Investors in British gambling companies have shrugged off revelations that the UK government is likely to cut maximum betting stakes on machines that allow wagers of £100 every 20 seconds.
A long-awaited report on fixed odds betting terminals (FOBTs) — machines that have helped betting shops survive on high streets but which campaigners have labelled the “crack cocaine” of gambling — is due next month.
The industry could lose about £150m a year at least in revenues under plans to reduce the maximum stake to £30, £20 or even £2.
But the markets have been anticipating a cut to about £20 for weeks, leading to shares in William Hill and Ladbrokes Coral to nudge about 1 per cent higher on Wednesday. Both make about half of their revenues in betting shops from FOBTs.
Simon Davies, head of research at Canaccord Genuity, said the industry consensus had been that maximum bet per spin stakes would be reduced substantially.
This was already reflected in share prices, he said. William Hill’s market value, for example, had fallen by a fifth since December when a cross-party group of MPs demanded tougher regulations on FOBTs.
Share prices of gambling groups would fall further, Mr Davies said, if the government conceded to calls by campaigners who want to cut the maximum stakes on FOBTs to £2. The machines pull in £1.8bn a year for betting shops, according to the Gambling Commission.
Research by KPMG on behalf of the betting industry found a significant cut to the maximum FOBT stake could lead to the closure of half of the UK’s 9,000 betting shops.
Landman Economics, a research group commissioned by the Campaign for Fairer Gambling, said punters would spend their money on other goods and services, supporting jobs and tax receipts in other industries.
Derek Webb, of the Campaign for Fairer Gambling, said it was certain a cut to the maximum stake would cause a decrease in betting shop profits. “But that is the whole point,” he said. “We want to remove the most harmful gambling product from the high street.”
Canaccord’s Mr Davies said that if the maximum stake was cut to £50, betting shop operators’ shares would probably rise. He said a £50 limit has been near-enforced already because of what the industry called the “£50 journey” — a requirement to top up pre-paid cards or pay over the counter for stakes beyond this amount.
“A cut below £10 would be negative for shares as it would really constrain the amount of throughput into the machines,” he said.