Bookies up on soft regulation hopes
Bookmakers' shares were buoyant yesterday after the UK industry regulator provided hope that a crackdown on roulette and poker machines may be more lenient than expected.
Ladbrokes Coral and William Hill jumped, fuelled by a Gambling Commission suggestion that the maximum stake on the machines be cut to £30 (€34) or less. While the recommended reduction from the current limit of £100 isn't good news for betting shops, it's a whole lot better than the £2 cap many have been fearing.
Dubbed the crack cocaine of gambling by opponents because of concerns over addiction, the machines are a key money earner for bookmakers, generating the industry about £1.17bn in the 2016 fiscal year, according to Investec estimates.
The extent of the cut in the top wager will be key in determining both future profit and the likelihood of more mergers and acquisitions in an industry that's already undergone significant consolidation.
A final decision rests with ministers but the Gambling Commission's recommendation is significant as the body is the government's main adviser.
For Ladbrokes Coral shareholders in particular, a maximum stake of more than £2 would entitle them to an additional payment in the takeover by GVC Holdings.
Yet, as Peel Hunt analysts point out, the regulator's findings shouldn't necessarily be cause for industry celebration.
As the commission hasn't suggested a specific maximum stake, the UK government could still choose any figure lower than £30 without being challenged for ignoring its own adviser. (Bloomberg)