Bookies’ shares dive as curb on machines looms

The City bet against the UK’s biggest bookmakers on Monday amid fears that controversial betting machines could be slapped with a £2 maximum stake, slashing profits.

The two main players, Ladbrokes Coral and William Hill, have almost 6,000 betting shops in the UK between them, relying on the machines to generate around half of their retail profits. The so-called “crack cocaine” machines under the spotlight have a maximum £100 stake, which has triggered a major campaign to get stakes cut to just £2 in the Government’s latest three-yearly review of the betting industry.

Documents published by the Department for Culture, Media and Sport in October appeared to signal that ministers were leaning towards a compromise, potentially setting the maximum stake at £20. It also launched another consultation on the topic, which closes tomorrow. But weekend reports suggested new Culture Secretary Matt Hancock considers the machines a “social blight”, and that the overwhelming response to the consultation has persuaded him to go for the most punitive option.

“It looks like the industry needs to brace itself for a £2 stake,” Cenkos Securities analyst Simon French said.

Shares in the listed bookies were punished, with William Hill down 13.5% or 45.5p at 290.8p. Ladbrokes Coral was also nursing double-digit losses, down 10% or 18.8p at 163.7p. Online gaming firm GVC, which is buying Ladbrokes Coral, saw its shares fall 4% or 38.5p to 899.50p. A £2 stake would cut the amount GVC has to pay to 162p, valuing Ladbrokes Coral at around £3.4 billion.

The DCMS refused to comment on the final outcome, saying: “Now is the opportunity for people to look at the proposals we have set out and give their views. We will be considering all responses to the consultation before finalising our proposals.”

Bookies also warned of potential job losses. A William Hill spokesman said: “A £2 stake would mean tens of millions wiped off racing’s income as each shop pays £30,000 for media rights and over 4,000 shops would be at risk of closure from a £2 stake. Anyone with racing’s interests at heart would not take that risk, particularly when the evidence suggests it would do little or nothing for problem gamblers.”

Ladbrokes Coral chief executive Jim Mullen said: “There is also no evidence that machine customers will switch their spend to sports betting such as horse racing.”