The Coates family took their place in the box at the notoriously chilly Bet365 Stadium — where home team Stoke City drew against Ipswich on New Year’s Day — warmed at least by another boost for their personal fortunes.
While the English football club, owned by the family’s Bet365 betting empire, may languish near the bottom of the Championship, results published just days later showed that company founder Denise Coates stayed near the top of the world’s best-paid executive list for another year.
The 56-year-old earned £221mn in salary — and at least a further £50mn in dividends — in the year ending March 2023, taking the total withdrawn from the company in the past 15 years to about £2.5bn, according to filings with Companies House, the UK’s corporate register. This sum will be dwarfed by the value of her stake of over 50 per cent in the business, which generated more than £3.4bn in revenues last year.
Her latest earnings cap off a remarkable 15-year run for the business, which is known as much for its bumper awards to the founding family as for its ability to keep them away from the public eye.
But behind the headline numbers, questions are now being asked by analysts about whether Bet365 can keep paying out quite as handsomely for the house — and what that will mean for the UK’s best paid businesswoman.
“The company is at an inflection point,” said Alun Bowden, an analyst at Eilers & Krejcik Gaming. “It is investing a lot of money to expand in the US as it reshapes the business for the future.”
Paul Leyland, an analyst at Regulus Partners, argued that the Bet365 “cash machine” was under pressure for the first time. Margins had shrunk dramatically from 40 per cent in 2018 to just 9.5 per cent, he said, raising worries that “Bet365’s USP is no longer clear”.
That question is not just relevant to the family’s fortunes but to the local economy around Stoke-on-Trent, an area still suffering the effects of post-industrial decline, where Coates has chosen to keep the business rather than seek more tax efficient havens elsewhere.
“There’s no reason why the family shouldn’t live in Dubai. The weather’s better,” joked Alun Rogers, a local entrepreneur and chair of the Stoke-on-Trent and Staffordshire Local Enterprise Partnership. He described Bet365, the area’s largest private-sector employer, as a “cornerstone” of the local economy.
This commitment to the Midlands city reflects a business described by multiple former staff and analysts as still very much a family affair despite its stellar growth, and kept under tight control by Coates.
The founder, a University of Sheffield economics graduate, convinced her father to mortgage his chain of bookies for the initial stake for the online gaming empire, which started in temporary offices in Stoke in 2001.
The high street outlets were sold in 2005 as the online business started to take off, spurred by the relaxation of gaming laws in the UK.
Central to the business’s initial success was being quick to spot the vast opportunities of online gaming when rivals were still focused on their retail chains. Coates has previously described the family as “the ultimate gamblers” given their all-in bet on the future of internet gaming.
The company grew fast, offering innovative ways of in-game betting, market-leading competitive odds and aggressive advertising to keep the punters coming back fronted by film star Ray Winstone.
With the UK reaching maturity, according to analysts, a large proportion of the group’s revenues were also now derived from so-called grey markets, where gambling is not explicitly allowed under national regulations, according to two people familiar with the business. China, where gambling is banned, ranks among one of Bet365’s biggest markets, the people added.
The payments from China — as with other unregulated markets — were handled by local payment service providers, they said. Barclays, Bet365’s main UK bank, only handles business from fully regulated markets.
Bet365 did not respond to requests seeking comment for this article.
Late last year, Bet365 withdrew from India after the ministry of finance imposed a 28 per cent tax on offshore betting companies, in a sign of its caution over running into trouble with authorities. Bet365 is now aiming for new markets in North America, where many US states have legalised online sports betting.
Global expansion had done little to change the local approach by Bet365’s top management, according to analysts and former staff. Coates still handles day-to-day operations, product development and technology at the business, while her brother John, who is joint chief executive, oversees its legal and financial affairs. Her husband, Richard, also works for the company.
Only one board director has left the company in recent years: Gil Rotem, an Israeli gambling executive, who ran Bet365’s online gaming business. The lion’s share of the £13.7mn in exit payments reported in the company’s 2018 accounts went to Rotem, the year following his exit, according to two people familiar with the matter.
Moreover, Bet365 is still almost entirely family-owned. Coates owns more than 50 per cent of the business. John, her brother, is also a significant shareholder, with about a quarter of its shares.
Coates also has two sisters — Moira and Siobhan — who each own 5 per cent of the business, according to documents filed with Companies House. The Financial Times can reveal that in 2021 Denise Coates bought an 8 per cent stake in the business from her father Peter — described by one person close to the company as an example of “estate planning” because of his advanced age: he turns 86 on Saturday.
One former executive said the family holds tight control of the group. “They’re a very private family. Everything is siloed. You just talked about your part of the operation and that was it. Obviously that’s the best way to keep things private. There’s probably only a handful of people that hold all the information.”
But within the family, few in the company have any doubts who is the boss. One person with dealings with its management said: “If Denise wants something then it will happen. Decisions are made quickly and often by instinct which is a major advantage.”
One gambling executive who has known Coates for more than a decade said she works all hours of the day, and rarely takes time off.
“The most important thing about Denise is she’s meticulous. She’s a product fanatic and she’s a customer fanatic so if someone tries to interfere with the product . . . good luck to you,” they said. “She doesn’t take prisoners: if she wants to get something, she will get it.”
In a rare interview with the Guardian in 2012, Coates said that she was no “shrinking violet” but that she did not enjoy public attention. “I’ve been bossy all my life. It’s just I very much enjoy actually running the business,” she told the newspaper.
Coates gets plaudits for paying tax in the UK on her salary and dividends, as well as investing and expanding the business in and around the north and Midlands. Many rivals have moved operations offshore.
“They are deeply and emotionally attached to where they come from,” said Bowden at Eilers & Krejcik Gaming. “She should be applauded for paying more tax than she needs to — which you can’t say about many companies.” An unofficial prerequisite of working for Bet365’s UK operations was to live within 30 miles of Stoke, according to a person familiar with the matter.
Coates herself has built, and now lives in, a mansion in neighbouring Cheshire, designed by Foster + Partners, which includes tennis courts and ornamental gardens.
The company has also given an annual £100mn for the past few years to the Denise Coates Foundation, a charitable trust, which has made multimillion-pound donations to the local hospital, universities and theatre projects.
Mark Bacon, chief operating officer of Staffordshire’s Keele university, who gave Coates a private tour of the new building her foundation helped fund before she opened it in 2020, says she comes across as a “very quiet and private person with a deep intellect”.
Peter Coates, the pater familias who has been a Labour party donor, has set up a separate foundation, which funds a degree in entrepreneurship at Staffordshire university and gives graduates an opportunity to pitch for venture capital investment.
People who have worked with the family are defensive about the source of funds from the gambling industry. Max Thowless-Reeves, founding partner of wealth management firm Sorbus Partners, whose not-for-profit arm manages the Peter Coates Foundation, points out Bet365 is “a legal business, being undertaken by a world-class firm. If someone wants to change the law on this, be my guest.”
“I know how much poorer this city would be without Bet365,” added David Webster, chief executive of Stoke’s Douglas Macmillan Hospice, another beneficiary of funding from the Denise Coates Foundation. “They aren’t in the arms race. They are providing a service that lots of people can responsibly utilise.”
For the business as well as the local area, the pressure is now on the family to show that this service — which has proven so lucrative for so many years — will continue to grow as they break into new markets.
