Paddy Power to close up to 100 betting shops in another bitter blow to racing's finances as budgets tax rises bite

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British racing is facing another seven-figure hit to its income following the news that Paddy Power have become the latest high street operator to announce closures, with up to 100 betting shops set to shut before the end of the year.

That would represent about a fifth of the company's retail estate in the UK and Ireland, and parent company Flutter Entertainment warned approximately 400 jobs are now at risk of redundancy.

Flutter has not revealed how the closures will be split between the UK and Ireland, but when Betfred recently announced they were planning to close 132 shops, it was estimated the hit to British racing's finances would amount to about £4 million in lost levy and media rights payments.

Senior figures within British racing have voiced their alarm at the situation facing the sector, which is facing calls for an increase in the rate of duty on the gaming machines (MGD) found in betting shops.

Arena Racing Company chief executive Martin Cruddace this week told a parliamentary reception that the impact of additional tax rises on betting shops could be "truly grave" and that "horseracing cannot be collateral damage". 

• Arc chief warns of 'truly grave' threat from tax rises in impassioned defence of betting shops 

Flutter said the closures came amid pressure from rising energy costs, rents and rates, as well as the higher gambling taxes unveiled in last year’s budget in the UK.

It is the latest round of closures by Paddy Power, which previously announced in October that 57 outlets would be closed. They currently operate 506 betting offices – 310 in the UK and 196 in Ireland – employing more than 2,300 people.

Flutter added that impacted employees would be redeployed where possible and that Paddy Power would consult with them throughout the process and provide support to those affected.

A spokesperson from Flutter UK and Ireland said: “We are incredibly proud of our high street estate, and it remains a key part of our business in communities across the UK and Ireland. Unfortunately, we have had to take the extremely difficult decision to conduct this review.

Paddy Power sponsors races such as the Paddy Power Gold Cup at Cheltenham in NovemberCredit: Edward Whitaker (racingpost.com/photos)

"The high street trading environment has been challenging for a number of years given rising costs, fierce competition, economic uncertainty and the shift to online, but we also face a material impact from the higher gambling taxes announced in last year’s UK budget.

"Our immediate priority at this time is to support those colleagues affected by this announcement."

Betting shops have found themselves increasingly in the eye of the storm in recent weeks.

Prime minister Andy Burnham Andy Burnham insists giving councils more power to block betting shops will 'crack down on businesses that aren’t good for our communities' to make it easier for local councils to block new shops opening as he lumped them in with "rogue operators" on Britain's high streets, while he told the House of Commons on Tuesday that the government had "announced tougher action on vape shops, alongside adult gaming centres and other gambling venues".

Andy Burnham: prime minister labelled betting shops as "dodgy businesses"Credit: Gary Roberts/SOPA Images/LightRocket via Getty Images

• Andy Burnham's betting shop crackdown is based on a false narrative - and racing will feel the consequences 

Meanwhile, former prime minister Gordon Brown last week called for a major hike in MGD, echoing a similar proposal made by the Social Market Foundation think tank.

The then chancellor of the exchequer Rachel Reeves nearly doubled the rate of remote gaming duty levied on online games of chance in last year's budget, which Flutter said would have a $320 million impact on earnings in 2026 before mitigation of $85m.

David Brohan, gaming and leisure analyst with stockbrokers Goodbody, said he believed the shop closures were part of that mitigation effort.

He added: "I suspect it won’t be the last of the closures as different leases expire and particularly if MGD increases in the budget. It might put some pressure on the media rights distributors to lower costs to make the economics of shops more attractive." 

Betfred announced their closure plans at the end of July, citing increases in taxation and economic uncertainty as the primary drivers behind the decision, while William Hill owner Evoke also chose to close 270 of its betting shops following a strategic review prompted by the budget. 

Comment: The bad news keeps coming for betting shops - and British racing will have to adapt

When it was revealed last October that Paddy Power were planning to close 57 betting shops in the UK and Ireland, the budget had not even taken place.

The bad news for high street betting, and therefore British racing's finances, has not stopped since then.

At that point Paddy Power had 608 betting shops. That figure has been whittled down to 506 and now another 100 of their shops could be shuttered as the increased gambling taxes announced in that budget, along with the rising costs facing all high street traders, continue to bite.

Since then both William Hill and Betfred have announced closures amounting to about 400 shops, while Ladbrokes and Coral owner Entain estimated that as many as 560 betting shops had closed since the budget before Paddy Power's latest announcement on Thursday.

The closures rather make a mockery of the idea that betting shops are proliferating on Britain's high streets.

It also rather holes beneath the waterline extravagant claims about how much extra tax can be raised by increasing machine games duty, something that would inevitably send even more betting shops to the wall.

Adult gaming centres appear to be the target of politicians' recent displeasure with high street gambling but betting shops are being caught in the crossfire.

Andy Burnham may have talked about the "proliferation of adult gaming centres" in the House of Commons on Tuesday, but "other gambling venues" were also mentioned when the prime minister talked about the "tougher action" the government was taking.

With each closure comes a cost to British racing which, according to an article published last year by industry consultants Regulus Partners, still derives about 40 per cent of its income from bookmakers through betting shops. 

Betfred estimated that their closure of 132 betting shops would amount to about £4 million lost to the sport in media rights and levy payments.

Greg Knight: substantial increase in cost of showing racing in Jenningsbet shopsCredit: JenningsBet

However, not all operators pay the same amount. Greg Knight, chief executive of Britain's largest independent betting shop chain Jenningsbet, recently revealed that their costs of showing racing had risen by approaching 75 per cent in the last five years – from £40,000 per shop, including VAT, to almost £70,000.

Something has got to give, and the next round of media rights contract talks are likely to be difficult. In the meantime British racing must try to find a way of replacing the income that is being lost. But that is easier said than done.

Read these next:

Arc chief warns of 'truly grave' threat from tax rises in impassioned defence of betting shops 

Betting shops and racing facing 'perfect storm' from tax rises and increased media rights costs, says JenningsBet owner 

'They are vital community hubs - having a bet brings joy to millions of people' - BHA launches staunch defence of betting shops 

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