LONDON (Reuters) - Britons will no longer be able to use credit cards to place bets under the latest move by the government to tackle problem gambling, hurting the owner of PaddyPower Betfair and its takeover partner Canada’s Stars Group.
Less than a year after Britain slashed the maximum stake that can be placed on popular fixed-odds betting terminals, it said on Tuesday it would ban the country’s 24 million gamblers from using credit cards to bet online or offline to rack up debt.
According to trade body UK Finance, around 800,000 Britons use credit cards to gamble. The Gambling Commission believes a quarter of those are problem gamblers - people who are addicted to gambling to try to win back their losses.
Shares of betting companies including 888 Holdings, Flutter Entertainment, the owner of Paddy Power Betfair and William Hill dropped between 0.9% and 2.5%.
Culture Minister Helen Whately said there was clear evidence of harm from consumers betting with money they don’t have.
“We will not hesitate to take any further action necessary to protect people from gambling harm,” she said in a statement.
Britain has a thriving gambling industry. It employs more than 100,000 people and made 14.4 billion pounds after paying out winnings in the 2018-2019 financial year.
But the government has sought to tighten rules in recent years by capping the maximum stake on terminals, bringing in stricter age and identity checks for online gambling and expanding support for those who become addicted.
The new ban will come into effect on April 14 and apply to all online and offline gambling products apart from over-the-counter lottery tickets.
The move would likely hurt Flutter Entertainment the most - it will have under just a third of the UK online gambling and gaming market once it buys Toronto-listed Poker Stars operator Stars Group Inc (TSG), according to data from H2 Gambling Capital.
The online industry was worth an estimated 4.4 billion pounds in revenue in 2018, according to H2.
Davy Research analysts though said the ban would likely lead to a low single digit percentage drop in related revenues.
“The latest in a recent series of more onerous regulatory changes, it also acts as a further reminder that the UK opportunity is no longer what it once was,” it said in a note to clients. “However, it remains a very large, (still) growing and highly cash generative market for online gaming operators.”
Britons had a total of 72.1 billion pounds outstanding on credit cards in November, according to Bank of England data, down a little from a record 72.9 billion pounds struck in May.
(GRAPHIC: UK gambling companies' market share - )
Reporting by Kate Holton, Elizabeth Howcroft and Josephine Mason; editing by Mark Potter
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