(Bloomberg) -- The U.K. will announce a clamp down within days on the highly addictive roulette and poker machines that are so profitable for the gambling industry but also blamed for contributing to social and economic hardship.
Chancellor of the Exchequer Philip Hammond has dropped his objection to imposing to a new maximum limit of 2 pounds ($2.70) -- down from 100 pounds -- on fixed-odds betting terminals, according to people familiar with the matter, paving the way for the measure to go through. One person said a decision would be announced this week.
The machines -- dubbed the “crack cocaine” of gambling -- are used by thousands of betting shops across Britain, and have helped offset a decline in revenue caused by the growth in online gambling. A 2-pound cap could force half of the U.K.’s 8,500 betting shops to close, with 21,000 job losses, and cost the horse-racing industry -- which sells broadcasting rights to the bookmakers -- 50 million pounds a year, according to analysis by KPMG.
It would have a “catastrophic impact on the future of retail betting,” said the Association of British Bookmakers, which commissioned the KPMG analysis.
Gamblers on the machines can currently stake 100 pounds every 20 seconds, and charities including GambleAware have long called for the government to reduce the maximum stake to remove the risk of gamblers losing thousands of pounds in a single session.
Analysts see William Hill Plc as the most exposed to the measure. The company is already eyeing opportunities in the U.S. to replace lost revenue, after a Supreme Court judgment on Monday freed individual states to permit sports gambling. It’s preparing to roll out operations in New Jersey, which instigated the legal fight by repealing its gambling ban.
Five other states passed laws to enable sports betting in anticipation of the Supreme Court lifting the federal ban: New York, Connecticut, Pennsylvania, West Virginia and Mississippi.
“We’re talking to a number of different people in different territories about potential tie-ups should regulation occur in those states,” William Hill spokesman Ciaran O’Brien said by phone.
It’s not only bookmakers who will be affected.
The U.K. Treasury may look to other sources of gambling, such as casinos and online gaming to offset the tax losses it may suffer by capping the stakes on terminals, said lawmaker Philip Davies, who chairs Parliament’s cross-party group on gambling and lobbied against a 2-pound stake limit.
The cap could mean a hit to the Treasury of 1.1 billion pounds over the next three years, and a loss to already cash-strapped local governments of 45 million pounds, according to the KPMG report.
William Hill, which also operates the largest number of sports books in Nevada, saw its share price rise 11 percent on Monday after the Supreme Court ruling. But European bookies may struggle to make up the losses from fixed-odds betting terminals in the U.S., especially in the near future.
“While this should lead to the removal of one of the biggest barriers to a licensed sports book market, it is important to remember that nothing will change overnight,” said Clive Hawkswood, chief executive of The Remote Gambling Association, which represents online gambling operators.
©2018 Bloomberg L.P.