The social menace of electronic roulette wheels on high streets was addressed when a £2 limit on stakes on fixed-odds betting terminals (FOBTs) came into force in betting shops in April. Now an all-party committee of MPs wants to become properly serious. It has recommended that the same restrictions on stakes should apply in the world of online casino games. For good measure, it would ban betting with credit cards.
Such a radical overhaul would represent a huge intervention. Monday’s share price reactions gave the game away. In the more sober era of FOBTs, the operators’ business model requires wild excess to continue online. We’re still miles away from a bill being put before parliament, but GVC, the owner of Ladbrokes, fell 10% – roughly a £500m fall in stock market value. William Hill was down 13% and 888.com, which only operates online, lost 14%.
Prepare to hear another chorus from the industry about the “nanny state”, this time with the twist that MPs shouldn’t interfere with the rights of individuals to squander their pay packets in the privacy of their own homes.
The behind-closed-doors defence, though, sounds extremely weak. Restrictions on FOBTs were introduced to reduce social harm and gambling addiction. If that’s the aim, why would you simultaneously expose vulnerable punters to inducements to chase their losses on smartphones or PCs?
As the MPs argue, once the government has accepted the principle that cutting stakes is a way to reduce harm, the next logical step is to ensure equality between land-based and online versions of casino games.
We’ll see what the next parliament brings, but the line-up of MPs may not matter terribly. Labour MPs were in the vanguard of pushing for FOBT reform, but it was a Tory government that took the leap and then brought forward the cut in stakes. And, if anything, cutting online stakes could be politically easier: no shops, and thus fewer jobs, would be involved.
To repeat, the all-party parliamentary group has merely offered a recommendation. But it is an influential body and it has logic and timeliness on its side. Reform of the 2005 Gambling Act – “analogue legislation in a digital age”, as the report puts it – looks overdue. Indeed, it looks a good policy for somebody’s manifesto.
What’s Aramco really worth?
If Saudi Arabian crown prince, Mohammed bin Salman, is wedded to securing a $2tn valuation for Aramco, the state-owned oil company, he can probably get what he wants.
Only a small slice of equity will be sold in the upcoming listing on the Tadawul stock exchange, so it would be a relatively simple matter for the prince to remind a few dozen local billionaires of their patriotic duty to write a cheque for several hundred million dollars at the desired valuation. He’d quickly secure the bulk of the $20bn-$40bn proceeds implied by a sale of 1% or 2% of the company at a $2tn price tag.
Such a tactic would not advance the other ambition of inserting Aramco into the portfolios of international investors, but the “wealthy families” factor is one to keep in mind. We won’t see pure price discovery around Aramco until a far larger chunk of the equity is sold on a non-Saudi stock exchange – and the timetable for that process is vague.
One can, though, say that $2tn looks far too high. The proposed semi-guaranteed dividend is $75bn, so the yield would be only 3.75%. Even for those investors who don’t care about Aramco’s polluter-in-chief status, that’s surely insufficient compensation for the heavy political risks.
Family planning
The threat of administration for Mothercare’s UK business is a possible tragedy for 2,500 staff. From the point of view of shareholders, however, the shame is that former management did not take this step a long time ago.
The UK end of the company, as opposed to the large and profitable franchise operation overseas, has barely had a winning run in a decade. Mothercare has, though, had a succession of well-paid chairmen and chief executives and “transformation” plans.
“The plan to bring the UK business back to acceptable levels of profitability will take three years,” said the former chief executive Simon Calver in the annual report as long ago as 2012. If only.
The long decline continued until dozens of shops were closed last year, supposedly to leave a core of 79 that could revive. The rump portfolio was “well positioned to support our UK customer base,” declared the current boss, Mark Newton-Jones, six months ago. He probably wasn’t even fooling himself.
