Archived article
Please note that tax, investment, pension and ISA rules can change and the information and any views contained in this article may now be inaccurate.
Bookies bashed on £2 betting stake cap reports
Renewed suggestions the maximum stake on a fixed-odds betting terminal (FOBT) will be cut from £100 to £2 have rocked the gambling industry.
The stock market value of the sector tumbled on 22 January following reports that new culture secretary Matt Hancock favours tough curbs on the controversial machines.
Consultation on the FOBT review closed on 23 January but a final decision isn’t expected until the second quarter of 2018 at the earliest.
Fixed-odds betting terminals are a key source of income for bookmakers with high street shops. Therefore a significant cut to the maximum stake could have a negative impact on their future earnings, hence why shares in Ladbrokes Coral (LCL) and William Hill (WMH) were particularly weak on the £2 stake speculation.
The market had appeared to be pricing in a maximum stake of £20 so the double-digit share price falls in these names at the start of the week was perhaps unsurprising.
GVC (GVC), which recently agreed a deal to buy Ladbrokes Coral, saw a more modest share price fall and subsequently recovered its losses.
This could reflect the fact the terms of its takeover deal with Ladbrokes are dependent on the outcome of the FOBT review and it could therefore end up paying less than the headline figure of £3.9bn to buy the business.
The implication the Government reached its view before the end of the consultation period has led some observers to suggest bookmakers might seek a judicial review into the decision. (TS)
Important information:
These articles are provided by Shares magazine which is published by AJ Bell Media, a part of AJ Bell. Shares is not written by AJ Bell.
Shares is provided for your general information and use and is not a personal recommendation to invest. It is not intended to be relied upon by you in making or not making any investment decisions. The investments referred to in these articles will not be suitable for all investors. If in doubt please seek appropriate independent financial advice.
Investors acting on the information in these articles do so at their own risk and AJ Bell Media and its staff do not accept liability for losses suffered by investors as a result of their investment decisions.
Issue contents
Big News
- EMIS stung by after-care foul-up
- Draper backing for cryptocurrency start-up
- Market shock after Dignity unveils radical new pricing structure
- Top performing funds are harder to find
- US treasury yields hit highest level since 2014
- Bookies bashed on £2 betting stake cap reports
- Connect crashes on profit warning