The UK horseracing industry has joined the chorus of voices urging the government not to slash maximum stakes on fixed-odds betting terminals (FOBT) to £2.
Over the weekend, UK media reported that Matthew Hancock, the recently appointed secretary of the Department for Culture, Media and Sport (DCMS), was in favor of cutting FOBT maximum stakes from their current £100 to just £2 when the government’s three-month consultation period concludes on Tuesday.
Monday saw share-price carnage for London-listed betting operators with a large high-street retail footprint. William Hill led the decliners, falling 11.6% to 297.2p after sinking as low as 285p earlier in the day. Ladbrokes Coral Group was down nearly 8% to 168p. Paddy Power Betfair, which has less of a high street presence and supports a steep stake cut, fell 2% on the day.
Online operator GVC Holdings, which is working on a deal to acquire Lads Coral, fell 1.2% to 926.5p after dipping to 885p in early trading. Investors eventually remembered GVC structuring the deal to ensure a lower top-up payment should the FOBT curb prove too harsh.
Hancock’s decision-making was said to be influenced by his ties to the racing industry, and his alleged belief that FOBT betting “takes money from reasonable, mature betting, like on the horses.” But the British Horseracing Authority (BHA) sought to correct this impression on Monday, saying a too-drastic FOBT cut could prove disastrous to racing.
The BHA took the rare step of making public a summary of its submission to the government’s FOBT consultation, which quotes BHA exec director Will Lambe saying that racing’s financial health is largely dependent on the betting industry, and that “any measures which severely compromise the sport’s financial stability would have unintended consequences to British racing and the wider rural economy.”
Lambe notes that betting operators have warned that a drastic cut in FOBT stakes would compel them to close “thousands” of betting shops. In addition to the resulting loss of race betting activity, racing’s media rights revenue depends on the number of shops airing racing coverage.
While the government’s FOBT consultation period ends Tuesday, the final decision may not be forthcoming for weeks, even months. But the fact that Hancock appears to have tipped his hand before the consultation closed may have unwittingly thrown betting operators a legal lifeline.
The Guardian quoted sources from several major bookmakers who claimed the media reports could lead to a judicial review of the government’s decision, based on the assumption that the consultation process was flawed. This view is far from unanimous, but, as one source put it, “if it’s a disaster-case scenario, there must be someone who’ll say we’ve got nothing to lose.”