UK gambling operators’ worst nightmare has come true.
On Thursday, the British government announced the approval of the reduction of fixed-odds betting terminals (FOBTs) maximum stakes limit from £100 ($135.08) to £2 ($2.69) to cap its long-running gambling review that started in October 2016.
Digital, Culture, Media and Sport Secretary Matt Hancock approved the decision of the Ministry for Sport and Civil Society to “stick up for the vulnerable” when it decided in favor of the FOBT stake reduction.
Stocks of British bookmaker William Hill, which analysts saw as the operator most exposed to the measure, plunged more than 6.5 percent in early trading, while shares of GVC holdings, which recently acquired Ladbrokes Coral Group, dropped more than 4 percent.
Paddy Power Betfair’s shares, meanwhile, rose 6 percent after assuring investors that the new policy not “have a material impact on our UK retail strategy.”
“These machines are a social blight and prey on some of the most vulnerable in society, and we are determined to put a stop to it and build a fairer society for all,” Hancock said in a statement.
The government wasn’t done making gaming operators’ lives miserable. Thursday’s announcement also revealed that “in order to cover any negative impact on the public finances,” the FOBT stake reduction “will be linked to an increase in Remote Gaming Duty, paid by online gaming operators, at the relevant Budget.”
Minister for Sport and Civil Society Tracey Crouch said the government will also beef up its gambling safety nets to protect the public and community.
For online gambling operators, Crouch said the government will require them to implement stronger age verification rules and to set limits on consumers’ spending until affordability checks have been conducted.
The government also plans to launch a major multi-million dollar campaign on responsible gambling this year. Crouch added that the Industry Group for Responsible Gambling (IGRG) has already tweaked its code to ensure that a responsible gambling message will appear for the duration of all TV adverts.
Even the UK’s National Lottery wasn’t spared from the government’s thorough scrutiny. Crouch said that the government will review the age limit for playing lottery, including the risk it poses to young people.
“While we want a healthy gambling industry that contributes to the economy, we also need one that does all it can to protect players,” Crouch said. “We are increasing protections around online gambling, doing more on research, education and treatment of problem gambling and ensuring tighter rules around gambling advertising.”
UK ookmakers had mixed reactions on the reduced FOBT limit. Hills, which warned that the company is at risk of a foreign takeover should the government slashes the FOBT stake, lamented that “the government handed [them] a tough challenge today.”
“It will take some time for the full impact to be understood, for our business, the wider high street and key partners like horseracing,” William Hill CEO Philip Bowcock said in a statement. “We will continue to evolve our retail business in order to adapt to this change and we will support our colleagues as best we can.”
Like Hills, GVC grudgingly accepted the UK government’s decision. GVC estimated that the new policy will cost the company £120 million ($161.93 million) by the end of this financial year and £160 million in the first full year after the policy’s implementation.
“Although we are ultimately disappointed with the outcome of the Triennial Review, it is a decision we accept. The uncertainty has weighed heavy on the industry and the many thousands of people who work within it,” GVC CEO Kenneth Alexander said in a statement.
Paddy Power Betfair, which has a much smaller retail presence than the other bookmakers, welcomed the decision of the UK government, which it believes to be a “positive development for the long-term sustainability of the industry.”
“We have previously highlighted our concern that the wider gambling industry has suffered reputational damage as a result of the widespread unease over stake limits on gaming machines,” Paddy Power Betfair CEO Peter Jackson said in a statement.