It’s been a mixed week for the gambling industry. On Monday, the US Supreme Court cleared the way for states to legalise sports betting by striking down a 1992 federal law that had prohibited most states from allowing the practice.
Today, in a move welcomed by anti-gambling campaigners, the UK government announced new rules that will limit the maximum stake that can be placed on fixed-odds betting terminals (FOBTs) to £2.
Currently, people can bet up to £100 every 20 seconds on electronic casino games, which have been described as the “crack cocaine” of the betting world. Last year there were more than 230,000 individual sessions in which a user lost more than £1,000, and the BBC reports the case of Terry White, who was losing up to £15,000 per day over a period of two years.
As Matt Zarb-Cousin, a former media adviser to Labour leader Jeremy Corbyn, who is now a spokesman for the Campaign for Fairer Gambling having previously been addicted to FOBTs, pointed out: "If we had a gambling product classification, similar to that of drugs, FOBTs would be class A."
There is clearly an issue. FOBTs have long term theoretical return to player (RTP) of 97%. The problem is the speed at which money can be lost. If we take a stake of £100 with a 97% RTP, the return will be, on average, £97, then 20 seconds later that £97 has dropped by another 3%. This process is repeated constantly, with the majority of players playing out their money to £0 within an hour.
In its campaign against limiting FOBT stakes, the gambling industry has highlighted the economic impact the move could have. According to KMPG, the £2 limit could negatively impact Treasury revenues to the tune of £1.1 billion over three years.
Bookmakers have also expressed concerns about the potential effect on their business. William Hill currently makes more than half its retail revenues from FOBTs and its chief executive warned that half of the UK’s betting shops could close, resulting in the loss of 20,000 jobs.
Yesterday, shares in Paddy Power Betfair surged after it confirmed that it was in talks to buy fantasy sports site FanDuel. To cope with the changes, might we see more bookmakers following suit and trying to grab a slice of the US sports betting market?
The UK will tell the EU that it is prepared to stay tied to the customs union beyond 2021, The Telegraph reports. There is still disagreement amongst ministers regarding the model of any future deal with the EU, however, the Brexit sub-committee has reportedly agreed that the UK will stay aligned to the customs union if the technology required to operate borders after Brexit is not ready. The move would be a last resort to avoid a hard Irish border and “strictly time-limited”.
A government review of building regulations initiated following the Grenfell Tower fire will not recommend an outright ban on combustible cladding and insulation. In her review due to be published later today, Dame Judith Hackitt is expected to argue for wider reforms of the system, including more fire testing and the way buildings are certified as safe. This comes in spite of calls for a ban from Grenfell survivors and the Royal Institute of British Architects.
The chief executive of Oxfam is to step down following the scandal surrounding the charity’s cover up of sexual exploitation of aid workers in Haiti. Mark Goldring will leave his post at the end of the year and will not receive a severance package. Although not at the helm at the time the sexual explotation took place, Goldring was forced to apologise for comments when he questioned the proportionality of the criticism Oxfam was facing. The impact of the scandal has been stark, with the charity losing thousands of donors and withdrawing bids for Department of International Development funds worth £30 million a year.
President Trump has confirmed that he reimbursed his personal lawyer for a 2016 payment, allegedly to cover hush money paid to porn star Stormy Daniels. The payment was revealed in a financial disclosure, which showed Trump paid back Michael Cohen for a 2016 expense of between $100,000 and $250,000. Although the financial forms did not state what the payments were for, Trump’s lawyers have previously said he reimbursed Cohen for the $130,000 he paid Daniels for her silence. Trump has denied knowledge of any payment to Daniels.
BUSINESS AND ECONOMY
Total has announced that it will wind down operations in Iran by November unless renewed US sanctions are waived. The French energy giant signed a contract to develop the South Pars gas field in 2017 and had planned to invest $1 billion in the project. The company is not alone in preparing for new US sanctions. German insurer Allianz has said it is winding down its “totally minimal” business in Iran, whilst Danish tanker operator Maersk will fulfil commitments in the country but will not be entering into any new contracts.
Mothercare has announced the closure of 50 stores and the rehiring of the chief executive it sacked last month, confirming news first reported by Sky News last night. Mark Newton-Jones is set to rejoin the retailer just 36 days after his unexpected departure. The surprise development will sit alongside a restructuring plan designed to put the business on a stable and sustainable financial footing.
The ‘Big Four’ accountancy firms are bracing themselves for plans to break up their UK businesses, as policymakers seek to solve conflicts of interest embedded in the industry. Pressure on KPMG, Deloitte, EY and PwC has ratcheted up following several high profile corporate collapses. A parliamentary report on the collapse of Carillion published yesterday recommended that the government refer the statutory audit market to the Competition and Markets Authority and should explicitly consider breaking up the Big Four.
What happened yesterday?
