Episode Transcript
[00:00:15] Speaker A: Hello, everybody, and welcome back to Right to the Source. My name is Robin Harrison and I'm here, as ever, with the.
The little John to my Robin Hood, a nice easy one this week. Mr. Ed Birkin.
[00:00:30] Speaker B: I. Hello, Robin. I would like to say I am more your right arm to your left arm, I. E. The one of yours that actually is useful and does stuff rather than. Is just kind of strapped to your chest and a bit useless there for visuals rather than action.
[00:00:45] Speaker A: Well, one for those of you not.
[00:00:46] Speaker B: Watching, for those of you not watching on YouTube, Robin has his arm slung to his chest having had a shoulder operation and is stoically battling through the pain.
[00:00:54] Speaker A: I have. And despite that, I am here once, once again for this podcast.
[00:01:01] Speaker B: Can I say now you've got a couple of pictures up and a couple of flowers in there. It looks, it looks more like a room than the dungeon.
[00:01:07] Speaker A: But the. I think we're getting there.
[00:01:09] Speaker B: Yeah.
[00:01:10] Speaker A: Start to come together.
[00:01:11] Speaker B: Still need a lampshade, but it's okay.
[00:01:13] Speaker A: That'll come in time. That'll come in time. At the moment I'm not in a position to put a lampshade on because I can't lift my left arm for a few more weeks. I've got to keep it immobile for the best part of a month.
[00:01:25] Speaker B: Okay.
[00:01:26] Speaker A: But despite that, despite that, the things going on in the industry this week.
[00:01:32] Speaker B: Yeah, let's get straight into it. Let's get straight into it. This is going to be a UK budget podcast special because on from one side people are probably bored of hearing about it, but on the other side, most of what's been taught put on LinkedIn and stuff like that is just opinionated bullshit without any analysis that could be proven right, could be proven wrong. Whereas I actually sat down and wrote an eight page note on it.
[00:01:56] Speaker A: You did. And that went out exclusively to readers of igamingbusiness.com, did it not?
[00:02:04] Speaker B: I hope so. I haven't been on your website, but I'm kind of hoping you help distribute it because I haven't written a note like that since I was an analyst a decade ago.
And I thought, you know what, let's just actually show something because we'll get into it. I think a lot of people will think it's crap because the general view is that the regulator market is completely screwed and the black market is gonna take over. I mean, I saw one comment on LinkedIn.
I'm not calling out the name because I don't remember who it was. Anyway, they said, you know, the UK market is, is going to be, you know, it's going to have 50%, you know, black market penetration like Portugal. I'm thinking. Well first of all, Portugal doesn't have 50% black market penetration. And secondly. No, it's not, it's just, it's not, this is, I mean it's not great for the industry but like doomsday scenarios that people are putting out there based on no analysis, it just frustrates me.
[00:02:55] Speaker A: Well, I would hope you've got some robust data to back up that.
[00:03:00] Speaker B: Well, let's claim, yeah, let's. Before I go into my, you know, rooms and by the way, the, the note is available on that Also on the H2 website on the news bit. It is available to non subscribers. So the idea being, you may completely disagree with it, we will see in three years time if it's remotely right or not. But at least we've walked through all of our assumptions and then people go, okay, well actually I disagree with that bit and you know, and put some analysis rather than just coming up with a finger in the air number.
However, let's look at the wider picture first. The budget wasn't a disaster for the gambling industry really was it? Compared to what it could have been.
[00:03:31] Speaker A: Compared to what could have been. No, I think that's fair. Some elements I thought were interesting like you know, taking out any, any meaningful rise for the land based sector and then lumping it all in online and even the way that was presented online is the biggest source of harm, therefore we're going to tax it more. So okay, so it's the biggest source of harm but you see it as a revenue generator. So are you actually doing anything to reduce harm or are you just looking to leverage that to make more money out of it? I mean, let's be honest, that was how it was presented. I've seen there's, obviously there was, there's a lot of campaigners that were very gleeful about this coming through. But where is the actual harm prevention in this? Yes, I suppose they've succeeded in getting more money from the industry.
