Shares of some British bookmakers saw some decline, following a UK Gambling Commission’s recommendation which provided hope that roulette and poker machines could face more favourable regulatory changes than the ones initially expected. On Monday, the major UK gambling regulatory body published a written advice paper to back the FOBTs and social responsibility measures review of the Department for Digital, Culture, Media and Sport (DCMS).
The recommendation made by the Commission gave hope to gambling operators after it made some suggestions related to the expected crackdown on the UK gambling industry. The UK gambling industry regulator has said that the maximum stake allowed at controversial fixed-odds betting terminals (FOBTs) should be reduced from the current £100 to £2. However, the Gambling Commission also recommended that non-slot games offered at FOBTs should see a reduction to as much as £30.
The opinion expressed yesterday by the regulatory body made some industry players hopeful that the expected roulette and poker machines’ crackdown may be more favourable than initially believed. Of course, the reduction of the maximum stake permitted at the machines to £30 is not a good news for bookmakers, but it way better compared to the £2 maximum limit that has been considered.
The shares of two of the largest bookmakers in the UK – William Hill and Ladbrokes Coral – have plunged after the UKGC recommendation to the DCMS. After reaching almost a month-high of £334 yesterday, the shares of William Hill saw a 1.41% plunge in the first hour of Tuesday trading, reaching £329.10. The shares of Ladbrokes Coral Group declined by 3.05% in the first hour of trading, reaching a price of £170.00.
FOBTs’ Maximum Stake Reduction Could Hurt Bookmakers
According to estimates made by Investec, the fixed-odds betting terminals have been the major service which has been responsible for generating revenue for bookmakers. FOBTs have brought approximately £1.17 billion to the industry over the 2016 fiscal year.
Since the competent authorities have announced their concern with the rising number of problem gamblers due to the spreading influence of fixed-odds betting machines across the country and initiated the industry review which could end up with stricter regime imposed on the gambling operators, bookmakers have been worried by the possible consequences.
According to companies, the extent of the FOBTs’ maximum stake reduction will be crucial in determining their future profits. In addition, gambling operators have claimed that the extent of the stake reduction will also have influence on the likelihood of merger and acquisition deals to happen in the industry, which has already seen a wave of significant consolidation.
The final decision on the fate of fixed-odds betting terminals and the maximum stakes allowed remains with the UK Government, which is also to decide whether to take into account the Gambling Commission’s recommendation or not. No specific maximum stake has been suggested by the regulatory authority, so the Government could choose any figure lower than the ones recommended by the Commission.