UK Restricts Bets on Gaming Machines in Blow to Bookmakers – Bloomberg

William Hill Plc and Paddy Power Betfair Plc warned that new U.K. gambling limits will slash their revenue from roulette and poker machines, raising the threat of widespread closures of the bookmaking shops that are a fixture of U.K. shopping districts.

William Hill, seen by analysts as most exposed to the measure, forecast a gaming revenue hit of as much as 45 percent and said 900 of its shops, or 38 percent of the total, could become unprofitable. Paddy Power warned of a similar impact on its revenue.

The maximum bet on the devices known as fixed-odds betting terminals now will be 2 pounds ($2.71), down from 100 pounds, the government said in a statement Thursday. The decision is likely to hasten bookmakers’ efforts to seek new sources of revenue, a trend that’s already under way after a U.S. Supreme Court ruling Monday freed individual states to permit sports gambling.

The reduction “effectively kills off” the machines subject to the cap, said Canaccord analyst Simon Davies in a morning note to clients. Still, the decision had been widely telegraphed and thus had been largely priced in to the companies’ stocks. Bookmakers’ shares pared their early losses as investors bought on the dip.

William Hill is now vulnerable to a takeover bid, said Davies, a warning which has been echoed by the company’s own management.

Betting Shops

Photographer: Simon Dawson/Bloomberg

Bookmakers already are eyeing opportunities to replace lost revenue. Paddy Power said Wednesday it’s in talks to expand into U.S. sports betting, while William Hill is preparing to roll out operations in New Jersey, which instigated the legal fight that led to the high court ruling by repealing its gambling ban.

Roulette and poker machines are used by thousands of betting shops across

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