Shares in bookmakers received a boost on Monday after UK's Gambling Commission recommended new restrictions on fixed-odds betting terminals (FOBT) that were less stringent than feared.
The Commission said the maximum stake FOBTs – non-slot machines that offer computerised casino-type games with the press of a button – should be cut from £100 to £30.
It also recommended that the stake on slot machines, like traditional fruit machine games, should be limited to £2.
Bookies relieved
Gambling stocks, including Ladbrokes Coral Group PLC (LON:LCL) and William Hill plc (LON:WMH) jumped on the news since the industry was expecting the maximum stake on FOBTs to be lowered to £2.
“This should be a relief for the sector as the worst-case scenario looks to have been avoided,” said Neil Wilson, senior market analyst at ETX Capital.
“Although the commission says there is a ‘precautionary case’ for a £2 stake limit for B2 slots games, it’s suggesting a maximum of ‘at or below £30’ for non-slots.
“With the non-slots versions of the B2 machines (roulette etc) far more popular and producing the bulk of revenues for bookies from these machines, this is undoubtedly a positive outcome for bookmakers overall.”
READ: William Hill and Ladbrokes Coral shares plunge on fixed-odd betting review concerns
FOBTs generated more than £1.8bn in tax revenue last year and are an important source of income for bookmakers.
Government tackles problem gambling
The decision to cut the stakes on FOBTs and slot machines is part of an industry-wide clampdown to address problem gambling.
The Commission said the £30 limit for FOBTs had been recommended to prevent players from losing large amounts of money in a short space of time.
"We've put consumers at the heart of our advice - advice which is based on the best available evidence and is focused on reducing the risk of gambling-related harm,” said Gambling Commission chief executive Neil McArthur.
"In our judgment, a stake cut for Fixed Odds Betting Terminals alone doesn't go far enough to protect vulnerable people.
"That is why we have recommended a stake cut plus a comprehensive package of other measures to protect consumers.”
The Commission has also proposed a ban on machines being able to allow different - high and low stake - categories of games to be played in a single session.
The government, which started a review into FOBTs in October 2016, will need to decide whether to accept the Commission’s recommendation or impose a lower figure.