When Matt Hancock was appointed culture secretary in early January, management at UK-listed gambling companies might have breathed a sigh of relief. Mr Hancock is known to be a fan of horseracing, and so perhaps his fondness towards one form of gambling would mean that he would go easy on the bookies during the review into fixed-odds betting terminals (FOBTs). Recent press reports have suggested that might not be the case.
At present gamblers can bet up to £100 per spin on FOBTs. Last October the government confirmed that it would cut the maximum bet allowed on the machines to somewhere between £2 and £50, as well as looking into how fast the machines spin in hopes of slowing down problem gamblers. Yet recent reports have suggested that the government is to opt for the extreme end of this range, with a £2 maximum stake.
While the final decision has yet to be confirmed, the speculation still sent the share prices of UK-listed gambling companies tumbling. William Hill (WMH) took the biggest hit, falling by around 13 per cent on the day of the reports. UBS analysts have estimated that a £2 stake would wipe around 85 per cent off William Hill’s operating profit. Ladbrokes Coral (LCL) is also highly exposed, with estimates of a 62 per cent hit to operating profit.