Election shock could spell bad news for high street bookmakers
The shockwaves emanating from Thursday’s shock general election result are likely to hit betting shop operators, if analysts of the sector are correct.
Theresa May looks set to form a new minority government with the backing of the Democratic Unionist Party (DUP), but that is far from the best-case scenario for bookmakers.
The findings of the triennial review of the stakes and prizes on the controversial gaming machines – also known as Fixed Odds Betting Terminals – had been delayed by the election and were not expected to be released until the autumn.
There was speculation that following the call for evidence the review would call for a reduction in stakes on the machines from £100 to as low as £10 to £20, but analysts of the sector said the election result might mean government making a political decision to cut stakes even further.
The Jeremy Corbyn-led Labour Party, as well as the Liberal Democrats, have called for stakes to be slashed to £2 in their manifestos – which bookmakers have claimed would lead to thousands of betting shops closing with serious consequences for the funding of horseracing and greyhound racing – while members of the DUP have also spoken out against them.
Even with DUP support, the Conservatives would have only a small majority in the Commons, and analyst David Jennings, of Davy Stockbrokers, said: “Passing anything controversial would be a challenge, and gaming machines are increasingly controversial with ongoing media scrutiny.
“It’s also worth noting that some Conservative MPs are already on record as calling for a £2 staking limit.
“The risk has therefore arguably increased that the next government will make a political rather than an evidence-based decision and that could mean a more severe cut to the maximum stake than is called for in the regulatory review.”
William Hill’s group communications director Ciaran O’Brien said the firm was monitoring developments but called on government to make a decision based on evidence.
“Ministers have always stated the process will be evidence-led, and we fully expect that to continue to be the case,” he said.
“We will accordingly reiterate to government the lack of the association between stake size and problem gambling, and the drastic economic impact of an unwarranted reduction.”
Ladbrokes-Coral and William Hill shares fell by two per cent and 2.5 per cent respectively on Friday but shares in Paddy Power Betfair, which has a much smaller betting shop estate, rose 1.5 per cent.
Another blow for SIS
It has been a difficult few weeks for SIS, which has lost its contract to provide outside broadcast and integrity services to Chelmsford City racecourse to RaceTech.
It is the latest piece of bad news to hit SIS after Arena Racing Company bought Newcastle and Sunderland greyhound tracks from under its noses last month.
Chelmsford City has chosen to go with RaceTech despite the course’s owner Fred Done having a 7.5 per cent personal shareholding in SIS and a further six per cent through the Tote.
Course City chairman Joe Scanlon said: “CCR is an ambitious racetrack and expects its race programme to continue to grow over the next few years, with multiple codes being embraced.
“SIS, the current provider, has done a tremendous job in our initial years, however it was always CCR’s plan to take control of its broadcast solution, as we look forward to a more diverse programme, and the growing stature of the track.”
RaceTech chairman Tom Phillips hailed the deal as a “terrific opportunity” for both his company and Chelmsford City.
SIS was one of the original partners involved in resurrecting what was Great Leighs racecourse but the company sold its 25 per cent stake in Chelmsford City to Done’s Tote Media Ltd in 2014. SIS has an exclusive ten-year media rights deal with Chelmsford running from 2015.
Boyle plans ahead
Boylesports founder John Boyle is set to step down as chief executive of the bookmaker later this year, although he intends to remain as chairman.
And Boyle has not given up on his ambition to gain a presence in the British betting shop market.
“I’ve been CEO now since 2012, and that’s not my gig,” he said. “My gig was retail and going out and finding stores. But I’ve gone in and I’ve enjoyed it for five years. I’m ready this year to step back from the frontline of being CEO.”
There was speculation Boyle, 61, would choose his successor as chief executive from his own family. Boyle’s daughters Orla and Jenna and son-in-law Conor Gray hold senior positions with BoyleSports.
Boyle told the Sunday Independent newspaper that he hoped to enter the British betting shop market, potentially as early as this year.
He said: “How close are we? In the last month we’ve been doing due diligence with a company, and we’re very close. I would say in 2017 we’ll be operating in the retail market in the UK. Now it’ll be at a smaller level because the bigger level of taking over 300-400 stores at this time isn’t available to us. I would hope in the next 12 months we would have at least 100 shops in the UK.”
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