Reflecting the frail state of UK politics, the fate of bookmakers appears to hang on one man’s love for horse racing – and how many punters he thinks feel the same.
Over half-a-billion pounds were wiped off the valuations of British bookmakers in January, when fresh rumours circulated that the government intends to cut FOBT stakes to £2.
The leaks, coming from anonymous departmental officials, centre around Theresa May’s new culture secretary, Matthew Hancock – who is said to favour the most severe restriction on bookmaker’s gaming machines, because he holds the unusual view that doing so would encourage more betting on British racing.
“Matt wants the new stake to be at the bottom of the range,” the Sunday Times quoted a source as saying. “His attitude to [FOBTs] is very negative, because it takes money from reasonable, mature betting, like on the horses.”
The retail sector had taken Hancock’s appointment as a welcome sign, given his avid support of racing, a sector commonly thought to be one of the first victims of new machine regulations. As an MP Hancock has Newmarket racecourse in his constituency; he was instrumental in pushing through levy reform, and was himself formerly trained as a jockey.
“People think that because he is a big supporter of horseracing, he wouldn’t support this direction of travel,” another source, possibly the same, later told the FT.
“But actually it’s the other way around.”
Many have questioned the credibility of the rumours, which have already knocked £577m off the combined market cap of Ladbrokes and William Hill.
While others, mostly racing bodies, have expressed major concerns over the new minister’s alleged logic: that hurting bookmakers machines would necessarily result in more money for racing.
Quite the opposite, said the British Horse Association’s chief executive, Nick Rust, who calculates a dramatic reduction would have a “significant” negative impact.
“The great work that government has done in helping us extend the levy could be undone at a stroke if there is a move to a £2 maximum stake,” Rust said.
A terse Martin Cruddace, CEO of Arena Racing agreed £2 would be “pretty catastrophic” starving racing of “at least £55m” in levy and media rights payments.
Meanwhile Ladbrokes CEO, Jim Mullen, reaffirmed there is “no evidence” that machine customers will switch their spend to other products such as horse racing.
“Our experience is that they won’t,” he said. “Any policy made on this assumption would result in a significant reduction in the level of funding for horse racing.”
Warwick Bartlett of analysts GBGC’s assured that as charges are now paid on a per shop basis, any cut would inevitably lead to closures, and therefore less funding for racing.
Nevertheless Bartlett doubted the legitimacy of the media, bent as they are on campaigning against the terminals.
“I’m paying no regard at all to press speculation from sources that are not named,” he said.
“It could be fake news.”
“The problem for the print media is that they have been on a campaign and they do not like to lose so they will give over extraordinary amounts of newsprint to ensure a win.
“The Government is weak and takes note of the media, however they have to be reasonable, and evidence based in their decision, otherwise they leave themselves open to judicial review from the bookmakers.”
“A judicial review is a last resort measure and one not taken willingly,” Bartlett added. “But the stakes are too high not to.”
Financial markets have taken the news as gospel nonetheless. At the time of writing Ladbrokes share price was still down seven percent from 22 January; William Hill’s by eight percent.