Toby Green: Ladbrokes on a loser as heatwave puts its gaming machines in the shade

Outlook Campaigners against gaming machines – the so-called "crack cocaine" of gambling – could be forgiven for having a wry smile on their faces yesterday. Fixed-odds betting terminals have no shortage of critics, given they allow players to lose (and, yes, occasionally win) big amounts of money at high speeds.

Whichever side you come down on the issue, there is no doubt that for the bookies they have been a real money spinner, providing a steady – and predictable – source of income.

This growth, however, is slowing, and yesterday the performance of the machines were the focus of a disappointing set of results from Ladbrokes.

The country's largest betting company announced pre-tax profits for the first six months of 2013 had been cut in half, falling to £55.1m.

Ladbrokes has certainly enjoyed the boom times, with revenues from the machines jumping 40 per cent in the last three years.

Those days, however, look over. The industry has already this year reported signs of a slowdown from the machines, but yesterday's results showed things are deteriorating faster than thought.

Ladbrokes warned investors that the "market rate of growth [had been] slower than expected", and at the same time admitted it was no longer expecting like-for-like growth from the machines for the year.

Yes, the results were skewed by the heatwave. Whenever a company attempts to blame the weather for disappointing results, a healthy dose of scepticism is required. However, pinning a 9.2 per cent slump in takings from the machines for July on the sun keeping people out of the bookies does make sense.

Yet, as Ladbrokes itself admits, there is a wider problem than just a month of scorching temperatures.

Investors were clearly worried – shares dropped by nearly 4 per cent yesterday to 199.6p, leaving chief executive Richard Glynn more to do to get the £12m bonus he is in line for when they move above 297p.

Despite this, there is little in the detail of the results to bring cheer to campaigners hoping the machines may be on the way out.

The problem is competition for gamblers' money is higher than ever, as shown by Ladbrokes spending £3.8m more on free bets than it did over the same period a year ago. To splash out that amount of cash for so little obvious reward highlights quite how many options there now are on the high street.

Part of Ladbrokes's plan to deal with this is by launching a new set of machines. Due to start appearing in shops during the last three months of this year, before fully rolling out at the start of 2014, it will mean more games and – Ladbrokes will hope – a better financial performance.

Still, there is also the prospect that the Government could make things tougher. Profits across the industry have already been hit by the introduction of a new tax in February – the "machine games duty". This replaced the previous regime with a standard rate of 20 per cent on any machine where the maximum cost is above 10p and the maximum prize is above £8.

Yet compared to other countries in Europe it does not look that strenuous. In Spain, Greece and Germany the taxation of machines is at least 10 per cent higher – in Italy, it is more than double. There are some in the Square Mile who feel an increase in the duty cannot be ruled out.

More immediately, the Department for Culture, Media & Sport is due to publish the conclusion from its consultation on gaming machines – which ended in April – in a matter of weeks.

Campaigners are calling for prizes to be lowered. David Lammy MP, one vocal opponent of the machines, is among those demanding the maximum stake be lowered from £100 to £2.

The industry is united in its belief that the majority of customers use the machines responsibly. According to Ladbrokes, the average amount spent on a session is between £10 and £15, whereas the average stake on a bet over the counter is £8.40, so the different is not that huge.

However, the Salvation Army claims players are able to lose as much as £18,000 in an hour and highlights estimates that put the amount lost by problem gamblers on the machines at £300m a year.

Whatever your viewpoint, there is certainly no sign of the bookies moving away from the machines. The law currently allows for a maximum of four in one venue – Ladbrokes yesterday announced the average number in each of its shops was 3.92, up from 3.86 a year earlier. No one will be surprised if that goes right to the limit.