So they've made the industry support the country more. I mean what have they actually achieved in terms of harm prevention from this?
[00:04:31] Speaker B: No. Well, they've increased harm as far as I'm concerned, you know, and we'll talk through the data on it. But you know, the, I'll just, I'll read a, I'll read a quote from it that. And this is.
[00:04:44] Speaker A: You're quoting yourself.
[00:04:46] Speaker B: I'm quoting the author of this report that may or may not have been myself.
[00:04:50] Speaker A: You are quoting yourself, I mean the megalomania.
[00:04:55] Speaker B: So as I put, we looked at it and said we have little doubt that if the direction of these forecasts materialize, I.e. onshore markets going down, offshore markets going up, we'll all disagree about the level of decline and increase. But if the direction of these forecasts materialize, then a reduction in the onshore market will be viewed by politicians as a major victory. Not only have they been able to curb the size of the brackets onshore online gambling industry, but they have increased tax revenue at the same time. That is how it will be taken, much like in the Netherlands. However, what will be completely ignored will be the at least doubling in size of the illegal market and all the negative implications. This has not leased on player welfare. And that's the thing. None of, none of that. And all the industry can shout is burn the face. But what will inevitably happen from this, that everyone agrees with is the size of the onshore market will go down. The amount of money generated from remote gaming duty will increase. Now I'm going to go on a minute about people saying tax take will go down. Maybe they talk about overall tax take in the market, but for machine gaming duty tax to go down, given it has pretty much doubled in rate, that means you're saying the onshore market is going to halve. I just do not, I just do not know how anyone can honestly believe that. And if anyone does, fine, but you'll be proven that is not going to be the case. Okay. It is not going to, is not going to halve in my view and not even close. So the remote gaming duty itself, let's talk about other bits like you know, employee cost as people go, will increase. Just as in Illinois when they put the tax rate up to 51%. Oh sorry, 40, 50% of it. It went up. That increased in revenues in tax take. So tax take will increase and the onshore market size will go down. They'll ignore the black market and this will be seen in 3, 4 years time as a victory by the politicians and by campaigners for the anti gambling industry. Without a doubt.
[00:06:40] Speaker A: Yeah, yeah, I think that's fair. That's fair to say. Yeah, yeah, I'd agree with you on that.
[00:06:44] Speaker B: And it's just whether the unlike the KSA in Netherlands, we keep coming back to that, calls out the government and politicians and says, you know, what you've done is create a huge illegal gambling industry, you know, and you shouldn't be using tax policy. I do not believe the UK Gambling Commission will, will do that. They will say, you know, they've acknowledged the black market exists now, which they at least they didn't really before.
[00:07:07] Speaker A: But well they actually, they actually argued under the previous CEO that the black market was being overstated to support industry goals.
So there has been a sea change there in that. Now you see the Gambling Commission putting out a fairly reasoned study on what the black market size could actually be but without really reaching any kind of firm conclusions on it.
So I do think, you know, in the regulator's defense there is definitely an acknowledgement that it is there.
[00:07:39] Speaker B: Yeah.
Now on the. So then Evoke put out a report and so they said we believe the overall level of tax of the regulated industry pays in the UK will decline. Okay. Now again, so they're not saying that remote gaming duty because again I think that is just absurd quite frankly to even countenance that the market is going to have. But they're talking about, you know, cutting other costs so reducing employment. Let's be honest, a lot of employment of online gaming industry isn't in the UK to be fair.
But I mean there is some. So that will impact it, you know, marketing costs and the flow through. So that will impact it. But they're also talking about shutting part to mitigate the costs they're talking about shutting retail store closes which I thought was a strange one because retail stores haven't been impacted by this at all. Machine gaming duty has stayed the same, retail betting duties stay the same. And so I get, you know, I think that's a victory because you know, horse racing has lobbied pretty hard and I think they've got the point across that yes, you know, machines may not be horse racing, but if you put up machine gaming duty betting shops turn unprofitable. Therefore fewer betting shops, less money on horse racing. So look, I think you've got to at some point just take, take the win here, the little crumbs of victory. But surely if you're spending more on online marketing, et cetera, then that's where you'll retail estate becomes even more valuable as like an omnichannel offering. No.
