Gambling stocks continue to slide as MPs seek £2 online betting limit
Gambling stocks fell for a second day this morning, following a report by MPs released yesterday that called for a cut in online casino stakes.
The gambling related harm all-party parliamentary group (APPG) yesterday called for stake and deposit limits to be introduced on online gambling products.
Read more: Gambling stocks tumble as MPs call for online casino stake limit
The interim report follows the introduction of stake limits for fixed-odds betting terminals in betting shops last year, where the maximum stake was cut from £100 to £2.
MPs’ report released this week argued for the introduction of a £2 online limit, in line with land-based venues.
William Hill shares fell 3.55 per cent today to 170p, having fallen 12.66 per cent yesterday.
888 Holdings‘ shares fell 1.54 per cent to 153p this morning, having fallen 13.67 per cent yesterday.
Paddy Power-owner Flutter‘s share price fell 1.64 per cent today to 7,802p, having fallen 3.39 per cent yesterday.
Rank Group‘s shares slipped 4.4 per cent to 228p, after falling 4.4 per cent yesterday.
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GVC shares were down marginally after falling 10.47 per cent yesterday.
Despite the tumbling share prices, analysts at Canaccord Genuity argued today that the sell-offs were an overreaction.
“Yesterday’s share price falls were significantly overdone in our view,” they said.
“We think there is minimal risk to any meaningful deposit and stakes limits being introduced over our forecast periods,” they said.
In the event that a minimum stake was introduced they said the companies would be able to absorb the hit.
“We think the companies themselves are well placed to mitigate much of the financial impact through increased customer recycling, changes in return to player percentages and reductions in marketing spend,” they said.
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Liberum argued that the report is “influential but not decisive”.
“The recommendations in the report would, if implemented, reduce online gambling revenue,” the broker wrote in a note today.
“If gambling is covered in forthcoming party manifestos we will get a better idea of whether any of the ideas in the report will be adopted by government.
“The parliamentary group was seen [as] influential in the debate about gaming
machines in betting shops. Tming of yesterday’s interim report may
be intended to influence the content of party manifestos for the election.”
But it warned that betting firms’ share prices will be stuck in the doldrums until there is a clear path forward. “Until greater clarity emerges it is hard to see how share prices can make progress,” analysts noted.
Liberum added that that government may not want to reduce its tax income from online gambling.
“It is harder to see where else in the sector could be squeezed to pay for reduced online slots revenue, and duty,” it said.