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Summary
- Some new restrictions are being implemented in the UK to protect the people from losing their money and make the games less intensive and safer.
- The slot machines shall be fully transparent in terms of displaying critical information.
- The gambling companies might not be allowed to sponsor sports events in future.
The gambling laws in the UK are currently under review even as the industry is fearing a loss of £2.2 billion in revenue and a possibility of sliding into an existential crisis. Gambling has been an age-old tradition in the UK. Often driven by greed, people tend to lose a lot of money. Due to the pandemic, people have resorted to online gaming options that often mimic real-life slot machines found in betting shops and casinos. The Gambling Commission intends to make online casino games less intensive and safer by introducing new restrictions.
The Gambling Commission has asked the Casino operators to disallow reverse withdrawals. People are driven by greed often tend to feed the winning amount back into their account to bet more. The regulator has mandated to discontinue this measure going forward. The casino operator might also have to remove the auto-play options that speed up play and disguises losses as wins by playing ‘positive music’ even when the player has lost. These sounds entice players to bet more as they start to believe that they are winning.
The online casinos might have to reprogram their slot machines in the wake of new restrictions being imposed by the apex authority. The apex authority has introduced a gap of a minimum of 2.5 seconds between the spins.
Also read: Betting Stocks Plunge Over Fear of £2 Cap Limit On Online Gambling
Also, the operators will now have to clearly display real-time losses or wins during any slots session. The new restrictions would be effective from 31 October 2021. Moreover, gambling companies might also be banned from sponsoring sports events.
In 2020, stake limits were introduced on the fixed-odds betting terminal in shops to protect the retail investors. The sector has already been imposed with stricter age-verification checks and higher taxation.
The new restrictions are being implemented to protect the people from losing their money. Although the recalibration of online slot machines would mean additional costs for the company, but market experts believe that there would be no significant impact on these stocks in the long run.
Let us put a lens through some gaming companies listed on LSE.
888 Holdings Plc (LON:888)
FTSE 250-listed online gaming entertainment and solutions provider 888 Holdings continued to deliver a strong performance throughout 2020. The company witnessed a considerable amount of growth in both revenue and active customer numbers in December. The company now expects revenue and adjusted EBITDA to exceed the expectations for 2020, according to its recent trading update.
The gaming company aims to improve its market share in the US markets. Since 2013, 888 Holdings has been in a partnership with Caesars Interactive Entertainment and has been powering the hugely popular WSOP (World Series of Poker) brand online poker rooms.
The FTSE 250-listed company has agreed to a multi-year extension of its exclusive B2B poker partnership with CIE. It is counting on its extended relationship to gain a formal entry in new US states, subjected to approval from the regulatory authorities.
In 2021, 888 Holdings is expected to add new states to its unique interstate poker network to improve the liquidity for poker participants on the company’s proprietary gaming platform.
Shares of 888 Holdings have delivered a triple-digit price return of 127.88 per cent in the last one year. Despite the UK being through the third national lockdown, shares of 888 Holdings have delivered a price return of 2.88 per cent since January 2021.
Flutter Entertainment Plc (LON: FLTR)
UK-based global sports betting and gaming company Flutter Entertainment’s revenue was up by 30 per cent during the third quarter of 2020. The company witnessed a jump of 33 per cent year-on-year in its sports revenue. The company recorded double-digit growth of 41 per cent in its average daily customers across all key regions.
The FTSE 100-listed company maintains a top position in the US markets as it has a total online share of 29 per cent. In the US market, the company managed to acquire more than 450,000 new customers and has over 1.8 million active customers in the third quarter. The company expects the total GGR (Gross Gaming Revenue) from the US to be more than $1.1 billion in 2020.
Driven by higher customer volumes across all divisions, Flutter expects EBITDA for 2020 to be in the range of £1,275-1,350 million assuming no further retail closures beyond the latest lockdowns currently in place in Ireland and England.
Shares of Flutter Entertainment have delivered a double-digit price return of 62.95 per cent in the last one year.
William Hill Plc (LON: WMH)
It is one of the leading betting and gaming companies in the UK and has recorded a growth of 9 per cent year-on-year in total revenue for the fourth quarter ended 29 December 2020, according to its recent trading update. In the UK, the online net revenue of the company grew by 5 per cent in 2020. The company provided a regular platform and product upgrades to remain competitive. The company’s gaming net revenue in the final quarter grew by 20 per cent, concluding the year strongly.
In the US, the company witnessed strong growth in online business and recorded an increase of 32 per cent in net revenue for 2020. The gaming and betting company leveraged upon its joint venture with Caesars Entertainment to launch its platform in five new states, including the mobile application.
As the company went live with its products in the US, it was able to record a triple-digit growth in revenue of 121 per cent during the fourth quarter. Notably, two of US’s leading sports media brands, ESPN and CBS, are now featuring William Hill’s sports betting apps and sportsbook.
Shares of FTSE 250 listed William Hill have delivered a double-digit price return of 57.39 per cent in the last one year.
