Ladbrokes sales soar but says 1,000 shops could close due to gambling machine crackdown

Ladbrokes owner GVC revealed soaring sales last year but warned again that it will be forced to shut around 1,000 betting shops because of a gambling crackdown.

Maximum stakes on fixed-odds betting terminals (FOBTs) will be limited to £2 per spin from next month in a bid to reduce the harm caused by gambling. But experts in the field have warned that many people with a problem may simply move to other forms of betting.

GVC said the £2 limit will hit earnings by £135m in 2019, adding that it is trying to transition to a “smaller, right-sized and more sustainable estate” as smoothly as possible.

Chief executive Kenneth Alexander said that GVC is “well-placed” to absorb the impact of the new regulations.

GVC, which is based in the Isle of Man, took over Ladbrokes Coral in March and saw revenue jump from £790m to £2.8bn last year, largely thanks to the acquisition.

The company posted an £18.9m pre-tax loss in 2018, down from £22.6m in the previous year. Underlying profit before tax rose almost tripled to £434.6m from £151m.

It comes after rival William Hill plunged into the red, blaming the fallout from the £2 maximum stake rule.

Last week the bookmaker reported a loss of £722m for 2018, compared with profits of £147m the previous year. Revenue rose 2 per cent, from £1.59bn to £1.62bn.

Ladbrokes Coral and William Hill are the two companies most exposed to the stake changes, each operating thousands of machines across the country.

However, both groups are now turning their attention to taking advantage of deregulation in the US, which has allowed states to legalise sports betting.

GVC recently signed a $200m (£150m) deal to operate a joint venture with American casino group MGM Resorts.

George Salmon, equity analyst at Hargreaves Lansdown, said the group’s “trump card” remains its online business.

“The mushrooming digital division means GVC looks well placed to take the FOBT hit in its stride and deliver strong growth in 2020 and beyond,” Mr Salmon said.

“We think that’s an attractive proposition for investors, especially since the pace of that growth could be turbocharged by the US opening up.

“Of course, there’s no guarantee the US venture will pay off, and regulatory change remains a constant threat. With debts stacking up following the Ladbrokes Coral deal, the group’s balance sheet would look more stretched if the government followed up its FOBT changes with tighter rules online, for instance.”