Denise Coates: Ultimate gambler

22:38By the end of 2011, she's appointed CBE for services to the community and business. Cue raised eyebrows, whether running a gambling business is a real service to the community, but clearly she's a bit of a local hero. And then in the 2000s, something big happens. The iPhone launches in 2007 and then the iPhone 5 comes out in 2012 and that really supercharges everyone's access to the internet and therefore to places like Bet365. I remember the advert for the first iPhone and one of the things on the advert was said, and access to the internet, the real internet. Because in those days on the Nokia phones, you could sort of get into the internet, But it wasn't like doing it on a laptop or a desktop.

23:22But this, the iPhone, meant it was there. All of human knowledge, all of human commerce was there in the palm of your hand. I feel like I have a vestigial memory of having to press actual buttons on a phone to get onto the internet, onto a pre-iPhone. Yeah, you had to click through ABC, DEF, da-da-da-da-da, and then dot, and then shift, and this, then that. With this, it revolutionised the access to the internet on mobile. And mobile itself revolutionised commerce. And by 2014, Bet365 is three times the size of the internet division of very established players like William Hill. It's seven times bigger than Ladbroke's online business.

23:59These are household names in the betting industry and they're destroying them online. But at the same time, this comes with increased scrutiny, right? And all of a sudden, politicians, regulators are looking at Bet365 with a kind of keener eye than they might have done before. Because betting is a highly regulated industry and it's regulated differently in different countries. So it is a complex area. And in particular, some places where you're not really supposed to operate. And they had a few scrapes in China where actually was a big source of some of their revenue. Now, China's one of the largest online gambling markets.

24:34But paradoxically, it's also outlawed in all but a few kind of key scenarios. And now Bet365 operated one of the most successful online gambling services in China. but they didn't have a physical presence or any assets in China. And in fact, some Chinese citizens were arrested or detained for interacting with online betting firms. Four Bet365 customers were arrested for gambling. Two were jailed for promoting 365 on blogs. And Bet365 has to frequently change website addresses in China because they need to sidestep local regulators. Which suggests if they're frequently changing their website address in China, it suggests that they do know that the local authorities don't necessarily approve of what they're doing there.

25:18And they even had to construct this complex payment system, right, to take the bets placed using China's currency. Not only that, but they catered for their Chinese market by creating a Chinese-speaking call centre in Stoke. So it's clearly too valuable a market for them to ignore. And according to the Guardian investigation that revealed this, it also said that only about half of the£1.3 billion the company won from gamblers in 2013 came from countries where Bet365 possessed a licence to operate. Yeah. And this is one of those grey areas when it comes to the internet about where you're actually operating from and where the rules and how the laws apply to you.

25:57Because Bet365 denied they were doing anything illegal. They said in the view of Bet365 and its lawyers, Chinese law does not extend the provision of services into China by gambling operators. But like I say, a complex and opaque area of international regulation. Where does this company live? Does it live in the ether? Does it live in Stoke-on-Trent? Which basically we've seen many times in terms of things like where is your data stored? Where is the company actually located? Digital businesses are hard to tax and hard to regulate, as we're finding right now. When you're harder to tax and you're harder to regulate, if you're a company, that kind of works out in your favour, right?

26:37Well, there are some companies, there was a period of some of the world's biggest companies, Google, Apple, others, who basically their revenues were being booked in low tax jurisdictions where basically this money for tax purposes might as well be in outer space because nobody seemed to be able to find a way of taxing it. Now they've clamped down around the world on the tax side of things, but it is still a grey area and they spend hundreds of millions, these companies, on lawyers to try and plot their way through this minefield. So while Bet365 and Denise Coates is paying tax in the UK and UK tax authorities are rejoicing, presumably, at the million pound bounty.