[00:09:01] Speaker A: Yeah, it's keeping physical presence. It's a brand presence, isn't it?
[00:09:05] Speaker B: Yeah. So I think I appreciate there could be some loss making shops that they're keeping open and now they're saying we can't afford to do that because of the online's less profitable. Or maybe they're saying that the customers you sign up in the shops are no longer as valuable online customers now and Therefore we get rid of it. But I don't know, it seems a bit strange to view this budget as leading to significant retail store closures. I mean, they've been trimming around the edges for years. Everyone has. The number of retail stores has been going down. It's like 10th consecutive year of gaming machine declines in retail stores, etc. So I don't really see how this is going to have a big impact on retail. But clearly, according to folks, they think it's going to lead to them closing stores, which I thought. So that's the only way I can see how it would lead to an overall tax take for the industry. But in terms of machine gaming duties, tax going, take going down, I just, I just think that's beyond absurd.
[00:09:57] Speaker A: Okay. And you mentioned marketing. There one, one thing in the run up to.
I mean, this is kind of going back to one of our favorite themes about statistics being kind of misused or distorted. There was something that I saw might be in the weekend before, just the weekend before the budget came out on Tuesday.
[00:10:18] Speaker B: So by the time this podcast goes out about a month and a half ago.
[00:10:21] Speaker A: Yeah, yeah. Sometime in 2025, you know, like before ICE probably when this comes out, they talked about gambling advertising spend and they said it was something.
This article claimed it was 2 billion, but then said it could also be as high as 2.5. And it might have just been the first draft of the article going up, but there was no link to the survey that claimed this, which I found really interesting. And then the industry. And at the bottom it chucked in a few more sources saying the industry says it's probably kind of like a billion 1.2, maybe 1.5. But it's just the distortive facts in this make it very difficult to really kind of ascertain the impact because we've had a lot of talk about advertising spend going down and.
[00:11:10] Speaker B: Yeah, well, let's, let's. So let's just put some figures into context because talking about like 2 billion, 1 billion, 2 and a half. So if you look at the fiscal year, in fairness, that doesn't include horse race betting. If you look at the fiscal year numbers reported by the gambling commission, which just. Which came out actually the same day as the budget, so we never looked.
That puts the ggy, so they report after effectively operator revenue. So after bonuses, the best online betting in igaming 7.8 billion. Okay, so if you're saying let's say advertising budget's about 20% of that. I know there used to Be higher back in the day, but I think that's a fair estimate. That would put it at 1.56 billion. Now I'd imagine maybe some of the bigger operators likes for 365 or someone, they probably actually don't even have to spend that much on it. So you know, you could go let's average it at 17.5% for instance, you know that put it at 1.36. So I think that kind of my point being that one and a half billion probably seems a fairer benchmark than I mean if you're doing two and a half, I mean there is no way in my view that you are. The average marketing spend is 35, 36% which would be two and a half billion like of, of GGY. I know it'll be less of GGR but of, of the operator revenue. I mean you know if you look at the tax rates, 20% on top of that, you know it's just they're not spending over 55%. So yeah, put back to a long way around. You want it to be data heavy, back of the envelope figures suggest maybe about one and a half billion.
[00:12:48] Speaker A: So in terms of cutting that sum because you mentioned there, you know, some of the more established brands, they probably don't need to put as much as 20% of a GGY into advertising and marketing and acquiring customers.
[00:13:01] Speaker B: Yeah, I mean, yeah, yeah.
[00:13:03] Speaker A: So I'm just really kind of. I suppose what I'm kind of curious about is the mitigation measures that people will take. You know you've already kind of talked about closing shop. Seems like an odd move. It's been a lot of talk about reducing marketing.
