Betting firms warn over jobs after shares sink on 'crack cocaine' of gambling reports
Britain's betting giants have warned that thousands of jobs will be lost and the horse racing industry will suffer after seeing their shares tumble following reports that the Government will slash the maximum stake on fixed-odds betting terminals (FOBTs).
Paddy Power Betfair slumped in afternoon trading on the London Stock Exchange in response to a Sunday Times report that UK Culture Secretary Matt Hancock is a mulling a steep cut to the maximum bet on FOBTs from £100 to £2.
The FTSE 100 firm was down more than 1pc, while its second-tier rivals Ladbrokes Coral and William Hill dropped 8pc and 11pc respectively.
Foxy Bingo owner GVC, which has agreed a takeover by Ladbrokes Coral, sank in excess of 2pc on the FTSE 250.
Betting firms are bracing for a profits hit, and could make a string of shop closures if the UK Government enforces the lowest proposed stake when a public consultation finishes on Tuesday.
Jim Mullen, chief executive of Ladbrokes Coral, said cutting stakes would not tackle problem gambling, but would cause job losses and drain funds for the horse racing industry.
He said: "The triennial review has been running for over 15 months, and throughout that time there has been constant rumour and speculation about potential outcomes, of which this is yet more.
"It should be noted that the current call for evidence is yet to conclude and industry responses have not yet been submitted to Government.
"We are very clear that stake cuts will fail to adequately address any issue of problem gambling.
"The industry has also always made it clear that a cut to stakes will have serious consequences - resulting in shop closures which will ultimately affect jobs, tax revenue and the funding of racing.
"There is also no evidence that machine customers will switch their spend to sports betting such as horse racing, and our experience is that they won't."
A stake cut to £2 would cause 3,000 betting shops to close and 15,000 job losses, according to a KPMG report for the Association of British Bookmakers.
The research found that horse racing income would drop by £30,000 for every betting shop that closes, while media rights payments would also take a hefty hit.
Mr Hancock believes FOBTs are a "social blight" and "wants the new stake to be at the bottom of the range", a source told the Sunday Times.
The consultation has mooted cutting the maximum stake on FOBTs - the so-called "crack cocaine" of gambling - to somewhere between £50 and £2.
It was part of a package of measures resulting from the Government's gambling review, with the high-stakes, high-speed electronic casino games said to be dangerously addictive, allowing players to wager up to £100 every 20 seconds.
Philip Bowcock, chief executive of William Hill, said: "The impact of this rumour on our share price this morning illustrates the drastic impact such a move would have on the retail betting sector.
"In addition to thousands of lost jobs and closed shops, a £2 stake, essentially a ban on FOBT content, would mean tens of millions wiped off racing's income as each betting shop pays £30,000 in media rights.
"We note the DCMS announcement that all the evidence will be considered and urge the Secretary of State to take note of the research and expert advice - particularly that of the Responsible Gambling Strategy Board - that questions whether stake cuts will have any impact on problem gambling.
A spokesman for the Department for Digital, Culture, Media and Sport said it "will make a final decision in due course once all the evidence has been considered".