27:17For other countries, it's a lot more difficult. Yeah, that's true. The refreshing thing in many ways about Bet365 is its home is in Stoke and they pay tons of tax. But while we can acknowledge that, you know, paying tax is good, and, you know, we'll talk about that in the philanthropy aspect of this episode later on, we can't neglect the fact that all this money is being made on gambling, which is the elephant in the room here, right? Lots of people would argue that the gambling industry is based on making people throw away their money. Yeah, no betting company ever makes money if people get back more than they put in.

27:54It is a business designed to separate people from their money. It can also be highly addictive in all betting adverts, and particularly in Bet365s, which are ubiquitous. They're all over the internet. They're all over television broadcasting or have been up to recently. is like, bear 365, bear responsibly. But of course, not everyone does and not everyone can. And the gambling harms can be widespread. I've come across many people who have got into serious trouble, bankruptcy, homelessness, even suicide. The list of social harms is quite a long one. And, you know, gambling addiction or gambling disorder, it's a recognised mental health condition in and of itself.

28:34Yeah, they think about half the percent of the adult population has a problem with gambling. Nearly 4 % have gambling sort of at risk level. And 7 % of the population are affected negatively by other people's gambling. That may be if a family member has lost money that you were going to spend on something else. So it's not an insignificant social problem. And, you know, all these problems are kind of exacerbated, I would argue, by the fact that gambling has gone online. So, you know, there's no social interaction when you put a bet online. whereas before you know maybe staff at a betting shop had higher visibility into whether someone was coming in day after day and throwing away their money there's no off switch with online gambling and you know these days with the emergence of something called virtual sports betting which is something that bet365 among its other competitors also offers you don't even need to be betting on a physical thing you know a real thing yeah you could be betting on a virtual horse that is running a virtual race on a virtual race course that doesn't exist.

29:31So the betting can basically never stop. The other thing about online gambling, and this is not specifically a problem for Bet365, it could be any company, is it's hard to verify people's age when they're online. I have personal friends who have had children under 18s rack up enormous gambling debts, something they can do behind closed doors, very hard to supervise. So, like I say, not an insignificant social problem and something that successive governments have tried to tackle without trying to clamp down on people's free will and their ability to have a bet if they want. In some of the betting shops, you'll say, if the fun stops, stop.

30:07You're supposed to be able to do something like self-exclude. If you think you've got a gambling problem, you're supposed to be able to tell the gambling site, don't take any more of my money, please. But there are countless examples where people who've tried to self-exclude find their own way of getting around it. That tells you that some people have a real problem with it. And Bet365's corporate strategy focuses on quote unquote safer gambling. But, you know, to me, this is kind of like McDonald's putting out a healthy salad, right? Like nobody goes to McDonald's to eat their vegetables in the same way that nobody really goes to an online gambling site to get away from their addiction.

30:44No. So listen, what we've established is there are social harms out there. They are very serious in some cases. But lots of people do gamble. About just over half the adult population in England have gambled. That's 40 % if you exclude the national lottery. Lots of people buy lottery tickets who don't ever gamble. And a result of that bit, Bet365 is really beginning to rake it in as a company. They're paying her a huge salary. They're paying her dividends, half of which go to Denise because she owns half the company. And in 2014, Forbes declare her at the age of 46 as a billionaire, worth over a billion pounds.

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32:30It's 2003 in Birmingham. Doors are being slammed in your face. You're not welcome here. They were capable of murder and had murder. Drive-by killings, gang wars, a vigilante group that fought against Jamaica's notorious Yardies. Yardies. The homeboys thought we're not going to take this anymore. We're going to be even more violent than you. Before turning on each other. I'm Livy Haydock and this is Gangster, the story of the Burger Bar Boys. Listen on BBC Sounds.

33:04So she's finally made it from just being a plain old millionaire to a billionaire, But this doesn't mean that she is spending or acting like your typical billionaire. You know, she still keeps herself to herself and she's remained out of the public spotlight. You know, she herself has said, I'm not a social animal. She's not a regular at the races. She's a regular, as she puts it, in the workplace. She's always said she's not a shrinking violet. She's been bossy all her life. But at the same time, she's almost kind of allergic to the limelight. And maybe that part of that is because, you know, betting, as we've discussed, is a controversial industry.

