New-formed UK gambling giant Ladbrokes Coral might see their earnings suffer by 25% if the UK government decides to move forward with its plans to crackdown on FOBTs (fixed-odds betting terminals). Being the biggest operator of FOBTs in the United Kingdom, the company is predicted to suffer the biggest losses should the plans come to fruition.
Only at the beginning of November, the company announced the approval of a $2.81 billion merger that saw the newly formed Ladbrokes Coral Group become the biggest chain operator of betting shops in the UK, surpassing the previous title-holder William Hill. As part of the merger prerequisites set by the Competitions and Markets Authority, both operators agreed then to offload a combined number of 359 betting shops to rival operators Stan James and Betfred.
But while the company waited for an approval of their merger, the UK government was busy preparing new strategies for regulating FOBTs found across sport betting shops in the UK. Lead by the Department of Culture, Media and Sports (DCMS), the government announced a new plan to reconsider the maximum stake in FOBTs, under concerns that the machines cause harm to “vulnerable” gamblers.
For this purpose, the DCMS released a Call for Evidence from operators and concerned parties. Once the call’s deadline ends, the government will then decide whether they should pass a new legislation that would correct the current maximum limit of £100 on every 20 seconds.
As proposed by a number of high-ranking officials, the maximum bet size might be reduced to as little as £2, should new legislation come, which in turn will afflict serious loss to concerned operators. And considering the fact that Ladbrokes Coral earn more than 50% of their revenue through FOBTs, analysts believe they might suffer the highest losses that may amount up to £100 million, pre-tax, during their first year of merger.