William Hill and GVC brace for shop closures after government's 'unprecedented' move to slash top stake on betting machines

 
Rebecca Smith
The government is cutting the maximum stake on fixed odds gaming machines
The government is cutting the maximum stake on fixed odds gaming machines (Source: Getty)

Bookmakers have started releasing initial forecasts on the impact of the government's decision to cut the maximum stake on fixed odds betting terminals, with William Hill branding the move "unprecedented".

The government confirmed this morning that the maximum stake on fixed odds betting terminals will be cut to £2 - down from £100.

Shares in betting companies dropped this morning on the news, with GVC down nearly five per cent in early trading, and William Hill down nearly six per cent.

William Hill said it expects gaming revenue to drop by 35 per cent to 45 per cent, and some 900 of its shops - more than a third of its retail estate - could become loss-making, with some of those then at risk of closure.

Read more: Fixed odds betting machines maximum stake slashed from £100 to £2

William Hill said:

However, a regulatory change of this nature is unprecedented and its impact on customer behaviour will not be fully known until some years after implementation.

In the first four months of the current financial year, around 70 per cent of the bookmaker's total gaming machine revenue was generated by stakes surpassing the proposed £2 threshold.

William Hill said this could reduce its operating profit by around £70m to £100m, though it will look to find ways to reduce the longer term impact on profitability.

Philip Bowcock, chief executive, said:

William Hill has a long and proud heritage as part of the UK high street and we know how important betting shops are to our customers and their local economies. 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.

Meanwhile Ladbrokes Coral owner GVC, said it expects to be able to reposition its business within two years following the government's proposed change, with a forecast hit of around £120m on group earnings secured by the end of that period.

It is though, also braced for store closures, saying the industry needed enough time to prepare and plan for the shop closures "that will arise", including attempting to mitigate the impact of resultant job losses.

It said significant re-engineering of the machines and gaming software will also be needed.

GVC boss Kenneth Alexander said:

Although we are ultimately disappointed with the outcome of the triennial review, it is a decision we accept. The uncertainty has weighed heavy on the industry and the many thousands of people who work within it. Our focus now is to work with government to build a constructive relationship that will ensure a positive future for the sector and the many millions of customers who enjoy our products responsibly.

Read more: William Hill margins bolstered by "unprecedented run of bookie-friendly results"

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