UK Bookmakers Hit Hard By Tax Rise On FOBTs
Despite the fact that UK bookmakers were prepared for a crackdown on the infamous fixed odds betting terminals (FOBTs), today’s tax rise by Finance Minister George Osborne sent their share prices plummeting. In his annual budget Osborne announced an increased tax rate from 20 percent to 25 percent on what is dubbed as the crack cocaine of gambling.
To put things in perspective there are about 33,000 FOBTs throughout the UK. The biggest bookmakers William Hill and Ladbrokes see a significant portion of their profits from these high speed machines. About 40 percent of Ladbrokes earnings are from FOBTs while about 26 percent of William’ Hill’s.
Ladbrokes are feeling the pressure from all sides as they have not managed to find as many alternative revenue resources as William Hill have particularly in the online gaming market. For them the latest duty rise is a serious blow. While both William Hill and Ladbrokes attempted to work with the government in an effort to soften the blow, today’s decree sent William Hill’s share price plummeting by nearly 7 percent and Ladbrokes fell by a whopping 12 percent.
Investec analyst James Hollins summed up the gloomy day,” The news is a surprise and a clear negative for both stocks. “Forecasts will have to change and this is a massive blow, particularly to Ladbrokes, placing significant pressure on group returns, the turnaround of mobile and the dividend that the group had stated was secure for 2014.”
UK bookmakers will have no time to lick their wounds as the much talked about point of consumption tax is set to come into play at the end of the year. All UK bookmakers are doing everything to increase their market share as the battle for every gambling pound rages on.