UK gambling operators got a double-dose of bad news on Wednesday as the government advanced the implementation of gaming machine stake cuts and online casino tax hikes.
On Wednesday, Prime Minister Theresa May’s Tory government caved to mounting cross-party pressure and agreed to reduce the maximum stakes in fixed-odds betting terminals (FOBTs) from £100 to £2 as of April 1, 2019.
Digital, Culture, Media and Sports Secretary Jeremy Wright issued a statement saying the government was in a pickle trying to balance the needs of both problem gamblers and the gambling industry, but parliament has “been clear that they want this change to be made sooner.”
The government had intended to implement the stake cut in October 2019 but the perception that this represented a delay from the supposedly original April 2019 timeline prompted outrage from opposition politicians and from within the Tory ranks, including the high-profile resignation of sports minister Tracey Crouch.
The government had also planned to hike the Remote Gaming Duty from its current 15% to 21% on October 1, 2019 to make up the shortfall in FOBT tax revenue. The government now says it will also advance the RGD hike to April 1, 2019.
Wright said the government expected to work with the gambling industry to minimize the expected job losses that will result from betting shop closures.
The government initially dug in its heels, rejecting claims that the FOBT stake cut had been delayed. But Crouch’s resignation sparked a media feeding frenzy, which in turn led to threats by a growing number of Tory MPs to prevent the government from implementing the RGD hike unless the FOBT stake cut was brought forward.
Following Wednesday’s announcement, Crouch told the media that she was “really pleased that common sense had prevailed.” Crouch said her resignation hadn’t been in vain, as it led MPs to “come together with faith leaders and charities” to demonstrate to the government “the strength of feeling on this issue.”
Curiously, investors appeared nonplussed by the news, as share prices for operators with a significant high-street presence, including William Hill and GVC Holdings (parent of the Ladbrokes and Coral brands), reported shares rising on Wednesday. Even online-only operators like 888 Holdings are up at time of writing.
GVC’s rise is attributable to the fact that it’s no longer on the hook for a major financial top-up payment – estimated at around £700m – to Ladbrokes-Coral shareholders had the FOBT stake cut vote taken place more than one year after GVC’s March 27, 2018 completion of the Lads-Coral acquisition. As for the other operators’ share prices, it seems that decision to add Xanax to the UK’s public water system is really paying off…