[00:13:16] Speaker B: Yeah, reducing marketing, reducing bonuses. So okay, I'll just quickly run through these some headline figures and I think. Well, let's just say what the OBR have said. So the obr, Office of Budget Responsibility, they are effectively. What do they. I've got another quote but this is from them.
They are the factual. What do they call themselves as the independent and authoritative. Authoritative analysis of the UK's public finances. So they have said that the change in tax which is effectively fourfold, you've got the increase in remote gaming duty I Gaming from 21% to 40% April 26, the increase in online sports betting, not horse racing from 15% to 25% in April 27 you have the abolition of land based bingo duty which is only 25 million. So we can kind of take that out the figures small fry. And you have the tax effective thresholds for land Based casinos are staying static for a year. Again you can just kind of say offset the bingo. So effectively the data released by the OBR is can be taken as a proxy for the impact of the machine gaming, the remote gaming duty and the sports betting. So they have said that in let's say we take fiscal year 28, April 27 to March 28 the year that has both the sports and the game of GC statically just by increasing the tax rate on the same market size it would make 1.6 billion of extra revenue. However, just over half a billion would come off that because of behavioral effect and that knowledge that is people spending less because operators will change their pricing, there'll be less good value and also that people will. Some will move to illegal operators. So the net benefit will be 1.1 billion. So that's what, that's what they've come out. So they acknowledge that not all of this will be passed straight through top line. Our figures are we get just about to that 1.6 billion from the static bit 1.55 of which now we've actually got 1.35 for my gaming only 200 million from sports betting. However, when we run through what's going to happen in terms of bonusing, what's going to happen in terms of GGYs affecting net revenue decline etc, we think there's going to be another. It's actually going to be nearer 800 million that comes off. So rather than being left with 1.1 you're going to be left with about 0.8 million billion angel mean extra tax revenue. So that's why I say I do not believe that the direct tax from this take will go down. I think that is just too hard to believe.
[00:15:46] Speaker A: But so tax won't go down.
[00:15:48] Speaker B: It won't go down.
[00:15:50] Speaker A: The ultimate. Yeah, the sum.
[00:15:53] Speaker B: The ABR have said that about a third of it but broadly they said about a third of the tax increase they won't get in because of market shrinkage and we're saying we think about half of it won't come in because of market shrinkage. Now they can go. I'm not going to bore everyone with all the details but for instance how this works in terms of bonusing we've got it reduced in terms of underlying. Underlying GGY after bonus you got it reduced ball pot figures less. If we're looking at the iGaming we have the iGaming GGR declining by 25% right. But the GGY is in net net revenue declining by 16% because you are obviously the bonuses. Now the problem is you pay tax, you pay tax on the ggr. So the actual decline in net revenue for the operators is lower than the GGR. And sports, you're looking about half. That's got about 8% GGY decline, 11% GGR decline. So overall total online market, 22% decline in GGR because this tax increase for onshore, but 14% decline for operator revenue. Now, you know, the decline in GGY is ballpark, the kind of level of the percentage point increase in tax revenue, which we think is a pretty fair starting point, is that we have more data. Some people, you know, your fees go, it's going to be down like 30, 40%.
Fine, maybe your estimate. But these numbers, you know, obviously to me seem kind of realistic. It's going to hurt the market. The problem is it's going to hurt the smaller players more when we look at it. And I also don't think that some numbers we've seen out there for bonusing for igaming. I mean I just don't think the I gaming bonusing in the UK is actually as high as some people have quoted, like mid-20s. I just don't believe that. If you look at, if you look at the remote gaming duty paid, it implies it's about 12%.
We've got it actually at I think about 16.8. And then we've got it, yeah, 16.8 and then we have it going down to 7.2. So I'm not sure there's quite as much bonusing as some people think in the market. So a lot of big guys don't, don't bonus anywhere near that. But I was doing some back of the envelope figures and do you know how many online gaming licensed operators there are in the UK entities? So like Evoke would have multiple ones.
