Some of the country’s biggest and best-known gambling firms have seen their share price go down after the Gambling Commission confirmed that it is considering imposing a maximum stake of £2 to online casinos. The cap would bring it in line with Fixed Odds Betting Terminals, which had the same maximum stake put in place in April of 2019.
The result of that decision was that numerous betting companies with a high street presence chose to shut some of their shops, which they had threatened to do from the moment it became clear that the the stake reduction could be brought in. Now gambling firms are having to figure out what they’ll do next if the same maximum stake is put onto online casinos.
Shares Prices Fall
The likes of William Hill, Ladbrokes Coral’s owner GVC Holdings and Flutter Entertainment, the rebranded name of Paddy Power Betfair, have seen their stock price fall in response to the UKGC’s confirmation that they’ll consider adding a £2 maximum stake to online casinos. William Hill’s shares fell by eight percent, with GVC Holdings’ going down by seven percent.
PlayTech, a firm that creates gambling software, also saw its share price fall by seven percent, whilst other gambling firms took less of a hit. Flutter Entertainment fared better than most, for example, as did 888. Even with those ‘better’ hits that certain companies took, the gambling industry as a whole still lost more than £500 million because of the change of stock value.
UKGC’s Comments Cause Panic
The share prices took such a dramatic hit because of a comment made by Neil McArthur, the Chief Executive of the United Kingdom Gambling Commission, when appearing in front of the All-Party Parliamentary Group into gambling related harm. It has been running its investigation for several months, with the suggested cap to online casinos already having been mentioned.
This was the first time that anybody to do with the UKGC had said that the organisation was considering doing as much, however. When he confirmed that the gambling regulator would consider dropping the maximum stake of online casino games to £2, the stock market reacted. When the MPs on the APPG panel recommended the cap in November 2019 the industry saw losses of around £1.2 billion.
The Gambling Commission reacted with a vague sense of surprise to the manner in which the market responded to McArthur’s comments. The regulator said as long ago as October 2019 that a reduction in stake limits would be considered as a method of reducing the gambling-related harm that has been a controversial point for the industry for years.
Speaking on behalf of the UKGC, a spokesperson said, “We said last October that we would be looking at online stake limits as part of our ongoing work to reduce the risks of gambling-related harm. This work is in addition to us focusing on VIP practices, advertising technology and game design. We will publish our assessment and next steps for online stakes and further protections later this year”.
The Betting And Gaming Council, meanwhile, released a statement suggesting that a stake cut isn’t the automatic answer. “We want to have a betting and gaming industry in this country which is not just the best in class, but which also ensures we don’t drive people towards betting on harmful unregulated black markets. We’re working hard with the Gambling Commission and with the government on their review to ensure effective regulation”.
Timescale Of Likely Changes
Gambling firms will have a good bit of time to prepare for the possible changes, considering that the Gambling Commission won’t be making a decision immediately about any possible maximum stake cap. In fact it’s likely to take around six months for any decision to be made, which may well have the effect of increased market volatility in the coming months.
The big question that gambling companies will want an answer to is whether the maximum stake introduced is likely to be as harsh as £2 or whether there will be any wiggle room there. The problem is that market analysts Goodbody think that certain politicians are unlikely to rest until a ‘significant skate reduction is introduced’.
Is A Gambling Act Review Likely?
The conversation around introduced a maximum stake of £2 to online casinos has brought about yet another conversation from some quarters about the fact that the 2005 Gambling Act is no longer fit for purpose. After all, the Act was introduced before the internet had become a big factor in people’s ability to gamble, whereas now it is crucial.
Tony Blair’s Labour government introduced the 2005 Gambling Act in order to liberalise the gambling industry, but it hasn’t been reviewed in the years that have followed. It’s no surprise, of course, when you consider that the gambling industry itself hadn’t faced a review of any real sort since the 1960s prior to the Gambling Act.
The calls for a maximum stake to be introduced to online casinos will almost certainly result in the government having a look at the Gambling Act. That’s because doing so would likely result in numerous issues being able to be dealt with at the same time, such as the link between gambling companies and the sport of football, which are closely linked.