GVC warns Ladbrokes shops will shut if FOBT stakes are cut to £2

ONLINE gambling firm GVC has warned it would not be able to prevent Ladbrokes Coral shops from closing if stakes are drastically cut on controversial fixed odds betting terminals.

The gambling industry has warned of widespread betting shop closures if the Government decides to cut stakes on FOBT machines to £2, from £100 now. GVC was a purely online business but its purchase of Ladbrokes Coral means it now has exposure to the UK high street.

Chief executive Kenny Alexander said GVC had protected itself by structuring the deal so that it would pay between £3.2bn and £4bn for Ladbro- kes depending on the outcome of the Government review. But this didn’t mean the company would be immune if a £2 stake was chosen. He said: “Shops would close and it would mean people being made redundant.”

The industry has predicted roughly 3,000 betting shops out of about 8,500 would close under a £2 stake scenario. Ladbrokes would potentially account for between 800 and 1,000 of those closures, GVC said.

GVC needs to secure approval from the Gambling Commission and the Competition and Markets Authority to secure the Ladbrokes deal, its biggest acquisition yet, which will propel it into the FTSE 100, with a roughly £5.3bn market capitalisation. Little more than five years ago it was listed on Aim with a market cap of roughly £100m. The update from the company came as it reported a fall in pre-tax losses to £25.6m in 2017, compared to £173m in 2016. Sales rose nearly a quarter to £896m thanks to its previous acquisition of Bwin Party being included for its first full year.

Mr Alexander said he expected to yield cost savings of roughly £100m from the latest deal. Part of this will come when Ladbrokes’ contract with software provider Playtech expires and GVC uses its own technology across the whole of the group. The company has not yet guided what it expects profits to be in 2018 but Mr Alexander said he thought revenue would be at least 2pc higher given it is a World Cup year.

“It’s the biggest opportunity to grow an online sports book and ours grew last year by 13pc,” he said.

“So far this year we are up 18pc so growth is accelerating and that’s before the World Cup has even started.”

In terms of acquisitions, Mr Alexander claimed he “would not rule anything out” but expected any deals in the near term to be much smaller than Ladbrokes and similar to its purchase this month of a 51pc stake in Georgiabased Crystalbet for €41.3m (£36.7m).