We have discussed the issue of fixed odds betting terminals (FOBTs) and the effect of the maximum stake cut that was introduced earlier this year. Namely, now players are only allowed to wager as much as £2 in a minute, whereas the previous limit was £100. The reasoning behind the stake cut was that the losses can quickly add up when the limit is that high. FOTBs were often called the crack cocaine of gambling and many argued that this is the most dangerous form of gambling that’s currently legal in Britain.
At the beginning of April we reported that the new FOBTs £2 stake limit is in place and it was clear that many operators would suffer losses and will be forced to close down some of their facilities, which in turn was expected to force them to lay some of their staff of.
Last month we reported that operators did close some of their shops. Understandably they blamed the FOBTs reform. A total of 2,300 betting shops all over the country were to be closed, with William Hill announcing to close down a total of 700 shops, whereas Ladbrokes reported that they will need to close down a total of 900 shops. When it comes to job losses, it was announced that about 12,500 workers were about to lose their jobs.
William Hill Hit Harder Than Other Operators
The operators keep on publishing figures that show just how hard they’ve been hit by the new FOBTs limit. It appears the William Hill got the short end of the stick as the operator has just announced that they lost a total of £64 in the first half of the year.
William Hill would’ve earned a total of £51m in profits if it wasn’t for the decision to limit the amount that players can stake on a FOBT in a minute, but the actual result was a £63.5m loss. Before the changes were introduced the company earned more from FOBTs than standard sports betting.
If we are to compare William Hill with other operators for which FOBTs didn’t play that much of a significant role when it comes to profits, we will see that the impact of this decision was a lot less severe.
For instance, Flutter Entertainment, a company that was previously known as Paddy Power Betfair, earned twice as much from sports betting as it did from FOBTs and therefore suffered a much less significant drop in profits. In fact, the exact drop in profit for Flutter amounted to just 4%.
GVC Also Reported Profit Losses
GVC Holdings, a company that owns Ladbrokes Coral, lost more than Flutter Entertainment, but less than William Hill. The company’s revenue suffered a 10% decrease. Even though William Hill’s high-street department suffered losses the company’s revenue rose by 1%, mostly due to the acquisition of Mr Green.
William Hill’s online department lost funds due to the tax increase from 15% to 21%. The company intends to compensate its losses in UK by expanding to the US market where a lot of states chose to legalise and regulate sports betting.