33:40Maybe she's aware of the fact that, you know, the more she steps out and does keynote speeches or appears at business conferences, you know, the more her words can be picked apart and used against her industry and her company. Yeah, I think it's a difficult position media-wise, publicity-wise, to be the highest paid woman in the world and having made hundreds of millions, billions of pounds from something that she knows is in the public spotlight for creating social harm. There's a tension there. So I'm not that surprised she wants to keep a low profile. And, you know, in the Guardian interview, she didn't even want to say if she had any children.

34:16That reminds me of a politician that we know. But she does this for different reasons, I think. So we know now, actually, that she has five children, four of whom are adopted. But, you know, we've had other billionaires in the past, Chuck Feeney comes to mind, who was quite scared of their children being kidnapped or being ransomed because of their wealth. And maybe this is also, again, another tactic to keep her family and her personal life to herself, to kind of mitigate the kind of potential harms that could come to them. Yeah, she's always been incredibly low-key, as we've said. She lived in a relatively modest barn conversion.

34:50Now, whether this is because she wanted to create a buffer around herself, or maybe she woke up one day and said, do you know what, I've got a lot of money. Yeah, time to start spending it. Time to start spending it. For whatever the reason, she starts buying up hundreds of acres of farmland surrounding her home. It's reported she's spending£90 million building a big 52-acre estate featuring a big glass home, and she buys it from the locals. And they were kind of, in a way, she made them an offer they couldn't refuse. Yeah, I mean, one of them is on record of saying, none of us want to leave because it's a nice area, but they offered us too much and we couldn't refuse.

35:24It was stupid money. Yeah, so why is she doing that? I don't know. Denise, if you're listening, the bid for the interview still stands. So now we come to the part where we judge our billionaires, right? Are they good, bad, or are they just another billionaire? So let's start with wealth. She's not the richest woman in the world. But by my reckoning, she's the highest paid woman in the world. In 2020 to 2021, she had a salary of so literally paid out as a salary of 421 million pounds, plus she got dividends from owning some of the company because you got there are two ways of getting money. You've got the salary get paid out.

36:06And if you own the company, any profit, you get a share of that in dividends. Now, that makes it£1.2 million every day. I was looking at comparisons. The boss of Oracle, the big software company, is on$50 million a year. That's nothing compared to this. Nowhere. I really struggled to think of what it feels like and even looks like if your monthly paycheck came in with that many zeros. I mean, yeah. In fact, I think in that year, her salary alone was more than the salaries of all the bosses of the hundred biggest companies based in the UK. That's a lot of money. That's more money than I can conceive of.

36:45She's had a bit of a pay cut since then, though. In 2022, she only got a salary of£213 million and a£45 million dividend. Tough times. Tough times. The cost of living crisis is hitting hard. And her current net worth,$7.1 billion, about£6.5 billion, makes her the 353rd richest person. I think that because she is the highest paid woman in the world, I'm going to give her a solid 8 out of 10 for this. Yeah, I would agree. Let's give her an 8 out of 10. To be one of the most well-paid women in the world, the highest paid woman in the world, that's pretty impressive. I'm going to give her an 8 out of 10.

37:22Okay, so those are riches. where she come from this is our rags to riches category so forbes describes her as self-made but i kind of disagree with that because after all she did go into the family business she took over her dad's company so i wouldn't say that she's you know had a trajectory that you know beggars belief i would actually give her probably three out of ten really i totally disagree on this one i mean i mean she's not oprah winfrey who literally grew up in rags but on the same To turn a bunch of provincial betting shops into an international gambling phenomenon, I think, has gone quite a long way.

