The billionaire owners of Betfred received dividend amounting to £10.2 million after reporting exceptionally large operating profits, as the Government’s restrictions on the controversial fixed-odds betting terminals (FOBTs) had a much milder effect than the one initially predicted by the sector.
In November 2019, the owners of the gambling business, Fred Done and his brother Peter, warned that British bookmakers were trying to survive after the decision of the country’s Government to sharply reduce the maximum bet allowed on the machines from £100 to £2.
According to the figures for the twelve months to the end of September 2019 showed that Betfred actually lost some of its income as a result of the newly-unveiled Government’s policy regarding the fixed-odds betting machines. The gambling operator, however, managed to generate an operating profit amounting to almost £75 million. The result meant that the two brothers and owners of Betfred were still able to get their usual annual dividend worth £10 million.
As the gambling company revealed, almost £58 million of the rise in Betfred’s operating profit was generated thanks to an increasing revaluation of its 1,578 high-street betting shops. This compensated for about 50% of the £119-million impairment that the company took on the value of its retail gambling hubs in 2019 because of lost FOBT income.
Gambling Operator Originally Said It Would Shut One-Third of UK High-Street Betting Shops
A further £107-million boost related to fixed-odds betting terminals is expected in Betfred’s 2020 results, after the gambling company managed to win a significant legal case against HM Revenue & Customs, with the latter being found to have overcharged the VAT on bookmaker’s electronic gambling machines.
As mentioned above, Betfred has encountered a milder negative impact of the Government’s decision to slash the maximum bet limits allowed on FOBTs, which have long been blamed for negatively affecting customers turning them into gambling addicts.
According to the gambling operator’s annual accounts, which include a six-month period before the implementation of the new FOBTs stake rules, show the amount that the firm’s customers wagered with Betfred declined to £10 billion in 2019 from £13.5 million registered in the previous year. The gambling operator’s turnover, on the other hand, fell from £728 million in 2018 to £621 million in 2019.
As explained by the company, on another measure of its operating profit that was generated by one-off exceptional items, including the positive revaluation of its retail betting shops, the gambling operator’s earnings were considerably lower in comparison to the ones generated in previous years, reaching £48.5 million. In comparison, the company’s earnings amounted to £119 million in the previous year and surpassed £80 million in each of the two years before that.
Betfred closed some of its brick-and-mortar betting outlets that were most affected by FOBT revenues losses. Still, the closures were not as many as the gambling company had initially predicted. The operator decided to shut 72 of its high-street betting shops during the financial year, with 16 more being shut the year before that. It had initially predicted that it would be forced to close about one-third of its bookmaking shops, which would have been around 500, because of the FOBT maximum stake reduction.
- Author
Olivia Cole
