Gambling has been about for hundreds of years in some form. It’s often considered to date back as far as 2300BC where the Chinese were famed for betting on games of chance, which would explain their continued love affair with this past time.
For the purpose of this article we are going to keep things a little more in the present, at least, not more than 500 years old, if that is indeed regard as the present at all?
The first casinos started to open their doors in the 1600’s throughout Italy. In fact, many of the games that we see today were regarded as some of the earliest of their kind, such as blackjack and keno. The games in their principles have changed very little, especially blackjack, however early reports are that the game offered odds of up to 10/1 on your money for hitting blackjack, whereas these days you’d be lucky to find 2/1.
The casinos, whilst not linked to sports betting as such, were an important stepping-stone of the industry. It allowed people the chance to make money from games of chance and the vast size of the online casino industry today highlights just how popular the pastime has been within our heritage for hundreds of years.
Horse racing; the blackjack for sports betting
People have been riding horses for hundreds of years and in that time they have always been racing. Horses have been used in everything from the military to tribal transport and as a recreation event, they have been raced throughout this period as well. The stronger, faster horses were bread to create equally impressive offspring, just as they would be today when going to stud.
It was around the turn of the 16th century that recorded competition for horse racing was first recognised. It’s often thought that the first race was held in Lanark in Scotland, back in 1160, but it terms of actual proof, it’s not until 1504 when James IV of Scotland mentioned the first race at Sands Leith in 1504.
From this point the sport really started to take shape and there are a plethora of records showing over the next 200 years about races and meetings that had taken place, many of which at courses that are still in operation even today.
One of the crown jewels of the history of horse racing comes in the form of Newmarket Heath, a name very well known to most horse racing fans. It was here that James IV really started to create a HUB for the sport and with it was able to get other royals on board, such as Charles II. In fact, it was Charles II who was the first real pioneer to offer prize money and gifts as part of the racing schedule. This came in the form of the silver bells or bowls, gifted to winner’s of each race to add to the value of the race.
The format of the races were a little different back then to modern day racing., What you would often find is that the races consisted of just two horses, with the owners going head to head. They would also have a wager on the race, which would often be the spoils for that race. This was known as ‘match betting’ which is something that again still is common within the modern day bookmakers for pretty much all sports. However, it was very unorganised and there were no official bookmakers back then, so punters would simply bet amongst themselves, often with friends and even provide their own books (odds) for each race.
It’s pretty crazy to think that over 300 years later, this is pretty much the business model of sites such as Betfair!
In the 17th century the sport really stepped up a notch and whilst not professional as such, it was widely regarded as a true recreational activity in Britain. Courses such as Newmarket and Ascot were expanding to allow more people in and higher calibre of races on offer. Records were started to be taken and the inclusion of the Royal Family, such as Queen Anne were on board breeding horses of their own and allowing the sport to have real credibility.
By 1739 the sport had continued to expand at an alarming rate and it was now that the government were to start getting involved. They initially saw it as a huge problem with race tracks often attracting violence and thievery within. It was at this point that the first of the enforced gambling acts were to be brought in, in an attempt to control the growth and expansion of the sport. Such was the popularity of the sport and gambling within horse racing that 122 towns were offering up races and betting opportunities for race goers.
At this point in time it was still widely considered that horse racing was for the rich, but as the popularity grew it attracted a lot of poor people to race tracks. As a result it was decided that in order to keep growth levels down and to keep the poor away from the race tracks, an entry fee would be added to each track, essentially refusing those who wouldn’t afford it admission. Prize money was also added to races worth up to £50.
Unfortunately for the government – and the rich – is that the working class, whilst poor, weren’t stupid, so they organised illegal race meetings instead. This was often in as little as a large field where punters could bet and essentially made the situation to govern the sport even more difficult.
The Jockey Club and Tatersalls
In the 18th century two of the biggest and most influential institutions were formed in the form of The Jockey Club and Tatersalls. They weren’t to know it back then, but these two institutions revolutionised not only competitive sports, but also betting and if wasn’t for them, we might not be where we are today within the industry.
The Jockey Club was the first to come to fruition in 1751 and was designed to keep the horse racing industry regulated. This included making sure that race meetings were run to a certain standard and also that people of all backgrounds were able to access to the sport.
In terms of betting, Tatersalls was formed to make sure that they were able to control how betting occurred and who with. For all the time leading up to the institutions inclusion in 1789, people would simply bet on a 1 to 1 basis.
By the turn of the 19th century they had been able to assign betting posts where people would congregate to bet and also arrange specialist marquees where betting took place as well. Sweepstake betting was another format of betting to really take place around this period, allowing punters to enter a pool for a bigger prize at the end, not to dismissal to how the Tote works, which we take about later in this article. They also allowed punters to bet on races weeks or even months in advance to combine several bets for bigger payouts, much in the same way that Ante Post betting occurs today.
