Online gambling makes Stoke woman a billionaire

On the site of Josiah Wedgwood’s porcelain factory, the home of a new power in Stoke’s economy is taking shape.

Machines from JCB, made at nearby Rocester, are smoothing the ground as a huge frame takes shape to house the head office of Bet365, the largest employer in the area that is also the home of Britain’s pottery-making industry.

In only 15 years, the world’s biggest online gambling site has moved from a hut in a car park to a £30m headquarters in Etruria, a Stoke suburb that was named by Wedgwood after the ancient Italian region that was home of the Etruscans.

Bet365 employs about 2,400 people and its co-owners are worth £2.4bn, half as much as Stoke’s annual economic output.

Denise Coates and her brother John featured on this year’s Forbes Billionaire list, joining John Caudwell, the Stoke-raised founder of Phones4U, and Lord Bamford of JCB, born in nearby Uttoxeter.

Ms Coates owns 50.2 per cent of the business and is the “driving force”, according to insiders. Her brother has 25 per cent, with the rest split between other relatives. They rarely give interviews and are not often seen at business or social events in the city.

The public face of the family is Peter Coates, their father and chairman of Stoke City, a Premier League football club owned by Bet365.

Denise and Peter live next door to each other in Sandbach, the quiet county town where Cheshire East council is based.

“They are real people, they just want to get on with life,” said Michael Jones, the council leader.

Peter Coates came from a mining family but opened some betting shops as pits began to shut.

His four children went to comprehensive school but were shielded from the ravages of recession as steelworks, ceramics and engineering plants closed all around them in the 1980s.

Denise, the eldest, spent weekends as a schoolgirl marking up bets. After gaining a first class degree in accountancy at Sheffield University, she asked her father to let her run the shops.

She expanded the chain to almost 50. But in 2000 she decided the future was online. She mortgaged the shops for a loan and bought the Bet 365 domain name for $25,000 on Ebay.

“I felt that as a chain of betting shops, we would only ever be a regional player, while with the online business, I felt we could become a leading global player,” she said.

Expansion was slower than expected after technology stocks collapsed in the late 1990s.

“It was very difficult to get funding as the initial internet bubble had [burst] and nobody wanted to lend to a start-up online business.”

I felt that as a chain of betting shops, we would only ever be a regional player, while with the online business, I felt we could become a leading global player

But in 2005, the betting shops were sold for £40m to Coral and the money invested in software and marketing.

The reinvestment of profits since then has allowed Bet365 to outstrip older rivals such as Ladbrokes and Coral to become Britain’s second-biggest bookmaker after William Hill.

It has also benefited from millions of new customers around the world who would never have dreamt of setting foot in a shop but who are happy to gamble online.

Bet365 was one of the first to offer in-play betting on football matches, where customers can bet, for example, on the number of free kicks or the next scorer. That accounts for the majority of spending.

Its accounts for the year to March 2014 showed turnover up more than a third to £26bn with almost 14m registered customers. The group’s sports and gaming operating profit grew by 81.5 per cent to £321m and the owners took £95m in dividends, up from £15m the year before.

The company also gave £105.5m to Ms Coates’ charitable foundation, which focuses on education, medical research and projects to help communities.

The foundation gave £250,000 towards a successful £15.75m appeal to save the Wedgwood Collection from being sold on the open market to help plug a gap in the pottery company’s pension scheme.

Bet365 and linked company Hillside also gave £330,000 to the Labour party between 2007-10. Peter Coates personally donated £160,000, although the last time was in 2012.

The company is thought unlikely to make political donations again, preferring to give to charities.

Ms Coates said the “decision to develop our own sports betting software was a key one. I just felt that we had to have a point of difference and that has proved to be the case”. Many bookmakers now use the same software supplier — Playtech.

Stoke remains one of Britain’s poorest cities. Average earnings were £22,000 in 2013, against a national average of £26,500, and one in six was on unemployment benefits.

But more than 2,000 jobs were created in the city with a population of 249,000 in 2014 as industry recovered and new commercial property developments attracted tenants.

Kevin Oakes, chief executive of Steelite International, a tableware maker that owns Royal Crown Derby, said Bet365 had been vital for employment. “Stoke-on-Trent has gone through a very difficult time. But the people are very hardworking. There are also lots of entrepreneurial young companies. Out of adversity comes innovation, and that is what we have seen.”

Steelite extended its factory last year and recruited 250 extra people. “Stoke is a much different city. There are green shoots,” he said.

Bet365 last year decided to move international operations, and 100 jobs, to Gibraltar. But it retains its software development as well as the UK operation, which accounts for a quarter of business, in Stoke. Many other UK bookmakers have overseas arms in Gibraltar because betting taxes are lower. Bet365 says it complies with all legal obligations.

Ms Coates, 47, shows no desire to slow down or sell the business. “I have always been motivated by the desire to be the best at whatever I do. That desire continues.”