Tough Times Ahead For UK’s BookmakersJake Cooper | 06 Oct 2017
With the British government’s review on FOBTs and the local gambling industry underway, the next few months could bring a few major challenges to the local gambling sector, and in particular, to its licensed operators.
Despite the reviews results not yet having been revealed, local regulators are still planning to tighten their legislation to minimise negative impacts on the industry. Such a move could seriously affect larger gambling firms like Ladbrokes Coral, especially since the latter firm is the biggest and most well-established of UK bookmakers.
Considering that Ladbrokes Coral currently operates more than 3,600 betting shops in the UK alone, a clampdown on the betting industry could devastate the firm and significantly slim down its revenues and overall performance. Furthermore, if the UK government should decide to impose new limits on fixed odds betting terminals (FOBTs) as well, Ladbrokes Coral would be one of the companies most heavily affected.
Reduced FOBT Stakes Could Seriously Impact Ladbrokes
A reduction of FOBT stakes from £100 to just £2 has been proposed to protect local players from the unwanted effects of excessive or problem gambling, but unfortunately, such a drastic reduction would seriously hit the profits of British bookmakers.
These machines have been a major source of money for many bookies to date (including Ladbrokes, which enjoys about 35% of its net machine revenues from FOBTs), and the aforementioned reduction has been estimated to hold the ability to cause annual losses of over £450 million for this company alone.
Ladbrokes Considers Merger Options To Stay Afloat
The British bookmaker has apparently already begun to consider mergers to help it through this tough period in the history of the UK’s betting industry. Ladbrokes has even initiated talks with GVC Holdings about a possible merger, although the latter company’s first bid of £3.6 billion was rejected.
Such a bid would be the third takeover offer for Ladbrokes since it merged with Coral in 2016. Last year, after the completion of the Ladbrokes-Coral merger, it was revealed that the newly-created betting giant had its sights on acquiring Australian operator Tabcorp, along with fellow UK betting giant William Hill.
Both British betting firms were attempting to strategically expand their operations and boost their betting assets, with rumours of a possible bidding war rampant at the time. However, Tabcorp had already agreed to a merger with its competitor Tatts Group in an attempt to gain the lion’s share of the Australian betting market.
Considering the tighter regulatory conditions that are currently being imposed across the UK, the increase in pressure on local operators is no surprise. This is precisely why experts are anticipating a wave of mergers and acquisitions across the UK gambling sector over the next few months, as firms adjust and adapt to new market conditions and attempt to stay afloat while tightening their belts.