Global stocks were unfazed by North Korea’s threat to withdraw from a summit with the US, however, Italian stocks fell markedly and the euro was at a 2018 low against the dollar on the back of news that the anti-establishment Five Star Movement and the far-right League are on the verge of agreeing a coalition deal. This would likely result in a sharp change in economic policy, with reports that the coalition would look for the European Central Bank to write off a sizeable chunk of Italian debt and call for an Italian exit from the euro.
Here in the UK, the FTSE 100 was up 11.22, or 0.15%, to 7,734.20 – not far off January’s record high.
Paddy Power Betfair led the way, climbing 6.31%, building on gains made after Monday’s US Supreme Court decision that is set to pave the way for legalised sports gambling. The company was further boosted after it confirmed it was in talks to acquire fantasy sports site FanDuel.
The bookmaker was closely followed by IT and software business Micro Focus International, which rose 6.19% following a positive trading update.
Smufit Kappa Group was the day’s biggest faller on the main index, shedding 5.08%, after US packaging firm International Paper Co. said it would not be making a hostile bid for its rival.
Centrica also performed poorly following Morgan Stanley’s decision to reclassify the stock as “underweight” from “equal weight”.
On the currency markets, the pound was up 0.22% against the dollar at $1.3515 and gained 0.18% against the euro to €1.1441.
British Land Company, Experian, 3i Group, Investec, Mothercare, National Grid, Royal Mail, Sophos Group, Wincanton
Countryside Properties, Euromoney Institutional Investor, Future, Grainger, Thomas Cook Group
Bouygues SA, TBC Bank Group
Hill & Smith Holdings, Just Group, Regional REIT Limited, Regional Reit ZDP, Staffline Group
John Laing Infrastructure Fund Ltd
7Digital Group, Elecosoft, Erris Resources, eServGlobal Limited (DI), esure Group, Fevertree Drinks, Foxtons Group, Genel Energy, Gresham House, Great Western Mining Corporation, Highcroft Investment, Hill & Smith Holdings, Hiscox Limited (DI), Impax Environmental Markets, IndigoVision Group, John Laing Infrastructure Fund Ltd, Just Group, Kape Technologies, Legal & General Group, LiDCO Group, North Midland Construction, Next, ProPhotonix (DI), Prudential, Regional REIT Limited, Regional Reit ZDP, Robert Walters, Staffline Group, TI Fluid Systems, Vectura Group
International Economic Announcements
(10:00) Balance of Trade (EU)
(13:30) Continuing Claims (US)
(13:30) Initial Jobless Claims (US)
(13:30) Philadelphia Fed Index (US)
COLUMNS OF NOTE
The House of Lords isn’t working and should be reformed. That is the view of Iain Martin, writing in The Times, who cites recent votes on press freedom and Brexit to support his argument. Martin argues that reforms proposed in 2012 were “half-baked” and suggests that the Lords should become the UK chamber, representing the constituent nations, with representation provided by members of the devolved assemblies or directly elected members. He concludes by calling for this to be discussed as part of a “a pan-UK, non-partisan, constitutional convention”.
In the Financial Times, Philip Stephens criticises Theresa May for choosing “the harshest possible interpretation of the [EU] referendum result” with her relentless focus on immigration. He points to the pressing need for more doctors and the government’s refusal to increase the number of visas, as well as the scandal surrounding the Windrush generation. All of this, Stephens contends, makes a “mockery of ‘Global Britain’”
DID YOU KNOW?
George and Thomas Crittenden were brothers who served as generals on opposing sides during the American Civil War. They were born and raised in Kentucky, which was officially neutral in the conflict. However, George chose to join the Confederate cause whilst Thomas remained loyal to the Union, with the two reaching the rank of major-general in their respective armies. Both survived the conflict.
House of Commons
International Trade (including Topical Questions)
Women and Equalities (including Topical Questions)
Business Statement: Business Questions to the Leader of the House – Andrea Leadsom
Select Committee Statement: Ninth Report of the Business, Energy and Industrial Strategy Committee, The impact of Brexit on the pharmaceutical sector, HC 382
Plastic bottles and coffee cups – Mary Creagh
International Day Against Homophobia, Transphobia and Biphobia - Peter Kyle
House of Lords
Steps the Department of Health and Social Care and the NHS are taking to support the mental health of the NHS workforce in England - Baroness Thornton
Implementing pardons and disregards for homosexual activities which are no longer crimes - Lord Cashman
Proposals for future framework for UK--EU Security Partnership - Lord Wallace of Saltaire
The opening of the US embassy in Jerusalem and loss of Palestinian lives in Gaza - Baroness Warsi
Legislation: Automated and Electric Vehicles Bill - Committee stage (day 2) - Baroness Sugg
First Minister’s Questions
Ministerial Statement: Scottish Veterans Commissioner's report on Veterans Health and Wellbeing
Stage 3 Debate: Land and Buildings Transaction Tax (Relief from Additional Amount) (Scotland) Bill
House of Commons
No business scheduled
House of Lords
No business scheduled
No business scheduled