The Department for Digital, Culture, Media and Sport’s (DCMS) long-awaited document (31 Oct) on gaming machines in betting shops triggered share price gains for Ladbrokes Coral (LCL) and William Hill (WMH) as proposals weren’t as bad as feared.

The maximum stake for fixed-odds betting terminals (FOBTs) will be cut either to £50, £30, £20 or £2 per spin from the present maximum of £100.

Canaccord Genuity analyst Simon Davies thinks ‘a £20 maximum stake is significantly the most likely outcome’, rather than a damaging £2 maximum stake which would seriously dent sector earnings.

Berenberg implies Ladbrokes’ shares were previously weak because the market was pricing in a worst-case scenario of £2 maximum stake. Several analysts believe Ladbrokes will be taken over if its share price doesn’t improve in the near future.

DCMS is now undertaking another consultation and a final decision on the FOBT stake limits is likely to be made in the second quarter of 2018 at the earliest. (JC)

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