Suggested Topics
people Emma Watson addresses celebrity nude photo leak
Katie Hopkins appearing on 'This Morning' after she purposefully put on 4 stone.
peopleKatie Hopkins breaks down in tears over weight gain challenge
Boris Johnson may be manoeuvring to succeed David Cameron
peopleHis band Survivor was due to resume touring this month
people'It can last and it's terrifying'
In this photo illustration a school student eats a hamburger as part of his lunch which was brought from a fast food shop near his school, on October 5, 2005 in London, England. The British government has announced plans to remove junk food from school lunches. From September 2006, food that is high in fat, sugar or salt will be banned from meals and removed from vending machines in schools across England. The move comes in response to a campaign by celebrity TV chef Jamie Oliver to improve school meals.
Arts and Entertainment
Life and Style
fashionModel of the moment shoots for first time with catwalk veteran
Life and Style
fashionPart of 'best-selling' Demeter scent range
ebooksAn unforgettable anthology of contemporary reportage
Tom Cleverley
footballLoan move comes 17 hours after close of transfer window
Alexis Sanchez, Radamel Falcao, Diego Costa and Mario Balotelli
footballRadamel Falcao and Diego Costa head record £835m influx
Life and Style
fashionAngelina Jolie's wedding dressed revealed
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Senior Data Warehouse Developer - (Oracle, PL/SQL, ETL, OLAP, B

£65000 - £70000 per annum: Harrington Starr: One of the global leaders in fina...

Executive Assistant/Events Coordinator - Old Street, London

£35000 - £38000 per annum + benefits: Ashdown Group: Executive Assistant/Event...

HR Generalist (standalone) - Tunbridge Wells - £32,000

£30000 - £32000 per annum: Ashdown Group: HR Generalist (standalone) - Tunbrid...

Derivatives Risk Commodities Business Analyst /Market Risk

£600 - £800 per day: Harrington Starr: Derivatives Risk Commodities Business A...

Day In a Page

'I’ll tell you what I would not serve - lamb and potatoes': US ambassador hits out at stodgy British food served at diplomatic dinners

'I’ll tell you what I would not serve - lamb and potatoes'

US ambassador hits out at stodgy British food
Radio Times female powerlist: A 'revolution' in TV gender roles

A 'revolution' in TV gender roles

Inside the Radio Times female powerlist
Endgame: James Frey's literary treasure hunt

James Frey's literary treasure hunt

Riddling trilogy could net you $3m
Fitbit: Because the tingle feels so good

Fitbit: Because the tingle feels so good

What David Sedaris learnt about the world from his fitness tracker
Saudis risk new Muslim division with proposal to move Mohamed’s tomb

Saudis risk new Muslim division with proposal to move Mohamed’s tomb

Second-holiest site in Islam attracts millions of pilgrims each year
Alexander Fury: The designer names to look for at fashion week this season

The big names to look for this fashion week

This week, designers begin to show their spring 2015 collections in New York
Will Self: 'I like Orwell's writing as much as the next talented mediocrity'

'I like Orwell's writing as much as the next talented mediocrity'

Will Self takes aim at Orwell's rules for writing plain English
Meet Afghanistan's middle-class paint-ballers

Meet Afghanistan's middle-class paint-ballers

Toy guns proving a popular diversion in a country flooded with the real thing
Al Pacino wows Venice

Al Pacino wows Venice

Ham among the brilliance as actor premieres two films at festival
Neil Lawson Baker interview: ‘I’ve gained so much from art. It’s only right to give something back’.

Neil Lawson Baker interview

‘I’ve gained so much from art. It’s only right to give something back’.
The other Mugabe who is lining up for the Zimbabwean presidency

The other Mugabe who is lining up for the Zimbabwean presidency

Wife of President Robert Mugabe appears to have her sights set on succeeding her husband
The model of a gadget launch: Cultivate an atmosphere of mystery and excitement to sell stuff people didn't realise they needed

The model for a gadget launch

Cultivate an atmosphere of mystery and excitement to sell stuff people didn't realise they needed
Alice Roberts: She's done pretty well, for a boffin without a beard

She's done pretty well, for a boffin without a beard

Alice Roberts talks about her new book on evolution - and why her early TV work drew flak from (mostly male) colleagues
Get well soon, Joan Rivers - an inspiration, whether she likes it or not

Get well soon, Joan Rivers

She is awful. But she's also wonderful, not in spite of but because of the fact she's forever saying appalling things, argues Ellen E Jones
Doctor Who Into the Dalek review: A classic sci-fi adventure with all the spectacle of a blockbuster

A fresh take on an old foe

Doctor Who Into the Dalek more than compensated for last week's nonsensical offering