UK betting companies face pressure in stock market trading
Two gambling giants, William Hill and Ladbrokes, experienced steep stock declines on Monday. This was due to unconfirmed speculations regarding proposed changes in wagering limits on betting terminals. If rumors can cause such fluctuations, what would happen during a legitimate emergency?
The British government is considering measures to make gambling at betting terminals safer. One suggestion is drastically reducing betting limits. Currently, bettors can invest up to £100 at a time, but this might be reduced to just £2. This news has raised valid concerns among investors, causing them to sell shares in the major players affected: William Hill (-13%) and Ladbrokes Coral (-10%). They operate numerous betting shops that house the controversial machines, known as fixed-odds betting terminals (FOBTs). These devices, dubbed as the "crack cocaine" of slot machines, are highly dangerous and profitable for the industry. Players can lose large sums of money quickly due to their ability to gamble large sums within short periods of time. A roulette game, for instance, can be played with a £100 wager for every 20 seconds. Losing such income would cause considerable damage to the companies. FOBT industry representatives consistently question the viability of stricter rules and urge the government to take a moderate approach.
These broadcasters make it clear that restrictions on gambling will not effectively tackle problem gambling. And the industry has long maintained that wagering limits would have serious consequences: Closure of betting shops, job losses, cuts in tax revenue, and racing sector funding. Jim Mullen, CEO of Ladbrokes
Conversely, the Department for Digital, Culture, Media and Sport (DCMS) seems unfazed. According to rumours that have stirred the current market angle, new Secretary of State for Culture, Matthew Hancock, intends to crack down on FOBTs. The machines garner a poor reputation due to their connection to gambling addiction. They also receive unfavorable coverage in the media, adding to the growing sentiment that gambling is becoming a problem in British society. The possibility of lower stakes is likely to win the support of numerous citizens.
FOBTs are not ordinary machines
The terminals are unusual machines within the UK gambling landscape. This is because they exploit a loophole in the laws that separate slot machines from casino games like roulette or blackjack. In the UK, the stake on normal slots is capped at £2, owing to their quick gameplay. However, FOBTs feature casino games, mainly roulette, with a maximum stake of £100 and a maximum win of £500. Depending on the type of bet, higher limits apply, with a maximum of £14 placed on a single number (resulting in £490 if won). Simple bets, such as even/odd numbers, allow bets of £100. The issue arises from the fact that a FOBT game of roulette does not take much more time than a slot machine spin, which is approximately 20 seconds. Since roulette involves the risk of losing one's stake, individuals can quickly gamble or win thousands of pounds.
The machines were introduced in 2001, and roulette was added the following year. At that time, they had no regulations. Only the threat of legal action convinced operators to develop a code of practice, which is still in place today. However, the initial few machines have since ballooned into tens of thousands. Each FOBT brings in an average of £55,000 annually, totaling a £1 billion industry at the expense of socially disadvantaged groups. Critics allege that the machines are particularly popular among people who cannot afford to gamble. Booksellers are predominantly situated in structurally weak regions as their machines can appeal to those demographics.
The industry is concerned
The colossal decline in the shares of the major bookmakers in response to rumors underscores the importance of FOBTs in the industry. Although stricter rules would benefit player protection, jobs in the gambling sector would be endangered.
The impact of this rumor on our share price highlights the drastic implications such regulations would hold for betting shops. Beyond lost employment and shuttered stores, lower stakes would mean the likely demise of FOBTs. This would lead to lost funding for racecourses, as each shop pays £30,000 for media rights. Philip Bowcock, William Hill CEO
However, the decision rests with the UK government. The consultation period for the issue has lasted three months, giving stakeholders and the industry time to voice their opinions regarding the future of the machines. Authorities must navigate the delicate balance of maintaining an important sector of the economy and finding justification for allowing £300 per minute gambling.
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Source: www.onlinecasinosdeutschland.com
