(Reuters) - Ladbrokes owner GVC on Thursday pointed to a lower than expected impact of a new betting price cap on some of its business in Britain, boosting the company’s shares.
Britain’s largest high street bookmaker said the impact of the new regulations on core earnings would be 130 million pounds in 2020, lower than its earlier estimate of 145 million pounds.
Britain implemented the new price cap on Fixed Odd Betting Terminals (FOBTs) in April, bringing down the maximum betting amount to 2 pounds from an earlier 100 pound limit.
The decision dealt a big blow to bookmakers, who have argued that the terminals are a major source of income for their retail outlets which are struggling as younger gamblers move online.
The company, which owns brands such as bwin, Coral, Crystalbet and Eurobet had earlier said a cut to the maximum stake on fixed-odds betting terminals would result in the closure of up to 1,000 shops and shave about 135 million pounds off core earnings in 2019.
“This actually follows on what William Hill said regarding the same subject. William Hill didn’t adjust their guidance in the same way but the tone of the results was certainly positive around the impact of the FOBT changes,” Hargreaves Lansdown analyst George Salmon said.
GVC’s shares were 1.14% higher at 600.2 pence at 0803 GMT.
(For graphic on British bettings firms: A story in deals, click tmsnrt.rs/2Ecsl0O)
GVC, which is holding a capital markets day on Thursday, also said it would save a further 15 million pounds in 2020 as the integration of the Ladbrokes online business has been quicker than anticipated. It acquired Ladbrokes Coral Group in 2018 for about 4 billion pounds.
European gambling companies such as GVC, Paddy Power and 888 Plc have been looking to expand across the Atlantic as Britain introduces tighter regulations - particularly on lucrative fixed-odds betting terminals (FOBTs) - and as U.S. states ease curbs on sports betting.
The boss of rival Paddy Power said earlier this month that the fixed odds betting terminal revenue hit would be at top end of estimates.
Rival William Hill on Wednesday reported higher revenue for the year to April 30, driven by the success of its online business and operations in the United States countered a weaker retail performance back home.
Isle of Man-based GVC has also been trying to expand in the U.S. market, where it has entered into a joint-venture with hotel and casino operator MGM Resorts International to capitalise on the sports-betting and gaming opportunities in the region.
“We have had an excellent start to the year with strong momentum across all divisions continuing into the second quarter,” Chief Executive Officer Kenneth Alexander said.
Reporting by Sangameswaran S and writing by Noor Zainab Hussain in Bengaluru; Editing by Shounak Dasgupta/Gopakumar Warrier/Jane Merriman