Brexit fallout poses risks for UK gambling industry, expert warns

Paul Leyland, a who was among the first to focus on gambling, said that bookies in particular will not prove as resilient to a post-Brexit recession as they have done in previous times of economic turbulence.

The forecast of a Brexit apocalypse has so far failed to materialise, but Leyland said it was too early to fully appreciate the economic fall-out from the historic leave vote.

"A lot of commentators and people from the gambling industry are saying the doom-mongers were wrong and it is business as usual," said Leyland, who was speaking at a two-day Betting on Sports Conference in London.

"That may be true and we may be looking at a period of stability unlike what many of the Remain campaign were saying we were going to get," he said. 

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Or the doom-mongers were right and we have just heard the scraping, the band is still playing and we are carrying on dancing and the hull is filling with water

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"Frustratingly, we still don't know which of those scenarios it is. Two things are true -- we aren't sinking but we're not on a pleasure cruise either," the expert added.

Leyland, who also worked in the investment bank sector, warned the gambling industry brazening out previous recessions would not work this time.

"From a UK perspective the commercial sector is nine billion pounds, five billion is cash and four billion -- and the fast-growing bit -- is online.

"For retail operators out there in particular, in a demand-driven recession, cash tends to be constricted rather than spent, and that's important.

"In 2007 most gambling companies were saying don't worry about the recession, we are resilient, we have seen it all before.

"2009 was a pretty horrible year for many of the operators, particularly for high-spending operators and there are high-spending operators even in bingo halls and betting shops.

"The reason for that is in such a recession people tend to hoard cash when they are generally scared about what's going on and don't trust banks anymore, and that is precisely the recession we might just be getting next year or the year after.

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So you're not safe if you're online and you're not safe if you're land based

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Leyland, who now works for a strategic consultancy focusing on international gambling and related industries, said factors such as the markets and robust consumer demand suggested all was rosy three months after the referendum that sent shockwaves across the world.

However, nobody should be rejoicing just yet.

"A number of manufacturers in the UK have started to say we are worried about investing and some key inward investors into the UK have said we have to see what happens here before we carry on," said Leyland.

"Probably the starkest example and it didn't get the coverage it needed to is the Japanese government saying to the British government we're pretty disappointed what you did and we're going to take a long hard look at the kind of investments we have in the UK.

"The type of investments they have in the UK, particularly in motor manufacturing, are really important. So we don't know yet if there will be a recession, but we do know that a lot of macro investment signs are getting a little bleaker.

"We are almost certainly going to see a lot of uncertainty in 2017 and a lot in 2018, which will start to have an impact on consumer confidence, jobs and spending growth.

"So regardless of what's going on at the moment, 2017 and probably a chunk of 2018 are going to be pretty difficult for consumers generally and the gambling industry in the UK."