Shares in Paddy Power barely flickered after the UK unveiled new gambling controls and higher tax on the view that the measures were less painful for industry players than they would have feared.
Broker Davy said details in this week’s UK budget, which cut the top payout for fixed-odds betting terminals in UK shops from October next year to £2 (€2.25) from £100, and the “linked increase” in the so-called Remote Gaming Duty to 21% for online gambling on games such as roulette, were “less harmful to the sector than recent press speculation had suggested”.
Nonetheless, the broker said that concerns remain about the outlook for valuations across the industry.
Paddy Power shares were little changed in the latest session but have lost 12.5% in the past year.
The bookie is valued at over €6bn. William Hill shares were unchanged but have lost 14% in the past year giving it a value of £1.76bn, while GVC, which owns Ladbrokes and Coral, gained 1.3% to leave its shares 3% higher from a year ago.
GVC is also valued at over £5.36bn (€6bn).
“While the finer detail may bring some relief on a short-term basis, longer-term concerns regarding the sustainability of earnings and, as a consequence, sector valuation remain,” wrote Davy analysts.
In April, shares in many bookie firms fell sharply when the UK first announced plans to restrict the maximum payouts on fixed odds machines. And in Ireland, the budget earlier this month doubled the betting tax to 2% and increased the tax on betting exchanges to 25% from 15%.
The industry in the UK and Ireland has also faced pressure from campaigners warning about gambling addictions.