Bookmaker share prices fall on £2 FOBT stake reports

The share price of UK bookmakers has dropped significantly this morning as operators after reports the government favours a new £2 maximum stake on fixed odds betting terminals (FOBTs).

Those with a heavy retail presence have been hit the hardest, with William Hill down 13% and Ladbrokes Coral down by 10% at the time of writing.

The Department for Digital, Culture, Media & Sport (DCMS) has been deliberating a new FOBT minimum stake during a 12-week consultation period which ends on Tuesday.

And fears were realised over the weekend after it was announced that the new culture secretary, Matthew Hancock, was determined to spearhead a crackdown on the high stakes machines.

Ladbrokes CEO Jim Mullen dismissed the reports as speculation. 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 and 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- any policy made on this assumption would result in a significant reduction in the level of funding for horse racing.

 “We will continue to make the case for a sensible measured, evidence led and proportionate response to the public concern regarding these issues and this will be the basis of the evidence submitted as part of the ongoing review.”

Bookies had previously voiced concerns that reducing the minimum stake from £100 to £2 will lead to thousands of jobs being lost and stores being closed down.

William Hill CEO Philip Bowcock, speaking after Hills drop in share price, said: “This is not the first time speculation has appeared around a £2 stake and we doubt it will be the last.

“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.”

The stake change would have a significant impact for all UK bookmakers, but some will be worse affected than others.

Paddy Power Betfair’s share price is down by just 1%, as the operator has a much smaller retail reach than the likes of Lads Coral and William Hill.

The firm’s former CEO, Breon Corcoran, had previously recommended that FOBT stakes be reduced to £10.

Industry experts suggested this was a tactical play by Corcoran as the law change would hurt PPB’s rivals due to their more extensive retail estate.