Ladbrokes and William Hill share price rise after Gambling Commission delivers “crack cocaine” fixed odds betting terminal reprieve
Investors in Britain’s bookies were buoyed this morning after firms received better-than-expected news on fixed odds betting terminals.
The Gambling Commission published eagerly-awaited advice on gaming machines.
Non-slots fixed-odds terminals should have a single stake limit of £30. For slots machines, stakes should be capped at £2.
Ladbrokes share price rose over five per cent while William Hill’s stock rose by 3.4 per cent.
“It looks like ministers will blink first and the industry will get away with more lenient limits on stakes than was feared,” said ETX Capital senior market analyst Neil Wilson.
The government has been facing calls for a crackdown on fixed odds betting terminals (FOBT). Critics have dubbed them the “crack cocaine of gambling” and demanded a cap wagers of as little as £2.
Gambling Commission chief executive Neil McArthur said: “We’ve put consumers at the heart of our advice – advice which is based on the best available evidence and is focussed on reducing the risk of gambling-related harm.”
In our judgement, a stake cut for fixed odds betting terminals alone doesn’t go far enough to protect vulnerable people. That is why we have recommended a stake cut plus a comprehensive package of other measures to protect consumers.
“We have proposed actions that will tackle both the risk of harm and provide solutions that are sustainable in the longer term,” he added.
Read more: William Hill could have prevented Gambling Commission embarrassment
Relief
Wilson said: “This should be a relief for the sector as the worst-case scenario looks to have been avoided. Ministers will now have to justify a cut below £30 on grounds of significant risk of harm.
“The government of course still has to decide whether to act on these recommendations or go for a lower cap. Given competing pressures for the DCMS (tax revenue), it would seem likely that it will follow the report and go for a £30 cap, although it may need to await the response from campaigners and MPs who back lower limits to test the water, as it were, as to the best course of action. The Commission recommendation is ambiguous enough (at or below £30 leaves £2 on the table still), to allow the DCMS to pursue its own decision. A good day for bookies nonetheless.”
Rebecca O’Keeffe, head of investment at interactive investor said:
High street gambling companies are breathing a sigh of relief after the Gambling Commission has been far less severe in their recommendations than the market previously feared.
Ladbrokes Coral and William Hill operate over 75 per cent of all high street gambling shops and each earns over 50 per cent of their net revenues from their retail presence, deriving significant income from fixed odds betting terminals – so these recommendations, if implemented, would be tantamount to them winning the lottery.
Read more: Government gambling review: How the industry reacted