Business Betting Bulletin 29th January 2018

FOBT debate reignites as reports suggest dramatic cut

The chances of the government reducing the maximum stakes on FOBTs to £2 appeared to have risen last week, wiping millions off the value of Ladbrokes Coral and William Hill and prompting dire warnings about the possible effect on British racing.

They were reacting to a Sunday Times report suggesting that culture secretary Matt Hancock favoured cutting the maximum stakes on the controversial machines to the lowest option set out in the government’s consultation which closed last Tuesday.

The Department for Digital, Culture, Media and Sport said the stake would be cut from the current maximum of £100 but would only add: “We are currently consulting on what the exact cut should be, and will make a final decision in due course, once all the evidence has been considered.”

Subsequent reports claimed there was division within the Cabinet over what the figure should be, with chancellor Philip Hammond wanting a stake of £20 to protect tax revenues, although the Treasury distanced itself from the story.

The issue even came up at prime minister’s questions when Theresa May said: “We are clear that the fixed odds betting terminals stakes will be cut to make sure that we have a safe and sustainable industry where vulnerable people and children are protected.”

Bookmakers have claimed that a £2 stake would lead to thousands of betting office closures and, with the sector paying up to £30,000 per shop for media rights, the loss of 3,000 betting offices would lead to racing losing out by £90m per annum.

Arena Racing Company chief executive Martin Cruddace, who previously held the same role at the Association of British Bookmakers on an interim basis, said that – while bookmaker claims about betting shop closures were overstated – a £2 stake could result in a minimum £55 million cut to the sport’s income.

He added: “We also need to be cognisant of the impact on the profitability of the remaining shops. The effect on prize-money and the economic ecosystem of the industry would be pretty catastrophic.”

The BHA said it did not wish to interfere in government policy. However chief executive Nick Rust told At The Races that a £2 stake would have a significant impact on British racing, adding: “We want government to understand that fully before it makes its final decision and we are taking steps to ensure they understand the impacts, they understand the cashflows and the likely impact on our sport.

“The great work that government has done in helping us extend the levy could be undone at a stroke if there is a move to a £2 maximum stake.”

There was speculation that bookmakers might consider bringing a judicial review against the government decision, due to the consultation not having finished when Hancock’s reported views were published.

However, bookmakers would have to decide whether the benefits of a judicial review outweighed the negatives and one industry source said: “It would always be a last resort and only if it was clear the decision was not being taken on the evidence.”

Account restrictions discussed in parliament

Few issues annoy punters as much as that of bookmakers restricting and closing accounts and last week the chief executive of one of Britain’s biggest gambling operators said he believed the betting market could become fairer and more transparent to customers.

Sky Bet’s Richard Flint claimed 97 per cent of the firm’s horseracing customers had no restrictions on their account.

He insisted his company needed to be able to manage their risk but Flint added he was happy to work with punter representatives to address their concerns.

Flint was speaking at a seminar organised by the Parliamentary All Party Betting & Gaming Group entitled ‘Are bookmakers unfairly closing customer accounts’, at which presentations were also given by Horseracing Bettors Forum chair Simon Rowlands and Racing Post editor Bruce Millington.

Flint added: “I believe the industry needs to do much more to work together with those customers and racing fans with whom we have so much in common.”

In his presentation Rowlands said that in the two and a half years since the HBF’s inception “the subject most frequently raised with us has been that of the closure and restriction of betting accounts.

He added: “At present too many innocents are being caught up in restrictions and closures.”

In his presentation, Millington said the number of punters being caught by restrictions appeared to be rising.

He added: “It’s an issue that affects Racing Post readers and it also threatens to harm the general popularity of horseracing, which is something that is in nobody’s interests. I hope a workable solution can be found.”

NBA wants cut of the US sports betting pie

Battle lines are being drawn up in the United States while the Supreme Court decides whether to allow an expansion of legalised sports betting.

A number of states are preparing legislation for such an eventuality including New York where the state senate’s racing, gaming and wagering committee held a hearing during which a top National Basketball Association official said the sport should receive one per cent of all the money bet on their games as compensation for dealing with the “risks that sports betting imposes”.

NBA attorney Dan Spillane said: “We believe it is reasonable for operators to pay each league one per cent of the total amount bet on its games.”

The demand did not go down well with gambling operators in the United States including Joe Asher, chief executive of William Hill US, who said: “There will be plenty of financial benefits to the leagues. There is no need to divert tax revenue from the citizens of New York to a privileged few.”

Gambling Commission asks for more powers

Declining public trust in gambling and concerns about advertising were two of the reasons given by the Gambling Commission for launching a new consultation last week which could change the rules relating to marketing, unfair terms, and complaints and disputes.

The regulator is seeking the powers to fine operators over breaches of advertising rules as well as tackling the issue of spam marketing.

The Gambling Commission is proposing that in future any firm breaching advertising codes could be subject to the full range of its powers, including fines.

The consultation said: “If we consider that licensees, or affiliates acting on their behalf, are in serious or repeated breach of the rules, we will not hesitate to apply the full range of our regulatory powers, which includes financial penalties.”

The gambling sector has been been identified as being in the top three most complained about sectors for sending spam text messages to UK consumers and the consultation also addresses this issue.

Rule changes would “require operators to ensure that they do not send marketing e-communications without the specific, informed and withdrawable consent of the recipient”.

The consultation also proposes bringing in an eight-week time limit for operators to deal with gambling complaints and disputes, as well as strengthening customer protection and making information more understandable.

GVC hit by Greek tax bill

Shares in GVC holdings, the online gambling operator set to take over Ladbrokes Coral, fell on Friday after it emerged they had put aside €200 million (£175m) after being hit by a tax bill in Greece.

The demand from the Greek authorities relates to trading by a subsidiary of Sportingbet in 2010 and 2011, before that company’s acquisition by GVC in 2013. The amount being asked for is €186.77m, which GVC said was substantially higher than the revenues generated by the subsidiary.

GVC said in a statement: “The board strongly disputes the basis of the assessment calculation, believing the assessed quantum to be widely exaggerated and is confident in the grounds of appeal. however, given the group subsidiary has to go through an appeal process, the board believes it prudent at this juncture to make a provision of approximately €200m in GVC’s 2017 financial accounts to cover the period and up to the end of 2017.”

The company is in the midst of a takeover of Ladbrokes Coral that could cost as much as £4 billion, although this news is not expected to affect GVC’s plans.

However, analysts at Goodbody said the development “creates a degree of uncertainty and comes at an unhelpful time”.

Shares in GVC fell 26.50p to close at 921.50p.

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