January 22, 2018 / 12:55 PM / 6 months ago

RPT-UPDATE 3-British bookmakers dismayed as shares plunge on report of low stake limit

(Repeats with PIX tag in slug, no changes to text)

* Government consultation ends Tuesday

* Lower stake limit on fixed terminals would hit revenue

* Price of GVC’s Ladbrokes purchase depends on outcome of review

By Kate Holton and Rahul B

Jan 22 (Reuters) - British gambling firms William Hill and Ladbrokes Coral, which run retail betting shops, reacted with dismay on Monday as their shares plunged on a report that Britain will slash the stake limit on in-shop terminals to 2 pounds ($2.78).

The government said in October it would reduce the top stake on fixed odds betting terminals (FOBTs) to between 2 and 50 pounds from 100 to help tackle problem gambling after a consultation ending on Tuesday.

The Sunday Times newspaper cited an ally of Culture Secretary Matt Hancock as saying the limit would be set at the bottom of that range.

“We are very clear that stake cuts will fail to adequately address any issue of problem gambling,” said Ladbrokes Coral, which is being bought by the online gambling firm GVC for a cash-and-share sum that depends on the outcome of the review. Ladbrokes took about 800 million pounds of revenue from gaming machines in 2016.

Ladbrokes shares were down 8.7 percent at 166.45 pence at 1220 GMT and rival William Hill was down 11.4 percent at 297.9 pence, the biggest loser on the FTSE mid-cap index. Paddy Power was off 0.5 percent at 8,400p.

“The impact of this rumour on our share price this morning illustrates the drastic impact such a move would have on the retail betting sector”, William Hill Chief Executive Philip Bowcock said in a emailed statement.

HIGH STREET PRESENCE

There are almost 8,800 betting shops in the UK and companies are allowed to install a maximum of four machines per shop.

The terminals have helped to keep betting shops going when many younger gamblers have switched to betting on sports events using their smartphones or tablets. But they have come under fire for leaving gamblers with big losses.

The Department for Digital, Culture, Media and Sport declined to confirm the report, saying in a statement that it would make a final decision “in due course once all the evidence has been considered”.

Ladbrokes Coral Group, currently Britain’s largest bookmaker, has more than 3,500 betting shops employing over 25,000 people. William Hill has 2,376 shops employing more than 12,500.

Bookmakers say that if they lose the income from the machines, they will be forced to close stores.

“There is also no evidence that machine customers will switch their spend to sports betting such as horse racing, and our experience is that they won’t,” Ladbrokes added in the market announcement.

GVC is to spend up to 4 billion pounds ($5.6 billion) to secure a high street presence with Ladbrokes, but the terms mean the price will be cut if projected FOBT income falls. GVC declined to comment on the Sunday Times report.

The reduction of the maximum stake is set to be the biggest regulatory change in the industry since the 2005 Gambling Act, and is seen as likely to set off a new round of acquisitions. ($1 = 0.7196 pounds) (Reporting by Rahul B in Bengaluru; Editing by Kevin Liffey)

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