A Day for the Bookies

Earlier this week figures showed that 1.7 million square ft of retail space had been sold off last year to bookmakers. In total, 106 new betting shops have opened up around the country as retail space had been re-allocated to such companies. 

Is this necessarily a bad thing? During the recession betting-shops were not as hard hit as general retail outlets and in some cases, gambling increased. The use of high-stake roulette machines have raised by around 5% from 2008. According to the LGA (Local Government Association) the number of betting shops in some parts of London have doubled in the past decade.

The LGA have called for councils to increase the difficulty of Bookmakers to purchase such retail space as they believe it is having a negative impact among local communities. A spokesman from LGA said in an interview with the BBC last week "Councils aren't anti-bookies but need powers to tackle the damage that can be caused to High Streets and town centres". He believes that they have became "far too concentrated" in certain towns and cities around the UK and added "Licensing laws must be updated to allow councils to consider the impact a new betting shop would have on their local economy and existing businesses. This would protect the power of local communities and democratically-elected councillors to shape their area.".

However, in a submission to a particular government consultation it highlights social and economic benefits from betting shops which include the following:

• The Centre for Economic and Business Research (Cebr)’s study reveals that betting shops contribute £3.2 billion to UK GDP, support 100,000 jobs and pay £1 billion in taxes.
• For every £1 of Gross Value Add (GVA) generated by betting shops, an additional £0.61 of GVA is generated in the wider economy through indirect and induced impacts.
• Bookmakers have already invested about £2 billion in local economies through the opening new and refitted betting shops.
• Betting shops employ 14,000 young people aged 18-24 (25%), an age group with 20% unemployment currently.

Nevertheless, yesterday Ladbrokes confirmed they are to be closing down 40-50 shops around the country as it looks to optimise its retail estate in “secondary locations”. They believe this is likely to be a common move amongst other high street bookmakers in the UK as the industry looks to reduce the number of retail outlets it has opened in the past few years. 

The question local councils need to be asking is if they are to tighten their laws the approval of betting shops to use retail space, what will be the opportunity cost? Clearly the data above proves that despite the stereotypical view on bookmakers, there are clear advantages to both the local and national economy. Dead-weight loss would arise if these areas of potential shop space were unused. This may therefore generate a negative multiplier throughout the economy as employment decreases and ultimately cause a fall in Real GDP.