[00:18:06] Speaker A: Right. Gate was to a thousand.
[00:18:08] Speaker B: Not bad. So on the latest gambling Commission stuff, it's interesting, you see somewhere there's over two and a half thousand or two thousand licensed operators.
[00:18:18] Speaker A: But in terms of online it covers all channels. So I thought online it was like half online.
[00:18:23] Speaker B: IGaming is 582 and online betting is 175.
[00:18:28] Speaker A: Now some of these would be across both 6, 700.
[00:18:31] Speaker B: Yeah, I mean obviously a lot of the betting will have iGaming. So let's say yeah, 6, 600, 650. But if we then look, if we look at the fiscal year 25 igaming GGR as reported by the Gambling Commission and we look at the split between large and Small operators by large I'm talking about you know effectively including there flutter, voak, epane365 I think we've got kindred Gamesys a couple of others don't have. Yeah, I don't think we include Battlefield should be in there but we don't have a figures but there's handful and what they make up of the market that we know and then you look at the smaller operators again this will be. I know a number of them will have multiple brands that may multiple operators so groups wise be different but you're still looking about 575of the smaller ones. If you, if you look at the GGR they are generating and then you take off the current so you then apply the 40% remote gaming duty tax and take off the current bonusing. This is without mitigation so you take off their ggy, their post tax ggy. So their net revenue after paying gambling tax works out about 1.3 million per licensee. There's not a lot to go around and so I think you are going to see a lot of exits of the market but you know, if you have, you know, if you've got the biggest operators generating, you know, few hundred million on, you know, on iGaming, you know you lose 50 people making a million each, you know, have an impact on the market but the number of operators in the market is no, you know, is completely different to the amount of revenue and that's why all the big ones have actually come out and said part of their mitigation is they believe they'll be able to take market share. Yeah so I don't say our numbers are that half of this tax is going to come through, increase will come through as tax take and half will be mitigated by behavioural change Then in terms of the legal market we think the Netherlands is the best example. The increase in tax recently probably hasn't been the main driver of the onshore market decline. It's contributed but it was deposit limits but still regulatory change, onshore market increasing, decreasing, offshore increasing. So we looked at the growth in the offshore versus the decline in the onshore shows about 57% anonymous 57% of decrease in onshore spend shifted offshore. Some people pay less, some people move offshore. Yeah, the number is going to be between north and 100. Not everyone with the deposit limit, not everyone's going to go offshore if you're getting lower bonuses not everyone's going to be offshore, some just pay less. We said right 55% of GGY not GGR will go offshore. So we've been very conservative here onshore GGR, all else equal, we've got it falling by 2 billion euros pounds because of this. 2 billion pounds down. Now that 55% GGY is only down 1.13. So we've taken 55% of GGY. Long story short, offshore GGR more than doubles and grows by 800 million. Now, you could quite easily say, and there's nothing wrong with this, we'll put the 55% on the 2 billion, in which case the offshore market will grow again up by another 300 million or so. Yeah, 1.1, 1.2 billion. So we've been pretty conservative on this in terms of what's going offshore, but we have it more than doubling. So net net, we have channelization falling to 84% in the UK, 80% for igaming channelization and 93 still for, for betting. Now, again, I know there's a lot of people who will say those numbers are far too high, they're far too high. That's fine. But that's why I've laid it all out over eight pages. So you can go, okay, you know, these are the starting figures that we know are correct from the gambling Commission. This is our initial analysis of the static increase, which, you know, is, is ballpark in line with the abr. So we're pretty happy with that. So you play around the assumptions as well. How much do you think the online onshore market is going to fall by? How much of that's going to go to the offshore market? It's not 100%. It never will be. And then if you're saying that 50% is going to be illegal, you try and make those numbers fit within an analytical framework that I provided to actually get to that, because you having to put in some pretty extreme assumptions to get there. Let people, let people judge. I know the headline figures. People are going to say, you know, it's far, far too positive, but we will see.
