, Kevin Peel.
The problem is money spent in a betting shop does not circulate very well. Compared to something like a restaurant which is much more labour-intensive, only a small amount of the turnover goes into paying staff.
Also the UK betting shop market is dominated by 4 national players who have 82% of all shops. So profit goes back to head offices that are not based in Manchester.
So the argument is money spent in betting shops cannot then be spent elsewhere in businesses that are more beneficial for the local economy.
But is 26 betting shops in the city centre too many? Some smaller towns like Rochdale have an even higher concentration of shops in relation to their population. On the other hand the UK currently has about 7000 betting shops less now compared to the 16,000 it had in the 1970s.
So the problem may not be how many we have, but where they’re located. The betting industry strongly refutes the accusation that shops are proliferating in areas of economic and social deprivation. But the on line mapping serviceprovided Geofutures certainly shows how clustered betting shops are around poorer areas.
Again, the industry argues that because they need to locate in areas of high football these are obviously going to be in town centres and high-streets. But their argument is not particularly convincing. Even their own research suggests that it is poorer people that gamble. They find a relationship between participation in gaming activities and household income only between households that earn under £36,000 a year.
Historically, activities that are not perceived as being particularly good for us are heavily regulated.
Before 2007 betting shops were not allowed to open next to each other. The reason we are seeing so many new betting shops in areas is partly the relaxation of this control but it is also a direct consequence of legislation that limits the amount of fixed odds betting terminals (FOBTs) to 4 in each outlet.
It’s these high-stake, roulette and casino machines that make up most of the shop’s turnover and also account for 50% of their profits.
A regular better i.e. someone that visits a betting shop at least once a month spends over £1200 per annum on FOBTs compared to £427 on over-the-counter bets.
A report by the Local Government Association indicated that half the public in their sample were concerned about betting shops. In particular, the ease at which empty retail outlets can be taken over by this type of operator.
Mary Portas singled out betting shops as being bad for the high street, but the concentration of any one type of business in a small area is usually bad, unless a location is looking to specialise, for example a street of fashion or second-hand book stores.
Many empty units like banks and building societies will not require any change of use to be granted before they can be turned into betting shops, therefore no planning permission is needed.
But all betting shops have to be licensed. Only one council so far, Newham, has turned down a license application for a betting shop. This is on the grounds that the shop’s primary activity will be gaming on machines rather than traditional over the counter betting.
This decision is being appealed against by Paddy Power and is up for review by local magistrates in June. I expect the licence will be granted as the operator is not proposing to do anything illegal.
Barking and Dagenham Council have launched a more strategic approach to their management of retail units. They have published supplementary planning guidance to give businesses 12 months notice of their intention to regulate the number of betting shops locally.
If gambling is the problem that Saturday’s protesters claim it is, then it won’t be long before national government will have to act. Perhaps that’s why the betting shop operators are so keen to get in quick, take over empty retail units quickly and make as much money as possible from the gaming machines whilst they can.