GVC Reports Better Than Expected Results after FOBTs Stake Reduction
GVC, the owner of Ladbrokes, has stated that the impact of the new betting price cap was lower than they first expected. The price cap came into effect in April and affected many of its businesses across Britain. According to the earlier numbers by the high street bookmaker, they expected that the new regulations would have an impact of 145 million pounds on the core earnings in 2020. It seems that the bookmaker now expects the numbers to decrease to 130 million pounds.
The New Cut Down in FOBTs Stake in the British Market
The cut in stake above is the newly implemented price cap of FOBTs stakes. It brought down the maximum betting stake to 2 pounds, from its previous limit of 100 pounds. The new decision dealt a massive blow to a lot of bookmakers. The bookmakers argued that the terminals represent a significant source of income to the retail outlets. They believe that these retail outlets are already struggling because the younger audience is moving to online gambling.
The company that owns multiple brands, Eurobet, Bwin, Ladbrokes, Coral, and Crystalbet stated that the cut down of the maximum stake is going to result in closing up to 1000 betting shops. It also said that by 2019, the company would lose about 135 million pounds from its core earnings. George Salmon, the analyst from Hargreaves Lansdown, stated that this follows the same thoughts of William Hill on this subject. The only difference is that William Hill did not adjust its guidance in the same way. It seems that from the tone of the results, the results are positive when it comes to the impact of the FOBTs maximum stake.
GVC’s Share Numbers Increase
The Shares of GVC increased by 1.14%, to reach 600.2 pence. GVC also stated that it would save another fifteen million pounds in 2020. The reason behind that is that the integration of the online businesses of Ladbrokes is happening quicker than they expected. GVC acquired Ladbrokes Coral back in 2018 for almost four billion pounds.
European gambling firms like 888 PLC, Paddy Power, and GVC have always been looking forward to expanding across the Atlantic. It happened at the same time as Britain tightens its regulations, especially on the lucrative FOBTs. At the same time, it seems that the US States are easing the curbs on sportsbetting. Paddy Power’s boss stated earlier at the beginning of May that the FOBTs stake cut is going to be at the top end of the estimates. As for William Hill, it reported higher revenue for the year that ended on April the 30th. The main drives behind that are the success of the online business, and the operations of the company in the US, which countered the weak retail performance in Britain, especially after the FOBTs stake reduction. GVC has also been trying to expand its operations in the United States Market, where it got into a joint venture with casino and hotel operator, MGM Resorts.