38:02OK, how much would you give her? OK, so I'm going to give her a seven, simply because when she was a kid, her parents were probably millionaires. But I think in terms of it's not just so much rags to riches, it's the kind of business journey she's on, I think, is pretty impressive. Now we come to villainy. So how should we judge someone who has made their money from gambling? which is probably one of the more addictive things you can do with your money. Gambling is one of the worst vices in a way that you can have because you can get rid of more money through gambling than you ever can through drink or drugs.

38:36That is the quickest way to lose more money than you can ever earn. So it is a very dangerous and can be highly toxic thing for people. On the other hand, it can be quite a lot of fun to have a bet on the Grand National or bet on your favourite team or even bet on, like you, on the Eurovision Song Contest. These are fun things to do, so you wouldn't want to stamp it out necessarily. But I think it's problematic to make that kind of wealth when you know that it has caused some serious social harm. So when it comes to villainy, I actually would score her quite highly on this just because of the industry she's in.

39:10Yeah, I think I agree. I think it might be an important thing to try and separate out the activity, the company and the individual. because gambling is legal. It's been enabled by technology. She spotted an opportunity to use the internet and mobile to supercharge an industry, which is legal in most countries. Her personal culpability is different, I think, from your views on gambling as a whole. Is it possible to separate those things out? Yeah, I think it boils down to a fundamental question, right? Is there such a thing as safe gambling? And how should we judge the people involved in an industry that has historically had problems with trying to create a safe atmosphere and a safe way to gamble is she culpable for the way the gambling industry has gone she did spot an opportunity very early on and she did understand that you know the internet can help people gamble 365 days a year as the name of her company suggests so i think for that you know for spotting that opportunity for offering that chance for people to gamble 24 7 on the internet no she does bear some responsibility because that decision alone to just go all in on online gambling that was a decision that she made for her company i'm torn because this is the business she grew up with in a family the internet and mobile would have meant that online gambling would have happened with with or without denise coates so i think that you could say that she's not personally culpable for that.

40:40So I'm really torn. So I'm just going to go five right down the middle. It's a five for me. I mean, I think I'm going to judge her slightly harsher just because she chose to go all in into online. And I think for that, she deserves to be held accountable for that decision. So I would give her on villainy seven out of 10. Okay. So let's talk about philanthropy then. You know, what does Denise Coates do with her money? Is she bettering society with it? Okay. In previous episodes, people we have scored highly for philanthropy, like Chuck Feeney, the duty-free billionaire who gave all his money away, we had a question mark over that, which was that the thing is, because a lot of duty-free, tax-free, he made his money in a tax-free world, if you like, and then chose to basically back the causes and was very generous to the ones that he wanted to give to, which some would say is no substitute for just paying your dues.

41:32I'm reminded of the Peter Mandelson quote, who was a Labour politician, party on the left, much more into wealth distribution, higher taxes. He said, we've got no problem when they were trying to modernise the image of people getting filthy rich as long as they pay their taxes. And you cannot argue that Denise Coates has not paid her taxes. Because unlike very many of our billionaires, she really does. So in the last two years, the Coates family has paid almost£1 billion in tax. And additionally, Bet365, along with other gambling companies, donates to gambling-related charities via a voluntary industry-wide levy.

42:08Denise also has a charity, the Denise Coates Foundation, that last year spent almost£19 million on charitable activities. But interestingly enough, the foundation doesn't currently make any donations to gambling addiction-related charities. That seems to be a big miss and quite a strange thing not to do. Maybe it's because if you do it, it's kind of an omission that what you're doing has a social downside. Maybe it's just, again, part of her low-key persona, just drawing more attention to the industry that she's in, drawing more attention to the fact that the industry has some social harms associated with it.

