Another FOBT red flag for UK bookies

British MP John Whittingdale’s warning earlier this week that UK bookmakers should brace themselves for FOBT staking limit restrictions (see previous report) has been echoed by the respected Fitch Ratings organisation, which said in a statement Wednesday that retail betting shop operators like Ladbrokes and William Hill could be particularly hard hit if staking limits are drastically reduced.

The Fitch statement notes:

“The UK government is likely to propose changes to the regulation of gaming machines in the next few months, following the completion of its triennial review. Our base case is for an incremental tightening of regulations that would mainly affect smaller, independent companies with less diversified revenue streams. But we have also considered an adverse scenario where gaming machine revenues are significantly affected.

“Ladbrokes Coral and William Hill are the most exposed major gaming companies, because of their large portfolios of licensed betting offices. In our downside scenario we assume that Ladbrokes Coral would lose about 35 percent of gaming machine revenues.”

Fitch predicts that there could be a mandatory reduction in maximum stakes on FOBTs from the current GBP 100 every 20 seconds, but that it is unlikely that the cut will be as severe as the GBP 2 per spin recommended by the All Parliamentary Party Fixed-Odds Betting Terminal Group. Fitch also suggests that other reforms may include measures to slow betting speeds.

The ratings agency goes on to speculate that the online sector of the UK industry could benefit from the travails of the retail betting shops, suggesting that land operators may seek to soften the impact and drive growth by investing more heavily in online activity and adopting strategies aimed at making online gambling more attractive to their players

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