Fat cat betting bosses cash in

GVC will be looking to brave new horizons when it reveals its profits this week. The gambling firm, which owns Ladbrokes, Bwin and Party Poker, is hoping to cash in on America, which is opening its doors to sports betting.

GVC has a joint venture with MGM resorts that could be a strong source of growth. That’s assuming the big ruthless American gaming groups don’t just swallow them up whole.

GVC’s foray into the US is all the more important given that in the UK it will be hit by the new £2 limit on fixed-odds betting terminals (FOBTs), down from £100, which takes effect in April. Nonetheless, its profits are likely to be in the range of £750m-£755m.

It is paying a decent dividend so, for an investor unworried by ethical considerations, GVC shares might not look like a bad option. Yet those qualms about problem gambling do keep rearing their head, and there is a real risk that gambling companies could become pariah stocks if they fail to reform.

GVC has already irritated corporate governance campaigners and its own investors with huge pay awards to its top team, which, for some reason, has not had much scrutiny.

So here goes: chief executive Kenny Alexander has been given around £36m over two years, while chairman Lee Feldman received more than £16m over the same period.

These sums have been handed out under an incentive scheme that, like the now notorious one at housebuilder Persimmon, had no maximum cap. More than 43pc of GVC investors rebelled against the bloated payments in 2018, earning it a place on the ‘List of Shame’ set up by Theresa May for companies handing out fat cat pay.

The next lot of annual awards will be less because GVC has scrapped the offending scheme, but the largesse has done nothing to enhance its reputation.

Nor did the fact that it held its shareholder meeting in a suite of luxury apartments in Gibraltar – hardly handy for UK investors.

Theissue of pay for gambling bosses is becoming highly toxic. Denise Coates, who runs Bet 365, is the best-paid woman in the world with the £265m she made last year.

In her defence, Coates is an entrepreneur who founded the firm from a Portakabin in Stoke, but the other side is that she has made her money from an industry that preys on the misery of gambling addicts.

One of the problems with excessive pay in an industry such as gambling, from the firms’ point of view, is that it undermines their lobbying efforts with governments to tone down regulation. MPs tend to have less sympathy for multi-millionaire bosses moaning they will lose revenue.

Similarly, it undermines the efforts companies do make on responsible gambling such as GVC’s initiative with harvard Medical School. It is opening up its databases and providing anonymous statistics on players, in the hope this will help identify and tackle addiction. It’s a good idea, but will probably not placate the critics.

Among the highly rewarded chiefs at GVC is Andy hornby, who was the boss of hBOS when it went under. he cashed in when GVC last year took over Ladbrokes Coral, where he held a senior position. Ludicrously, his pay is not public information because he does not have a seat on the board. Not bad for a man whose behaviour while at hBOS is still under question.

But one defence the gambling firms might try is that, even with the scourge of problem gambling, they have still caused less damage to ordinary Britons than the banks.

That’s a sobering thought.