42:43Maybe she just doesn't want to acknowledge that. Yeah. So I don't think she scores very high on philanthropy, unless you consider paying your tax a form of mandated philanthropy, which more people should involve and fewer people should try and avoid. I would love to be thought of as a philanthropist just because I pay my tax. But yeah, I agree. I don't think it should come in under philanthropy. OK, I think then we're going to score her low for this one. I think I'm going to give her a two, given how rich she is. I would give her a two out of ten. I mean, you know, financially supporting Stoke City, very important I'm sure to Stoke supporters but doesn't make you a philanthropist.

43:21Yeah well backing a course like Stoke City some would argue is going above and beyond when it comes to philanthropy. Having said that it's a nice detail that she earns more than twice the payroll of the entire Stoke City squad so if you think football players are well paid they're nothing compared to the person who owns the club. So let's talk about Denise Coates in terms of power. How much power does she have? I think by design, very little. I personally think that online gambling, mobile gambling would have happened with or without Denise Coates. She's done brilliantly to sort of make her company as big as it is.

43:55She by design doesn't like to get involved too much. She would quite happily take a backseat and just take keep the salaries and the dividends coming. So I don't think she exerts an enormous amount of power over the industry. And as far as I know, and I could be wrong about this she's not the kind of person who is lobbying all the time or in the government's ear agitating for change do you know what I mean? She doesn't feel like someone who moves the industry she benefits from it but doesn't feel like she uses her wealth to pull any particular strings. No I would agree actually when it comes to the things where people exert political power like appearing on parliamentary committees you know there was a 2011 committee that you know she could have attended because it was about gambling.

44:40And MP actually did ask her brother who did attend a committee, where was Denise? And her brother said, you know, operationally she runs the business. He does the quote-unquote external stuff. So she kind of seems like her low-key persona also extends to the amount of power she wields, right? She doesn't like to be exercising it visibly. So I would also score her quite low. Yeah, I might sort of say I'd give her, you know, three, maybe even less one yeah i would give her one i mean given how rich she is she doesn't seem that interested in becoming a public player okay legacy how will denise coates be remembered right i think she'll be remembered as the highest paid woman in the world the richest person to ever come out of stoke-on-trent sorry robbie sorry robbie lemmy and slash and as a sort of rather peculiar mild-mannered, hard-working, competent accountant turned bookie who became enormously rich.

45:45I can see her being a pub quiz question in the future. You can see Denise Coates being an option on the quizzy machine in a pub. I mean, in terms of legacy, you know, in the obituary, I think, yeah, she'll be a bit of an anomaly, really, among billionaires. You know, someone who was enormously attached to her hometown, probably at the cost of her own company, because they could probably make way more money if they went somewhere else. Someone who was very low-key and reclusive and shy, you know, a billionaire kind of Bruce Wayne in a way. Stokes' answer to Bruce Wayne. So I'm going to give her legacy a two and I think she'll be pretty glad about that.

46:21Yeah, I actually think she'd quite enjoy being given a two. I'll give her a two too. Okay, we've done an enormous amount of agreement apart from on the rags to riches one on this one. Final question, is she good, bad or just rich? Just another billionaire. Well, I scored her quite highly on villainy, so I feel like I have to call her a villain on this one. Yeah, okay, so you're going to call her bad. I've been trying to get an interview with for ages. If I call her bad, it's never going to happen, is it? I was going to say, you've got a vested interest here. So I'm going to say she's just another billionaire.

46:56She's neither good or bad. She's just very rich. Actually, this is the first time we've disagreed on the final assessment. My wife's going to kill me. She hates gambling. She hates it when I gamble. So Denise Coates, bad slash just another billionaire and also the source of Simon's new argument with his wife. So next week, tech geek, monopolistic, crusher of competition, world's greatest philanthropist, William Henry Gates III. For my generation, the richest man in the world for a very long time. And for everyone else, it's Mr. Microsoft, Mr. Windows 95, Bill Gates. Thanks for listening to Good Bad Billionaire.

47:34This podcast is produced by Hannah Hufford and Mark Ward. James Cook is our editor and it's a BBC audio production.

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