[00:22:43] Speaker A: Wow. Well, that's a challenge to the industry. Go out and prove Ed wrong.
[00:22:48] Speaker B: Well, they won't prove that. Just the only way it'd be proved wrong is, is what we see in three years time. And actually this is where, of course, yeah, this is where I, you know, probably this isn't great for, you know, upsetting all our subscriber base, but I'm not sure the industry's response to this is being. I think it needs to be careful how it responds because whining about this now is not going to Change. They're not going to reverse any of this, are they?
[00:23:11] Speaker A: No, no. I mean, let's face it, we've said it before, this is a new world order.
[00:23:17] Speaker B: So if you start putting out stuff like regulated tax revenue is going to decline. Yeah. Which they may. Overall, this depends what you do. If you're going to shoot your entire retail estate, then yeah. But people who. Actually some people are saying black market is going to be at 50%. I know not everyone's saying that stuff, but you go too much, then at the end of the day, in three years time, we're going to know what happens and at some point there's going to be more regulatory push against the industry. This isn't over, it's going to continue. Creepy. And if I'm the politicians then, or the gambling commission and I go, well, we did this and you told us everything's going to be disaster and it wasn't. So we want to do this and now you're telling me everything's going to be disaster. Well, you've already cried wolf. It's fine to say, use it as a lobbying thing before it's happened as a disaster, but now it's happened, I think the only thing you can. There's no upside to really. Yeah. You don't just lay back and go, oh, you know, it's fine, you know, you want to make a bit of a fuss about it. But I think if you go too far, or at least two doomsday scenario, then you go, well, they're not going to change, there's no upside because they're not going to reverse what they've done.
And there is a downside because they can look back on it and you may not care about the future now, but three years is not very far away. And when they do, the next push go, well, hang on, you told us that when we increased remote gaming duty that the tax take was going to go down. Well, that clearly hasn't happened. So why should we believe you that the tax take is going to go down if we increase betting duty more? You know, I just. It's a tough line to tread and I'm not saying they shouldn't complain about it, but I think you need to be really careful about forecasting doomsday scenarios because it's just going to give you less leverage going.
It's going to weaken any argument you have going forward.
[00:24:54] Speaker A: Yeah, I think that's fair to say. And I mean, I mean, look, in these situations, the only real kind of way. Well, I mean, the thing that you never see, is you never see people voting with their feet from a mature market. Like you look back at Illinois, everyone said they'd have to leave that market because of the tax hike. No one did. And people look at that, you know, by. Unless the threats are followed. The threats are the. Well, yeah, the threats are followed through on.
It's just going to, it's just going to ring hollow.
[00:25:24] Speaker B: Yeah, and that's exactly ring hollow. And yeah. And you know, people, I get people should put out, you know, yes, we're disappointed with this. Yes, it's going to be an issue. But don't overstate it, you know, because if anything, understate it because what happens in three years time is going to happen in three years time. Yeah, two years time. Whenever, whenever you're going to measure it. Okay? So if you're like, oh, we told you it was going to impact us and it's impacted us even more. Crap, this is, you know, you really need to listen to us. But if you say, oh, we said it was going to kill our industry and it hasn't killed the industry, the next time you say it's going to kill the industry, then, well, boy, you cried wolf.
[00:25:56] Speaker A: Well, I think one, one of the, one of the responses that I thought was actually quite effective was a supergroup. You know, Neil Monash said that he supports kind of like reasonable taxation of the industry.
Not saying that he was calling a 40% rate reasonable, but he also said this creates a risk of black market growth. What are we doing to stop that happening? Because as ever with these things, there's always a scope for leakage to the black market. The black market is, let's face it, depending on what you actually decide that it constitutes. And I know we got into the weeds in that last week after some judicious editing to cut out slightly more incriminating libelous bits.
But it's. This bit is always just forgotten about.
