Back in October we looked at the UK bookies. Ladbrokes (LAD), William Hill (WMH), and Paddy Power (PAP) weren’t doing all that great, but signs of a nascent recovery were starting to show. New taxes were and still are threatening that recovery. Ironically, the higher tax, being the 25% sales tax on machines, is actually the less threatening one because the market is shifting heavily towards online and mobile. A high tax will only shift demand further in that direction, more reshaping the market faster than it would at its own pace, buLAt not shrinking it significantly.

The real problem is, and will continue to be, the 15% POC tax that took effect in December last year. That tax can’t simply reposition demand as it is a suffocating blanket that covers the whole market. The full impact of it has yet to be seen, and so far, the slow, fragile recovery continues for all three, some more fragile than others.

Ladbrokes

Beginning with Ladbrokes, the positive highlights are mobile sportsbook, with staking up 110% and active players up 62%. While these numbers are nice, Ladbrokes is still heavily weighted towards retail rather than digital. Digital is only 20% of total business, with retail at 70%. That Ladbrokes is still heavily reliant on its retail business exposes it to that 25% tax, in addition to it being less balanced than its competitors. The consequence is that overall net revenue in 2014 dropped by 2.4% even though digital revenue increased by over 20%.