It wasn’t until the turn of the 19th century that bookmaking as we know it today really started to become popular. The main reason for this is because horse racing had moved away from head to head racing and started to include races with much larger fields. The classics were also starting to really develop as major racing events, such as the One Thousand Guineas, Two Thousand Guineas, St Leger, The Oaks and The Derby.
This was the first time that bookmakers moved away from offering odds on odd horse and then the field and more into being able to offer individual pricing on all horses within that race. The art of bookmaking back then was much harder than it is today and bookies had to work out quickly what their exposure on each eventuality would be. If they needed to attract they would lengthen their odds and if they needed to detract they would shorten their odds, just as they would today.
The betting boom
Whilst horse racing has been at the main forefront of the gambling boom at the end of the 18th and turn of the 19th century, in the background other sports were all getting a piece of the action.
Punters were now looking for anything that they could bet on from endurance racing, time races, the speed in which they could build houses, coin tosses, pub games, nine pins, cock fighting, dog baiting, bear knuckle boxing and foot races. You name it, they were betting on it!
For many betting was seen as a class thing, especially for the upper and even middle class. They were able to show off how much money they had by being extravagant with both what they bet on and how much they bet. For the working class it was often seen as something much distant to that. It was a way to get away from their industrial based jobs in mine pits and huge factories and instead get a buzz of excitement from the few times that they would actually win.
As gambling continued to grow, so did the social backlash. Many of the middle class were complaining of gambling running lives in terms of losing money, but also of the calibre of folk it attracted to sporting events, mainly the working class. Often events would be ruined due to drinking and gambling. The fact that people were making money as ‘something for nothing’ was also frowned upon by many successful business people.
In 1830 this triggered anti-gambling groups to try and aid those in need and outline the detrimental affects of gambling. Issues such as betting frauds, publication of anti-gambling literature and highlighting the mass losses that some people had incurred as a result.
The pressure on the government to act finally came to head when these problems were escalated to the House of Lords. They in turn set up their own committee to govern gambling in 1844 and the first Gaming Act was brought about a year later in 1845.
What’s pretty astonishing is that the 1845 Gaming Act was still in running right up until 2005 where the act was rewritten in order to condone with modern day betting, mainly because of the vast expansion of online betting.
The original act was set up to almost remove the government from any individual losses and even stated that those foolish enough to wager should suffer the consequences if things go wrong. But, the act also targeted the upper class as well by removing their power within a court to essentially sue companies in relation to gambling losses, something that was very common within the 19th and early 20th century.
Betting shops on every corner
As betting continued to be popular, the number of betting shops were starting to flourish, with one report stating they were on every street corner in England. Whilst a bit of an exaggeration, it did underline just how many shops were opening and the popularity that came with the pastime.
In order to deal with this, the Betting act of 1853 was issued in order to outlaw these exact betting shops. They would reprimand any owners or tenants of betting shops accordingly and essentially ban them from accepting bets within their stores. However, a workaround for most was soon achieved by providing these betting shops as private members clubs, similar to that of a casino, allowing people to bet as long as they were a part of the club. Another issue that arose from this was that of street betting, which became just as, if not more popular than betting shops, which if anything, escalated the issue further.
The bookies were always one step ahead of the law when it came to betting and instead of operating shops, they used to use private houses and even had runners who would take bets on the street and then return wagers or winnings to and from the house. It also coincided with the Industrial Revolution, which at that time meant that people were earning more money, had excess income (even the working class) and were able to see gambling as a recreational activity, increasing the number of bettors year on year.
National Anti-Gambling League
A long time protestor to gambling were that of the National Anti-Gambling League, who were one of few organisations that had managed to gain some power in the fight against illegal betting operations.
In 1901 they were able to get a committee formed within parliament who were able to outlaw street betting. In fact, they were able to go one step further and try to outlaw that of all forms of betting that were accessible to the vulnerable and the working class. Two key proposals were initially rejected, but alter introduced:
- Bookmakers had to be licensed regulated and taxed
- Totaliser systems to be introduced as an alternative to gambling
The fact of the matter is, that even with the best interests of the local public, street betting continued and the powers that be were almost powerless to stop it due to its increasing size. The number of arrests for illegal bookmaking grew exponentially, but even they continued to grow in a long drawn game of cat and mouse between them and the law.
It wasn’t until 1906 and the start of the First World War where the government decided that outlawing gambling was going to be an impossible task to police.
The understanding of how gambling worked was increased and as a result moved from a prohibition to regulation, a huge step for the industry.
The government in turn were then forced to work out ways in which it could limit the exposure of the interaction between the punter and the bookmaker, which they saw to be the biggest catalyst in the gambling addiction issue. To solve this they introduced postal betting, where boxes were set up in towns and cities for punters to post their bets.
The Royal Commission
The Royal Commission was set up in 1949 following World War II. The years during the war saw little change in any regulations within the industry and understandably so given what was going on.
It was the Commissions role to see if they could come up with a resolution about gambling and more importantly, to see how people were reacting to the measures that were already in place.
To their surprise, many people were feeling much less infuriated by the whole situation with gambling, which led the Commission to believe that with proper regulations in place there was a potential to make money from it.
