Betting shops on a winner

High street bookies are defying the odds as favourites with punters, including the younger generation

"I don't know why anyone would want to bet in betting shops these days," was the stark view of one City analyst while discussing the merits of shops vs online in between the merits of his and my fancies for next week's Cheltenham Festival.

It's a reasonable view. Online offers huge advantages. It's available at the click of a mouse. The odds are superb because bookies' margins are wafer-thin. Then there are offers like "best odds guaranteed" to protect against the punter's bane: backing a horse at 5-1, only to see it start the race at 8-1. Anyone under 40 is guaranteed to use the net, right? Wrong.

Betting shops are as popular as they have ever been. Ladbrokes is a case in point. Its online offering has been a laggard, taking considerable flak in the City. And yet its betting shops are doing rather well.

They saw a 2.1 per cent rise in operating profits last year to £152.3m. Visits to shops from the over 55-year-old demographic were down by 3 per cent, but from the 18-34-year-old age group – the internet generation – they were up by 3 per cent.

Today's betting shops aren't like those your grandfather knew. They aren't much like what your father knew. Among older demographics, betting shops still have a slightly downmarket, sleazy image: Dimly lit with dog-eared copies of the Racing Post stuck to cork, moth-eaten carpet covered in used betting slips and dog-ends, dropped by small groups of older men clustered around small, murky TV screens.

They were designed to be like this: the legislation brought in by Harold Macmillan's Conservative government might have made them legal, but it was also intended to make them as unwelcoming as possible.

Liberalisation, however, came first with the introduction of the National Lottery in 1994, then with the Gambling Act in 2005. Partly thanks to this, partly thanks to heavy investment, the reality of a modern Ladbrokes couldn't be further removed from the old image.

One of the new format stores that head of retail Nick Rust is so excited about can be found on The Broadway in Stratford, London, a stone's throw away from the Olympic park.

It is light, airy and clean with a decent-sized, multi-ethnic clientele. Much of the floor is wooden, and where there is carpet it looks, well, pleasant. You get the impression that a vacuum cleaner is not unknown to it. Carpet freshener, too. Perhaps that explains why there are even one or two female punters.

But that's just the start. Sit at the comfortable seats for any length of time, and a smiling member of staff will bring you a steaming mug of tea or coffee. In a china mug too.

The design is clever. You are subtly directed to whatever your poison might be. There is a section where turfistes cluster, with the usual racing form on the walls, and big, flat screens showing each race. Another part is tailor-made for the rapidly growing number of people, particularly the younger set, who prefer to bet on football.

And no longer is there a need to fill out a slip. You simply tick a pre-printed card, and go up to the cash desk, where a receipt will be produced with stake and potential winnings.

Greyhounds are close to the cash desk, as are the fixed odds betting terminals, with their own zone so their bleeps don't disturb sports bettors (and in sight of the cash desk so under-age gamblers can be challenged before they get involved).

But why are they so appealing to young people? It can't just be the modern design.

Says Mr Rust: "Since the National Lottery launched, these people have grown up with a level of comfort with gambling. They think that sports betting is fun to do. It also coincides with Sky.

"There is now so much more live sport. It has became far more of a part of British culture, and from that comes betting. It provides a better way to get involved, and we are seeing a lot more growth than through horse racing. We see lots of people coming for a fiver or a tenner, sometimes 20 quid. They'll then stay and watch the match."

The technology has certainly improved. Touch screens abound, enabling the punter to view prices from any event, rather than having to ask at the cash desk for them to be put up on screen.

Eric, the regional manager who takes me around, talks about the prospect of using iPads, or perhaps having touchscreens set up on tables, to enable punters to use them to place bets.

This, it is hoped, might cut down on the number of people using the shops to view events, while using their mobile phones to bet with competitors such as Betfair.

It is thanks to younger gamblers that the gross win through machines in Ladbrokes shops grew. Over-the-counter bets remained flat, despite the tough economy, and that was helped by the continuing growth in football betting and the boom in punting while events are running – or "in play". This is another favourite of the more youthful punter.

Driven by the emergence of betting exchanges, the concept has been enthusiastically embraced by traditional bookies, and the results speak for themselves. Where a company like Ladbrokes wins is that it can offer a far wider range of bets than an exchange. That is because bookies can take risks, while exchanges simply match punters with other punters.

For example, if there isn't enough liquidity in the market for the number of corners in a Man U-Liverpool match 30 minutes in, you won't be able to get on.

Mr Rust has another explanation for betting shops' popularity – cash.

"We've tried to remove some of the fear of not knowing what to do when you get in there, and hope they are a pleasant place to visit, but another reason why people love betting shops, I think, is they like playing with cash.

"There's nothing like the feeling of getting your winnings in cash, feeling them in your pocket. You can't get that online."

It seems those predicting the demise of the betting shop are going to have to wait for a while yet.

Blight and bitter: Rust fury at Harman jibe

Since they were legalised in the early 1960s, betting shops have always been controversial. That hasn't changed.

Most recently they have been accused of exploiting the poor. Harriet Harman, the shadow Culture Media & Sport Secretary, has accused them of "blighting high streets and communities in low-income areas".

Nick Rust, who runs over 2,000 Ladbrokes shops, is furious.

"That's patronising. Betting shops have always been part of working-class culture. They are a legitimate, fun business that 2 million people enjoy. A lot of criticism comes from people who don't understand that."

Mr Rust said shop numbers boomed after the abolition of the test that required bookies wanting to open up in a new area to prove to magistrates that there was a demand. Existing shops always opposed new openings.

"The end of this meant suddenly competition was introduced and a lot of new shops opened. Competition will also mean that a lot of those new shops will now close."

One reason for bookies' proliferation in poorer areas is that there is ample, cheap space and little competition for it. Betting shops are therefore very visible.

According to Mr Rust, 30 per cent of shops make annual profits of less than £22,000.

The economy may yet remove much of the "blight" Ms Harman has spoken of, leaving another kind of blight in its wake: empty, boarded-up shops.