Big bookmakers are weighing up the possibility of legal action against the government after suggestions that ministers have decided to cut the maximum stakes on betting machines from £100 to £2.
The reports spooked investors, who had been forecasting a cut in the maximum stake to £20. Almost £800 million was wiped off the value of the quoted betting groups, with William Hill and Ladbrokes Coral losing £336 million and £277 million, respectively.
The Department for Culture, Media and Sport launched a review 15 months ago in response to concerns about the addictive nature of fixed-odds betting terminals, culminating in a decision in October to cut the maximum stake for £100 to somewhere between £2 and £50. It then launched a final 12-week public consultation that comes to an end today. The review also encompasses wider socially responsible measures to protect the vulnerable.
According to The Sunday Times, Matt Hancock, the culture secretary, favours tougher curbs amid claims that betting machines are more addictive than most other forms of gambling.
The bookmakers expressed astonishment at the suggestion that Mr Hancock may have decided the outcome of the review of the machines before today’s deadline. Both William Hill and Ladbrokes Coral are planning to lodge their submissions as late as possible.
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Neither would comment on the likelihood of taking legal action, although an insider at one said: “The government has been clear all along that its decision would be evidence-based. So if they’ve taken a decision without seeing all the evidence, that would be a clear breach of process. We wouldn’t want to take legal action, but it’s on the table as a possibility.”
A report last year by KPMG prepared for the betting industry suggested that half the country’s bookies could close, with the loss of up to 20,000 jobs, in the event of a £2 stake. The racing industry could take a knock-on hit of £100 million by losing racing levy contributions and media rights from bookmakers.
Philip Bowcock, William Hill’s chief executive, said: “The impact of this rumour on our share price illustrates the drastic impact such a move would have on the retail betting sector.”
Jim Mullen, his counterpart at Ladbrokes Coral, added: “There is also no evidence that machine customers will switch their spend to sports betting such as horse racing and our experience is that they won’t. Any policy made on this assumption would result in a significant reduction in the level of funding for horse racing.”
Shares in William Hill closed down 39p, or 11.6 per cent, at 297¼p, while those of Ladbrokes Coral fell 14½p, or 7.9 per cent, to 168p.