(Reuters) - Shares of GVC Holdings Plc fell about 18 percent on Friday and were on track for their worst day in nine years, after the sports betting and gaming firm’s top bosses offloaded a large chunk of their stake in the company at a discount.
Major regulatory changes on both sides of the Atlantic for the gambling sector have commanded investor attention in recent months, but Britain’s GVC has been able to weather out the storm and reported strong results.
The company this week, however, spooked some investors after warning that a cut to the maximum stake on fixed-odds betting terminals (FOBTs) would result in the closure of up to a thousand shops and impact core earnings by about 135 million pounds in 2019.
Chief Executive Officer Kenneth Alexander and Chairman Lee Feldman together sold 3 million GVC shares at a discounted price of 666 pence, seen by investors as a lack of confidence in the bookmaker.
“Both of us remain fully committed to GVC and, whilst I continue to have the support of our shareholders, I’m here for the long term and at the very least I have a current plan that will take 3 plus years to accomplish,” Alexander said.
The company’s shares, which are poised to leave London’s blue-chip index, fell as much as 18.6 percent to 557 pence on Friday. Shares in rivals William Hill Plc, Paddy Power Betfair Plc and 888 Holdings Plc were also in the red.
“Equine flu and the impending cap on FOBTs have brought an end to GVC’s brief stint in the FTSE 100,” Hargreaves Lansdown analyst Nicholas Hyett said.
“The group’s CEO and chairman sold 76 percent of their shareholdings just days before the stock is due to leave the UK’s premier index, and that’s knocked the share price still further,” Hyett said.
British gambling firms trail midcap index - tmsnrt.rs/2EW21ZK
Isle of Man-based GVC, which owns game brands such as partypoker and Foxy Bingo, had earlier said it expects full-year underlying core earnings to be ahead of market consensus, boosted by strong growth in its online business.
The cut to high-stake FOBTs, which have been widely blamed for allowing gamblers to rack up large losses in a short span of time, would be implemented from April.
GVC has expanded rapidly and last year set up an online betting platform in the United States with hotel and casino operator MGM Resorts International.
Reporting by Noor Zainab Hussain in Bengaluru; Editing by Shounak Dasgupta