Football pools shape up to take on national lottery - Monday 17th of September 2007

DEREK THOMAS started as a door-to-door collector for Littlewoods football pools 35 years ago, picking up the coupons from customers in Newbury, Berkshire.

Back then, more than 10m people � about a third of the adult population � played the pools and, for many of them, checking the coupon while watching the results come through on a Saturday afternoon was a weekly ritual.

Thomas is still with the business, overseeing an army of 1,200 collectors in southwest England, but there are far fewer players. Today, about 750,000 regulars hope to scoop the £1m jackpot awarded to those who predict the matches ending in score draws.

The national lottery, when it began in 1994, almost killed off the football pools. Thomas, 55, said people found it a lot easier to go into their local shop and buy a lottery ticket than wait for the pools agent to come knocking on their door.

“We suffered originally because the perception of a lot of people was that the pools were difficult to do. People found the lottery easier because they could go to a newsagent. There were Camelot retailers everywhere,” said Thomas.

The pools have struggled against the lottery ever since, but now Sportech, the company that owns the Littlewoods and Zetters businesses, hopes to reverse the decline by acquiring its only real competitor, Vernons, from Ladbrokes. Last month, the Competition Commission gave provisional approval for the deal, with a final decision due by October 17.

The combination of the two groups would give Sportech 99% of the pools market � the only other operator is Leicester-based Brittens, which has less than 1%. A tie-up is seen as crucial if the game is to have a future.

“Bringing the two brands under the same umbrella means they can promote the game better, spend more on distribution and offer bigger prizes,” said David Pope, leisure analyst at Brewin Dolphin, the stockbroker.

Sportech’s management is banking on a reversal of fortune. Last week it announced a 14% fall in pretax profit from £6.1m to £5.2m for the six months to June 30. It also said higher interest rates would reduce earnings in the second half of the year. That won’t please the company’s biggest shareholder, Sir Trevor Hemmings, the tycoon who owns the Blackpool Tower, Pontins holiday camps and a big stake in Preston North End Football Club.

Sportech bosses are adamant the pools could have a vibrant future if promoted in the right way. After all, they say, the game has two in-built advantages. First, it is inextricably tied up with English football, which has never been more popular. There has been a huge rise in betting on football; it now accounts for about 10% of turnover in William Hill shops, partly because of the increased availability of live, televised matches.

Second, the pool-based betting system used by Littlewoods and Vernons is the form of betting most commonly found in other countries (as opposed to fixed-odds betting, which is the norm in Britain). This means that there is strong potential to expand the game internationally.

The problem is that too many of the pools’ existing customers are older people who play it because it is what they have always done; it is a habit. The 12,000-strong collector network lives on but the challenge for the business is to make it more appealing and readily available to a younger audience.

One option would be for the pools firms to have booths inside football grounds, as bookmakers do. When the pools started, representatives from the various operators � there used to be more than 200 � handed out coupons outside the clubs’ grounds. The industry believes it needs to recapture some of that immediacy.

As well as increasing the retail presence, Ian Penrose, Sportech’s chief executive, sets a lot of store by technology. In March, he signed agreements with Orbis and Scientific Games to improve the group’s software. He envisages customers being able to buy a coupon and play anywhere � whether at a football match, by mobile phone or computer or by visiting a shop.

“Twenty years ago, the collector came to your door on a Thursday night before the games on Saturday; lots of people were home before 7pm on a Thursday evening. We need to make our games accessible right up to 3pm on a Saturday afternoon,” said Penrose.

The initial hope is that making the game more accessible could get the number of players back above 1m.

Sportech has sold noncore assets such as its BetDirect online bookmaking operation in order to make the investment to kick-start this. The acquisition of Vernons, at between £50m and £60m, will accelerate the process. “It gives us the ability to take that even further,” said Penrose.

There will also be cost savings from the merger of the two operations, both of which have their head offices in Liverpool, although Penrose declined to give any details on how much might be involved.

It is also not clear how long the Littlewoods and Vernons brands will survive if the deal goes ahead. Sportech has the right to use the Littlewoods name until 2010, when its licence expires.

The Vernons name will continue in the short term but the future use of the brand is not assured. Nothing is likely to happen until the start of the next football season in August 2008.

While the issue of branding is yet to be resolved, Penrose is working on developing a number of new products in an effort to broaden the pools’ appeal. For example, he points out that the main pools competition is aimed at Saturday afternoons, but football is now played nearly every day of the week. The pools need to reflect this.

As well as new games, such as Premier 10, where players predict the outcome of the 10 biggest matches that week, there are plans for a revamped website offering league tables ranking pools players’ performance, football news and other content in a bid to generate customer loyalty.

The hope is that greater interest will also lead to players spending more money. The average pools player spends £1.80 a week, so there is scope to increase this. About £2m is staked each week on the pools, compared with £100m placed on the lottery.

If Penrose can start to make inroads into that gap, it would be what the pools panel would no doubt describe as a home win

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