At last, some welcome news from the UK high street! No, don’t be silly, declining retail trends aren’t reversing to give the internet a run for its money. Rather the UK Gambling Commission’s recommendations on restrictions to Fixed Odds Betting Terminals (FOBT –compared to crack cocaine) look set to be less onerous than feared. Investors in dominant player William Hill and Ladbrokes Coral are thus breathing a 4% sigh of relief, while those who’d been holding off for confirmation are bidding them higher now that a highly valuable revenue stream isn’t set to fully evaporate.

The big players may well take a hit, however, never underestimate their power of marketing ingenuity and ability to innovate to make up for, if not offset, the loss. That said share price charts suggest a recent waning of concerns, their shares recovering from 2018 lows, implying less worry about a £2 cap being recommended across the whole segment. With the government having already decided to cut the upper limit from £100 to £50, today’s news leaves a still handsome £30 upper cap, meaning today’s reaction is understandable given most had pencilled in a more punitive £20.

The commission findings include a slots stakes limit of £2 and non-slot limit of £30 “or lower”, coupled with limits on games per session/player and player-tracking to make it more difficult for gamblers to get themselves into a hole. Note Paddy Power Betfair is the odd one out, shares flat (languishing around 2018 lows), having been vocal about more severe curbs, suggesting the segment is less important for it.

Mike van Dulken, Head of Research, 19 Mar 2018