'This will result in job losses and empty shops on the high street'
Britain's betting shop operators received the news they most feared on Thursday as the government finally made its decision on FOBT stakes.
William Hill described the government's decision to cut stakes to £2 from £100 as unprecedented as the company said the move would make 900 of its estate of more than 2,300 shops unprofitable while GVC Holdings, who recently completed the acquisition of Ladbrokes Coral, said they expected there would be a £120 million impact on earnings two years after the implementation of the change.
Betfred accused the government of playing politics with people's jobs but Paddy Power Betfair, who have previously called for a cut in FOBT stakes, welcomed the government's decision.
Online operators are not going to escape unscathed either, with the government promising to increase remote gaming duty – which does not include sports betting – to make up for lost tax revenues, a move criticised by Sky Bet chief executive Richard Flint.
William Hill said around 70 per cent of their total gaming machine net revenue was generated by stakes in excess of £2 and that they estimated that following mitigation measures the government's decision could reduce the operating profit of their retail estate by around £70m to £100m.
Chief executive Philip Bowcock said: "The government has handed us a tough challenge today and it will take some time for the full impact to be understood, for our business, the wider high street and key partners like horseracing.
"We will continue to evolve our retail business in order to adapt to this change and we will support our colleagues as best we can. Despite the challenges presented by this decision, our teams will compete hard and offer great service to William Hill customers."
In a statement GVC said they welcomed the certainty provided by the government but were disappointed by the outcome.
The company called on the government to give them time to prepare for implementation, including planning for shop closures and mitigating the impact of job losses.
They added: "As a responsible business, we reiterate our commitment to work closely with the government and our regulators to ensure that both our retail and online offerings are places where customers can enjoy gambling in a safe and secure environment."
Paddy Power Betfair said they did not believe a £2 stake "will have a material impact on our UK retail strategy", estimating a £2 stake would hit revenues to the tune of £35m to £46m, or two per cent to 2.6 per cent of group revenue.
Chief executive Peter Jackson said: "We have previously highlighted our concern that the wider gambling industry has suffered reputational damage as a result of the widespread unease over stake limits on gaming machines.
"We welcome, therefore, the significant intervention by the government today, and believe this is a positive development for the long-term sustainability of the industry."
That view was not shared by Betfred, whose managing director Mark Stebbings described it as a political decision rather than being evidence-based.
He added: "We are already highly regulated, and responsible gambling is at the very heart of our business. This decision will result in unintended consequences including direct and indirect job losses, empty shops on the high street, and a massive funding hit for the horseracing industry. The government have played politics with people’s jobs."
Sky Bet unhappy
Were remote gaming duty increased to 20 per cent it would raise an extra £200m in tax according to analysts Regulus Partners.
Such an increase would punish Sky Bet and risk jobs, according to their chief executive Richard Flint.
Flint added: "Rather than punishing a UK-based job creator, the government should focus on getting a fairer tax contribution from other tech companies who, unlike us, don’t already pay sufficient taxes on their UK activities.
"There are a number of wider proposals in today’s Gambling Review based around online safety which we welcome."
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