High street betting shop earnings have plummeted for the owner of Ladbrokes and Coral in the UK, as the bookmaker has been hit hard by a clampdown on fixed-odds machines.
GVC (GVC.L) saw sales from games in its UK retail arm drop by 19% in the three months to 30 June, after the government slashed the maximum stake allowed on controversial fixed-odds betting terminals or ‘FOBTs’ from £100 to £2 a spin.
Rival William Hill blamed the clampdown as it announced thousands of jobs and hundreds of stores were at risk earlier this month, with plans to close around a third of shops.
GVC’s sales from UK machines were down 39% on a like-for-like basis in its second quarter.
But GVC said the 19% like-for-like sales decline was better than it had feared, as some punters had started using alternative sport betting terminals instead.
Its expansion of its online gambling services also appears to be paying off for the company and offsetting its UK high street woes. Its overall gaming sales were up 3% in the quarter and 5% in the first half of the year.
The bookmaker reported fast growth in online gambling, with sales up 16%. GVC also owns brands including bwin, Crystalbet and Eurobe, and has licences to operate in more than 20 countries.
GVC and other companies have also been expanding into the US market, benefiting from looser regulations on sports betting.
But the company had warned in September last year the government’s curbs would spark the closure of up to 1,000 shops and cost it a £130m hit to its earnings in 2020.
Games on fixed-odds machines have gradually started to dominate high street betting shops in Britain over the past two decades, with customers attracted by the hundreds of pounds on offer in the jackpot.
But the terminals are highly controversial, with campaigners calling the allegedly highly addictive machines the “crack cocaine of gambling” and claiming they heavily exploit problem gamblers.
The clampdown by the government in the face of heavy opposition from the industry saw limits introduced earlier that several bookmakers claim threatens the survival of thousands of branches.
One punter outside another bookmaker’s betting shop told Yahoo Finance UK last week the machines “were designed from the beginning to rip people off.”
John Eckles said: “They should have capped stakes long ago, nipping it in the bud before it started. A lot of men lost their wives, families, homes - they even rob their own children. I’ve met a couple of guys who’ve fallen into debt.”
Campaigner John Myers, whose son hanged himself over gambling debts racked up on FOBTs and online, recently told Yahoo Finance UK the crackdown was welcome, but online gambling also needed tougher restrictions.
He said a simple change to regulation could help save the lives of gamblers like his son Ryan, a carpenter from Huyton in north-west England who took his own life five years ago.
Speaking just a few days after what would have been his son’s 33rd birthday, he accused gambling firms of “grooming people into gambling addiction” by advertising how much customers had won, but not how much they had spent.
Myers said firms should be forced to reveal how much had been gambled whenever they advertised winnings, to show “the real odds” of beating the bookmakers.
He also urged the government to begin recording the number of suicides linked to gambling, saying his son’s death certificate did not mention his gambling addiction.