[00:26:50] Speaker B: And I think hopefully you're going to put up an image on our actual thing. But yeah, as you will now see on screen, perhaps, you know, these are forecasts for the overall market and the channelization. The channelization is changing a lot. But again, I don't think you need to go overboard. Let's look at what we. I'll just shut it down now. But if I look at what we're saying for the illegal, you know, offshore legal, let's be honest, black market 2020 calendar 27. So we're taking it all. It's going to be 1.3 billion of gross gaming Yield, that's actually customer losses. So suddenly you're going to go, actually we're going to times that by divided by 0.8 or something. Yeah, that's like 1.65 billion of GGR. That is a big number. You know, if you're looking in terms of tax revenue lost, that is. What's the average tax going to be now? About 36%. You know, that's 600 million of tax revenue. That's one of. I guarantee almost everyone listening to by what people say on LinkedIn and you hear all the other topics, that number's far too low. You know, it's going to be 70% channelization, 60%. But I don't think you need to go. There are numbers here that are very sensible that are still like, wow, this is a big problem. You don't have to be going out there and saying it's going to be 50% channelization, you think for people to listen or see what a problem it is. I mean, this is still a big number.
[00:28:05] Speaker A: If it's a 1.6 billion market, that's a scarily big market.
[00:28:10] Speaker B: Yeah, but people.
[00:28:12] Speaker A: That's not protecting players. All the stuff that.
[00:28:17] Speaker B: Now we're at a point where. Yeah, unless, unless people are saying it's like 50% channelization. It's almost as if no one's going to care about the black market unless we say it's that big.
[00:28:26] Speaker A: But I mean, I mean, this is one of the things, I mean, like on one level you want people to understand the scale and the danger that it presents. But I worry that sometimes the numbers just become too abstract.
[00:28:40] Speaker B: Yeah. I mean, above a certain level, no one cares. Like you can, you can say 50% transition, all that. But if you tell someone there's a, you know, the Black market is 200 million being spent abroad with legal operators. That seems like a big number. A billion. Okay, that's a big number. 5 billion. Like once you get to those levels, no one can really comprehend the difference between a billion and 5 billion. It's just a shitload of money. So why are you doing stuff? Yeah, but then to say numbers that don't really make any difference in terms of people going, okay, that's a big number, but that you clearly cannot back up. You find me, you find me operators who are making a billion, five billion of revenues from the UK in three years time.
[00:29:18] Speaker A: Yeah.
[00:29:18] Speaker B: The gambling admission on that greater black market blocking, no regulator is. But come on, you can't keep it if you're making that much money. So let's say you'd have to. Let's say the black market's 50 and so you go, okay, right, the black market is going to be around onshore has to go down more. So that's just, you know, let's say it's around 4. 4 billion. 5 billion for the sake of argument. Okay. GGR. Yeah, it has to be that. At least that. So 5 billion GGR. Okay.
And that assumes a big cut to the onshore. You are probably going to have bearing in mind the weighting of market share. You're going to have an operator that's got at least 10% but probably nearer 20% of that. So. So you're going to have an operator that is making the best part of a billion pounds from the UK market that isn't shut down. You know, that's sticking it. That's proper head above the parapet stuff. This isn't someone making like 5 million on the sly. It's, it's. I don't get it.
[00:30:08] Speaker A: But that is a good time to stop for this episode, I think.
[00:30:12] Speaker B: Yeah, it's been insulted anyone too much.
[00:30:14] Speaker A: I don't think we have. It's been a. I thought we've actually for the first time in, in a while had some really good data. I suppose we've gone a bit more kind of news driven recently.
[00:30:25] Speaker B: So yeah, we're just trying to be informant. Yeah, I don't know, we'll see. I think this would be a good one because it will actually give some analysis. Now as I say, I'm expecting most people to disagree with it but instead of just disagreeing the headline numbers, look at the analysis and go, okay, well this is where I think it's, it's going to change and then you know what we'll see in three years time.
[00:30:42] Speaker A: Yeah, we will see in three years.
