FOBT Changes Hurt GVC But Online Innovations Pay Dividends

The fallout from changes to fixed odds betting terminals (FOBT) is finally starting to bite according to GVC Holdings.

Ladbrokes FOBT

A trading report from GVC shows that revenue from its Ladbrokes stores is down due to FOBT changes. (Image: Wikipedia/Mtaylor848)

Publishing its H1 post close trading update on July 17, the owner of Ladbrokes Coral said retail revenue was down 10 percent.

Although the report said the downswing was less severe than expected, the reduction of FOBT betting limits to £2 was the primary cause.

April Changes Bite

In support of its analysis, GVC reported that Q2 like-for-like retail revenue dropped by 19 percent.

Changes to class B2 betting terminals (aka FOBTs) came into force in April. In the weeks that followed, Ladbrokes and Coral stores saw their largest losses.

While government officials and anti-gambling advocates won’t have much sympathy, the report is a sign of the time. With live betting shops now generating less revenue, operators are being forced to increase their efforts online.

For GVC, recent innovations have paid dividends. Virtually in unison with offline earnings taking a dive, the operator’s online takings have improved.

During Q2, total net gaming revenue (NGR) for sports was up 19 percent while gaming improved by 15 percent. Looking at H1 2019, total online growth was 17%.

GVC Embracing New FOBT Era

While some operators initially tried to find ways around the FOBT changes, all now accept that online expansion is necessary.

For its part, GVC agreed a new multiyear deal with software supplier Playtech just before FOBT stakes were cut.

Reflecting on that and changes to the UK gaming industry, CEO Kenneth Alexander called it a “transformational” period.

Like William Hill and Paddy Power, GVC is now looking towards the US for growth. Launching a joint venture known as Roar Digital alongside MGM Resorts, the company is poised to offer services in Nevada and Mississippi.

With the downfall of restrictions on sports betting in the US, GVC is looking to capitalize. Under the wing of MGM Resorts, it plans to move into all states where sports betting is regulated.

Although it may take time for its US ventures to pay dividends, the operator has a clear plan in place.

While Alexander and his team may wish retail revenue was still strong, the latest report suggests there’s hope for all UK gaming companies in the new post-FOBT-changes world.

Share Now: