Ladbrokes Claimed £102M Furlough Funds
It has emerged that British bookmaker Ladbrokes has claimed £102 million in furlough payments over the last two years. The revelation has been met with some criticism, as Ladbrokes has benefitted from increased betting activity during the pandemic. The betting firm’s parent company Entain has claimed that it is now considering returning the funds, amidst growing pressure.
While the high-street suffered during the pandemic, online gambling revenues grew.
©Andrea Piacquadio/Pexels
Online Growth
One of the UK’s top bookmakers has been revealed to have claimed almost £102 million in funds from the government’s furlough scheme. Accounts published at Companies House detail the claims made by the firm over the last two years. In 2020, Ladbrokes claimed £57.5 million, and went on to claim a further £44 million the following year.
The news has been met with derision by some, as the gambling operator’s business did not suffer during the pandemic. On the contrary, the UK’s gambling industry has benefitted from a growth in online betting sales during the last two years. As lockdowns forced people to work from home and stay indoors, many turned to online casinos and betting sites for entertainment.
Entain, which operates a number of betting and gaming brands including Ladbrokes and Coral, saw its profits grow as a result. Campaigners raised concerns over the welfare of gamblers during the lockdowns, as rates of online gambling and gambling harms rose. In response, the industry withdrew some of its TV and radio advertising in 2020, switching to Safer Gambling messaging.
Ladbrokes did not go entirely unaffected by the pandemic. Highstreet betting shops were forced to close for periods during 2020 and 2021. Ladbrokes is the UK’s largest betting shop operator, with 2,845 shops run under its Ladbrokes and Coral brands.
Disrupted sporting schedules at the beginning of the pandemic also had an impact on revenues, although 2021 saw a welcome boost from the long-awaited Euros tournament and the Tokyo Olympics. The Grand National last April broke all previous records, becoming the biggest online sports betting event in the UK.
The company’s betting revenues for 2020 fell from £983 million to £681 million. However, Entain’s overall revenues hit £3.6 billion, unchanged from the previous year. Its pre-tax profits came in at £114 million. Since then, Entain’s business has continued to grow around the world. It has recorded 23 consecutive months of rising revenues.
Situation Under Review
Entain has not done anything inherently wrong in claiming payments from the government’s pandemic furlough scheme. It is legally entitled to claim the money and is within its rights to keep it. Nevertheless, Entain has been compared to a number of other betting and gaming firms which have since returned their claimed cash or declined to claim any furlough funds at all.
It remains uncertain whether Entain will choose to pay back the furlough funds, although pressure is mounting for the company to do so. Responding to the accusations that it should not hold on to the funds, a spokesperson for Entain said:
“The furlough scheme was a sensible and highly welcome policy intervention that helped us, as one of the country’s largest retailers, to maintain the livelihoods of more than 14,000 retail colleagues on full pay. Whilst the virus is still with us and the outlook, although improving, is still far from certain, the Board will continue to keep the situation under review.”
The Guardian newspaper took that statement to mean the Entain has declined to repay the funds. However, Entain’s CEO has herself refuted that claim. Speaking in an interview with the Telegraph, Jette Nygaard-Andersen said that her firm is keeping “the situation under review”.
Nygaard-Andersen also took the opportunity to urge ministers to strike a “healthy balance” in the government’s upheaval of gambling legislation. She claimed that the industry has been given an unfair reputation, and warned that too strong a crackdown could advantage black market gambling operators.
Many gambling firms claimed payments from the government’s furlough scheme at the beginning of the pandemic, when its impact was still uncertain. While the high-street did take a hit, strong performances online led to a better trading period than was expected. Subsequently, many firms opted to pay back their received funds and didn’t claim any more cash.
US Market Expanding
One of Ladbrokes’ top competitors, William Hill, claimed £24.5 million from the government’s furlough scheme. It paid that sum back in January 2021, which lead to an annual loss of around £30 million. Flutter, which operates the Paddy Power brand, did not make any furlough claims. Both betting firms have fewer retail sites than Ladbrokes and Coral.
The majority of furlough claims have been made by businesses in industries that experienced sharp drops in revenue. For instance, airlines that were grounded and retail and hospitality businesses that were forced to close their doors. Entain’s financial situation marks a stark contrast against that of other claimants, some of which have gone bust.
Ladbrokes’ £44 million claim made in 2021 is amongst the twenty biggest furlough claims of that year. Vice chair of the Gambling Related Harm APPG, Iain Duncan Smith MP, didn’t hold back on his criticism of Entain’s behavior. He said:
“The greed of these companies, that derive vast profits from addicted gamblers, never ceases to amaze. Any company with a clear sense of morality would immediately hand this money back to the UK taxpayer.”
Entain was approached by US rival Draftkings last year for a potential takeover. Despite an extension to the bid deadline, Draftkings walked away from the deal last November. If it had gone ahead, the US fantasy sports firm could have paid £18.4 billion for the acquisition. It would have benefitted from the company’s wealth of experience, as the US betting market continues to grow.
It is thought that Entain’s existing deal with MGM Resorts was considered too complicated to resolve. MGM joined forces with Entain to launch BetMGM shortly after PASPA was declared unconstitutional in 2018. Entain is still benefitting from the growth of online sports betting in the US, which has just launched in New York, through its BetMGM venture.