[00:30:43] Speaker B: Time because let's be honest, one thing for them as I know the black market are innovative but so are the regulator players. Flutter and people. They didn't get this. I know because acquisitions. But look at the individual brands like padded power and stuff. They're good operators. They will, they will, they will. Yeah, they'll take a hit. I mean rank, poor rank. They paid let's say something like 180 million in taxes. They made 44 million of profit last year and this is going to hit them with another 40 million of tax. You know, it's pretty much wiping out their profit and that'd be mitigation. And I may have misremembered a couple of those numbers but you know It'll be tough, it'll be painful for people and it's not great. I'm not saying this is like a good budget, you know, I think it could have been worse and it will be painful. And the black market is going to more than double in size and it's really bad for everyone and the onshore market will decline. But, you know, I. I also have confidence that operators are innovative. They're good. The guys who operate in the UK onshore. Not all of them.
[00:31:35] Speaker A: Not all.
[00:31:35] Speaker B: 570, 82, whatever.
[00:31:37] Speaker A: Yeah.
[00:31:38] Speaker B: Pretty damn good.
[00:31:40] Speaker A: A lot of them are very good and there are. There are some good up and coming brands. Obviously they're going to be about. Life's going to be more difficult, but this is a resilient industry.
[00:31:49] Speaker B: Can I, on that, talk about marketing and good brands? Can I call out what I think is an absolutely brilliant gambling advert and an absolutely terrible gambling advert because they're both by the same company.
I'm going to tell you. So the Padi power betting one with super sub and at the end, so he's getting an award, is like the Ballon d', or, but the kind of golden sub.
[00:32:10] Speaker A: Yeah. And the statue with the high vest. Yeah.
[00:32:14] Speaker B: And then. And Peter Crouch goes, I was a super sub. And Teddy Sherman goes, no, you weren't. I think that is just brilliant. Makes you chuckle. Very clever. I just love it. And then when I saw their casino one with Danny Dyer, I mean, I knew that was terrible.
[00:32:30] Speaker A: I like that.
[00:32:32] Speaker B: Shocking. Going to the lowest, you know, Gemma Collins, Lean, Rooney, whatever her name is, as part of the thingy of Rebecca Vardy. I mean, I. I mean, it would make.
[00:32:41] Speaker A: I thought it was a great advert.
[00:32:43] Speaker B: It would make me. It would make me stop. It made me stop playing the casino product. I thought, was that bad, but there you go. I thought it's the most bad. Evan, you like it?
[00:32:50] Speaker A: Yeah.
[00:32:50] Speaker B: I thought the Peter Crouch one was brilliant and you were like, yeah, I just.
[00:32:56] Speaker A: Love.
[00:32:56] Speaker B: Yeah, just tidy. Shame a bit. I was a super sub. No, you weren't, mate.
[00:33:00] Speaker A: It was. They were both. In my eyes, they were both good adverts, but neither of them are as good as.
Who was it? It was Carlton Palmer in the bath and Des Walker in the wardrobe when he just keeps signing the shirts and the guy's getting increasingly pissed off, like, des, I've got work in the morning. Des, that's enough. That's enough.
[00:33:23] Speaker B: Two Wednesday nights.
[00:33:24] Speaker A: Yeah. You're going to merge with Sheffield United, apparently. So on that note, thank you.
Thank you very much for listening.
We hope you found it informative. And if you found it aggregating.
Aggreg. Aggravating. Get in touch. Come on.
[00:33:40] Speaker B: Get in touch with IGB, not H2.
[00:33:42] Speaker A: Get in touch with H2. Gambling capital.
I'll put Ed's email address in the description of this episode. All right.
[00:33:49] Speaker B: Robin.harrisongb.com guessing it's not actually my email. Okay. Right.
[00:33:54] Speaker A: All right.
[00:33:55] Speaker B: Happy ending. Awesome. We've nailed it.
[00:33:57] Speaker A: Until next time. The next one.
