Shares in William Hill PLC (LON:WMH), GVC Holdings PLC (LON:GVC) and Paddy Power Betfair plc (LON:PPB) were under the cosh after a report suggested the industry should pay a mandatory tax to fund the treatment of gambling addiction.
The report, published in the British Medical Journal, said gambling laws should be radically overhauled as the economic cost of problem gambling had been “significantly underestimated”.
The paper said new laws should put more responsibility on the industry to combat gambling-related harm.
In reaction, shares in William Hill fell 4.7% to 142p, GVC dropped 3.7% 6to 594p and Paddy Power Betfair declined 2.3% to 6,056p.
ouch William Hill pic.twitter.com/XrRK4E4V3M— Neil Wilson (@marketsneil) 9 May 2019
In the UK, there are an estimated 430,000 problem gamblers.
The BMJ paper said there is a lack of funding to address the issue. Some £1.5mln was spent in the UK last year on the prevention of gambling addiction, or about 2p per capita.
There is just one specialist NHS clinic for problem gambling but the government has vowed to provide more as part of a funding package for the health service.
Professor Gerda Reith, a co-author from the University of Glasgow, said: “Gambling doesn’t just affect an individual. The impacts ripple out beyond them to their family, friends, communities and society.”
A downbeat broker note from Goldman Sachs was also weighing on the sector.
"We cut our target multiples for gambling stocks by c.15%, believing the industry has entered a new reality where multiples will be fundamentally lower, amid persisting regulatory uncertainty and maturing levels of growth," Goldman said.