Operator insight: AGCs fighting back after decade of change

Operator insight: AGCs fighting back after decade of change

Tuesday, September 22, 2015
Talarus' Peter Harvey said that the AGC sector wants to compete on a level playing field

Peter Harvey, chief operating officer of Quicksilver-owner Talarius, tells TotallyGaming.com about how his company has responded to the regulatory and market challenges that have affected the Adult Gaming Centre (AGC) sector over the last 10 years

AGCs are entrenched into the culture of high streets, providing a safe and social environment for adult entertainment across the country. However, the AGC sector has been hit by a perfect storm of over the last decade, which Talarius – and its Quicksilver, Silvers and Winners venues - has been determined to weather. 

The introduction of the smoking ban in 2006 reduced the amount of time that customers spent playing on machines. Combined with the subsequent recession and the growth of the National Lottery, which provided an alternate forum for AGC customers to play games, the circumstances had damaging repercussions that were felt heavily by the industry. Even the biggest player in the sector was not immune to this and we saw revenues drop and 50 venues close.

However, the sad truth is that these factors pale into insignificance when compared to the difficulties inflicted on the ACG sector by the introduction of the Gambling Act 2005, which came into force in 2007. The Act banned the popular S16 machines, which had a maximum stake of £2. Many customers who had enjoyed these machines then migrated to the B2 machines available in betting shops, which offer a maximum stake of £100 and a jackpot of £500. Given it was not allowed to offer machines with £2 stakes let alone £100 per spin, the AGC sector instantly lost a significant chunk of its customer base as a result. 

Meanwhile, the alternative to the now banned S16 machines for AGCs was the new B3 machines. These offered the same prize but only half the stake (reduced from £2 to £1), and had a lower technical specification which significantly reduced the players game interaction. The Act introduced a cap on the number of the machines permitted per AGC venue, which took a significant toll on the industry. Although the stake was later increased to £2 by the Betting and Gaming Duties (Amendment) Order 2011, by this point venues had already closed, many UK manufacturers had disappeared and customers had moved on. 

AGCs are not just disadvantaged in terms of machines, but also in terms of product. In recent years, betting shops have increased their competitive advantage, with the most popular B3 content being imported across to B2 machines. Meanwhile, AGCs are not able to offer the sports bets, for example, available at betting shops. This means that betting shop customers are given a complete choice of game at one venue with the added option of playing on higher stakes machines, compared to just a B3 offering in an AGC, giving betting shops a one way advantage. 

In an attempt to compete with the rest of the gambling industry, AGCs have had to reinvent themselves. Talarius is working hard to increase its market share; is investing millions of pounds to modernise its venues, improve the machine estate and provide extensive training and development for employees across the business. These developments will ensure that our venues across the country are welcoming more customers through their doors, and help Talarius build on its excellent results of the last couple of years and deliver sustained long term growth. 

However, betting shops continue to benefit in terms of the machines and products they can offer. Talarius does not wish to offer dangerous, high stakes B2 machines in its venues in their current form, but until the government acts to level the playing field one way or another, the future for many thousands of employees and family-owned businesses remains uncertain.

 

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