U.K. Bookmakers Slump as Lawmakers Call For Online Crackdown
(Bloomberg) -- British gambling stocks were pummeled after a panel of lawmakers called for a crackdown on digital betting.
The Gambling Related Harm All-Party Parliamentary Group recommended the government limit stake and prize limits to 2 pounds ($2.58) along with other measures, citing public concern over the harm caused by online gambling, following a six-month inquiry into the sector.
GVC Holdings Plc shares traded down 9.2%, William Hill Plc slid 7.8%, and 888 Holdings Plc fell 5.4% at 12:22 p.m. in London. The interim report singled out Kenny Alexander, GVC’s chief executive officer, for his “cowardly behavior” in refusing to appear before their interview panel.
The proposals, if implemented, “would be highly counterproductive and do far more harm than good,” Alexander said in an emailed statement. They “could lead to an increase in problem gambling, as customers move away from responsible, regulated operators towards the black market.”
The industry has shifted its focus to online gambling after a 2 pound stake limit on in-store fixed-odds terminals came into effect earlier this year, slashing revenues and rendering hundreds of betting shops suddenly unprofitable. According to Monday’s report, 5.6 billion pounds was lost in online gambling last year, in many cases by vulnerable people.
If stakes above 2 pounds “are not acceptable in land-based venues they should not be allowed online,” said the report. “It is now a matter of urgency that stake and deposit limits are introduced in online gambling to reduce the harm that the industry is causing.”
Lawmakers also recommended ending the use of credit cards and overdrafts for web gambling.
“We are responding positively to public concerns about safer gambling by investing significantly in new technology that identifies risk of harm at an early stage and developing new affordability measures to ensure safer gambling,” Brigid Simmonds, chair of the Betting and Gaming Council industry group, said in an email, adding that businesses will continue to listen to concerns.
The environment for gaming companies is different in the U.S., where the recent legalization of sports betting has prompted a surge of interest in partnerships with American gaming companies like casinos. Last month Ireland’s Flutter Entertainment Plc announced it was buying Canada’s The Stars Group Inc. for about $6 billion in stock. Further U.K. regulation may accelerate that shift to other markets.
It’s yet to be seen whether the British government will adopt the recommendations, or which party will be leading the country by the end of this year -- a general election will be held on Dec. 12.
“These are just proposals at this stage,” Goodbody analyst Gavin Kelleher said in a note to clients. “It would be no surprise if stricter gambling controls made it into election campaigns or manifestos, which could heighten U.K. regulatory concerns once again.”
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