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Friday, 16 November, 2018

How true is the famous saying 'you never meet a poor bookmaker'?

Expenses, challenges and concerns for on-course layers

The betting ring: bookmakers' umbrellas come in handy on a wet day
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As part of our fortnightly series, Tony McFadden looks at whether there's any truth to the old adage 'you never see a poor bookmaker'

Does the house really always win? Mention gambling to most ordinary people and some variation of this phrase will immediately crop up. In the eyes of millions, being a bookie is nothing short of a licence to print money.

And yes, there is a lot of money to be made if you run a vast casino (although Donald Trump managed to bankrupt several) or a multinational betting operation with a booming digital arm but away from the mega-corporations of the FTSE 100, the game can be very different. 

In particular, the ordinary men and women who take bets on British racecourses run businesses that are far removed from the popular idea of bookmakers coining it in.

There are three key reasons why bookmakers are not as loaded as might be imagined: startup costs, expenses and declining turnover.

So you want to be a bookie?

One of the first costs facing an aspiring bookmaker is an operating licence, which must be obtained from the Gambling Commission. 

The cost of the application fee ranges between £160 and £881 depending on how many days you plan to work, while the annual fee can be as much as £1,346 if you plan to work more than 200 days. Little wonder some old-school layers fondly remember the time they dusted down their finest suit and popped down the magistrates' court to get their licence at the cost of £100, followed by a £26 renewal fee every couple of years.

Equipment is by no means cheap either. Bryan Hazell, who has been a bookmaker since 1974 and is a familiar face on the northern scene, says he spent £13,800 on three digital boards two years ago, while there wasn't much change from £1,000 for the battery.

The joint – the stand used by bookmakers – cost another £2,600, while the computer was £640, printer £220 and, perhaps most remarkably of all, those famous bookie umbrellas? That cost in excess of £400.

After acquiring the correct paperwork and equipment you need to purchase some picks, which will determine your position in the ring and play a huge role in influencing how many bets you field.

The good news is that some of these picks – which can be sold privately or via auction – can be yours for literally nothing. The bad news is that they are worthless for a reason.

"It's all about positions," says Robin Grossmith, a director of the Federation of Racecourse Bookmakers. "You pay exactly the same expenses [low down compared to the top]."

Bookmaker Joe O'Gorman, whose father and grandfather were also layers, says: "You can make a good living with decent positions but they are going to cost you £1 million to buy the portfolio."

The best picks at top racecourses such as Cheltenham rarely come up for sale but are estimated to be worth in the region of £250,000, while last year two high-end picks at York sold for in excess of £200,000.

O'Gorman adds. "You can't go to Cheltenham in pick number 60 and pay the same expenses as pick number one and expect to win – it's impossible."

Expensive expenses

Even after you've bought your pick you still need to pay for your betting badge each time you go racing, which is typically a multiple of five or six times the normal admission cost but can be as much as eight times the standard price at big festival meetings.

O'Gorman says: "At [Royal] Ascot for example it's eight times £85 to get in. Some days at Ascot I'll step out the door and have to win £1,000 before I get my wages."

Due to the level of turnover at big festival meetings additional staff are required to handle the increase in custom, with a casual member likely to command at least £100 for a day's wages.

And there really is no such thing as a free lunch for bookmakers, with their meals and those of their staff added to a bulging list of expenses including the workers' admission, hotel rooms, transport, sponsorship fees and computer support. Little wonder Grossmith labels the expenses as "astronomical and horrendous".

Midweek malady

Despite these huge sums, which put bookmakers on the back-foot before a race has even been run, and the tighter margins brought about by an increase in competitiveness since the emergence of the internet, it is not the festival meetings which are the problem for the on-course layer.

"Our big days are still as good as ever," says O'Gorman. "But whereas we used to make a living midweek, nowadays we don't. I struggle midweek."

In fact, turnover can be so poor that a few years ago bookmakers, during the coldest, quietest period between December and February, were given an attendance allowance to bet at Lingfield all-weather meetings to ensure there were never fewer than three layers and a starting price could be returned.

On a long-term basis, a bookmaker cannot realistically expect for more than 12 per cent of their turnover to be profit. With expenses for an average midweek meeting often eclipsing £300, a layer must take over £2500 in bets from the sparse crowd just to cover expenses – assuming results go their way.

Falling numbers of bookmakers

All of this means that many bookies have left the game. "Sadly I know dozens of good bookmakers who have had to give up," says Hazell, who has had to make difficult decisions of his own.

"It's necessary to adjust your modus operandi, particularly midweek," he explains. "The biggest change was to reduce the staff. I was reluctant to do it – my staff are brilliant and have worked tirelessly – but it was the only way to make the midweek meetings pay. It was very difficult to have to tell the staff that I couldn't keep taking them all.

"A lot of bookmakers get themselves into a position where the amount of trade they do is commercially unviable compared to the running costs.

"There have been quite a few who have packed it in because they couldn't make it pay – you only have to look at the numbers."

And the numbers back up the bookies' claims. In 2002 there were 610 registered on-course bookmakers, yet there are now 415 – a 32 per cent decrease in 15 years.

Hazell does not expect the numbers to recover. He warns: "Anyone starting out now, I would honestly consider their chance [of making a good living] is between very difficult and nil."

Not many bookmakers enter the game skint, but you might meet a few poor ones on the way out.


If you enjoyed this you should try others in our Racing Revealed series:

The art, rules and rudeness of naming racehorses

So, how much does a jockey really earn?

So, can horses really suffer from hay fever?


 

Sadly I know dozens of good bookmakers who have had to give up
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