The 1960 act wasn’t passed until a further 10 years had passed, but it’s often thought that this act paved the way for modern day gambling, with many of the same ethics and regulations still being apparent in the way we bet today.
Modern day betting and regulations
The next biggest milestone within the gambling industry didn’t come until 2001. But, instead of chasing betting companies about safe gambling, it was now to do with money, money that the government wanted and were duly owed.
The taxing for bookmakers worked out at around 9p for every £1 wagered. But, companies found a loop hole in the system that meant they could move off-shore and pay no tax whilst still providing operations for the UK market. Victor Chandler, now known as BetVictor, were the first of a fleet of bookies that made the switch in the late 1990’s.
This sent alarm bells ringing to parliament and in fear of more bookmakers doing the same and the government missing out millions in tax, they instead allowed punters to have tax free winnings and charged the bookies a set 15% tax on gross profits.
The online era made this rule difficult to enforce once again, with many setting up abroad and merely offering online services from countries such as Malta and Gibraltar, with massively reduced tax rates. But, in 2014 the government once again fought back, ensuing that any bookmaker or gambling site offering services to UK punters would be liable to pay UK tax rates.
2005 Gambling Act
2005 was a huge year for the gambling industry. It’s widely regarded as the ‘boom’ years for online gambling and a plethora of bookmakers and casinos were starting to see that more people wanted to play and bet from the comfort of their own homes.
The online system allowed millions more punters to access sports betting and casino games, which erupted the industry. But, the same struggles that the industry saw in the 18th and 19th century started to rear their head once again. People were gambling beyond their means and social issues were cropping into the industry.
Cue the Gambling Commission. The Gambling Commission was set up along with the 2005 Gambling Act, but instead of making sure that the companies paying their own way, they were instead designed to support the consumer more. They made licensing compulsory within the UK and forced companies to adhere to laws and regulations before they were able to offer their services.
The affect of online for the high street
The online sector has had a huge affect on the high street bookmakers. It’s also revolutionised how these bookmakers work and whilst they are probably better off now then they have ever been, they have been forced to change the roots and heritage that some of them had decades of experience in.
The high street used to be littered with betting shops packed with punters, but these days, they are usually the last few shops standing in dying towns and cities.
The mobile era is here and it’s here to stay. The ability to jump on your phone and place a bet within a matter of seconds is winning punters over. There is no need to travel to the nearest betting shop and even if you do, you will likely have limited betting markets to choose from at odds that are less favourable than online.
So, the question that remains is, why are there still so many betting shops on our streets?
The answer is pretty simple; Fixed Odds Betting Terminals (FOBTs).
Fixed Odds Betting Terminals are machine based, computer powered games. They are essentially like a mini casino, crammed with dozens of games that allow you to bet and play instantly. They’ve become massively popular with punters in betting shops and are the main reason why so many shops still exist today.
To give you an idea of the popularity and the earnings potential of these machines, from 2009 to 2011 the gross gambling yield in the UK grew 21.6% from £1.07bn to £1.30bn. This was in line with over the counter bets dropping 10.7% from £1.66bn to £1.44bn. Fast forward to 2016 and these numbers have grown exponentially, now showing a yield of £1.82bn, an increase of 73% and far surpassing the amounts taken from your over the counter bets.
The machines are claimed that you can wager up to £100 every 2 seconds, which is an astronomical amount if you are sat for even up to 5 minutes on one game. Campaigners protested against the machines to limit the maximum bet to just £2 applying heavy pressure on the government to make changes.
FOBTs are essentially why betting shops still exist today, for the most part at least. The terminals ‘success’ has meant that betting shops are only limited to 4 machines per store. But, the bookies workaround for this is to open more stores, which is why it’s not uncommon to see the same bookmaker with multiple shops within just a few hundred yards of each other, such is their popularity and potential earnings.
The future of the industry
The latest figures within the betting industry continues to show an increase across the board. In 2015-16 revenue in casinos increased by 20%, lotteries 7% and online betting 5%, which has been a pretty stable progression over the last decade or so.
What we would expect to see is the decline of the high street bookmaker. The FOBTs are the one thing that is keeping them afloat at the minute, but as pressure continues from outside the industry, changes will be made.
In 2018 the government announced that Bookmakers’ must reduce the maximum stake of FOBT’s from £100 to £2. Online casinos taxes will also increase from 15% to 21% in order to make up for the tax shortfall following the minimum stake reductions. These changes are set to be implemented in April 2019, which will undoubtedly effect the high street bookmaker with many shop closures widely anticipated.
Online betting is likely going to continue to go from strength to strength though. Bookmakers are coming up with plenty of new betting ideas and features on site and it’s almost a case of them trying to outdo each other, which is great news for the punter.
We do expect to see that the bookies are forced to take better care of their customer base though, especially those vulnerable to gambling. There are already measures in place with the likes of The Gambling Commission on player safety, so this is an area we feel they will continue to be pushed hard on to prevent people from betting above or beyond their means.