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Ladbrokes Coral Grp (LCL)

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Monday 22 January, 2018

Ladbrokes Coral Grp

Response to Triennial Review £2 Stake Speculation

RNS Number : 5259C
Ladbrokes Coral Group PLC
22 January 2018

Ladbrokes Coral Group plc (LSE: LCL)


Legal Entity Identifier: 213800P7FJOPCV4H3J04



Response to Triennial Review £2 Stake Speculation


22 January 2018


Ladbrokes Coral notes the stories in the press that speculate that the Secretary of State favours a £2 stake as the outcome of the triennial review consultation.


In response Ladbrokes Coral Chief Executive, Jim Mullen said:


"The triennial review has been running for over 15 months and throughout that time there has been constant rumour and speculation about potential outcomes, of which this is yet more. It should be noted that the current call for evidence is yet to conclude and industry responses have not yet been submitted to Government.


"We are very clear that stake cuts will fail to adequately address any issue of problem gambling.  The industry has also always made it clear that a cut to stakes will have serious consequences - resulting in shop closures which will ultimately affect jobs, tax revenue and the funding of racing.  There is also no evidence that machine customers will switch their spend to sports betting such as horse racing, and our experience is that they won't. Any policy made on this assumption would result in a significant reduction in the level of funding for horse racing.


"We will continue to make the case for a sensible measured, evidence led and proportionate response to the public concern regarding these issues and this will be the basis of the evidence submitted as part of the ongoing review."




Horse Racing Funding Impact


·     The independent modelling from KPMG, on behalf of the ABB, has estimated the impact of a stake cut on B2 machines to £50 and £2 respectively. A £50 stake would put almost 300 additional shops at risk of closure by 2020, a £2 stake would put over 3,000 shops at additional risk of closure in the same period (relative to 2015). 


·     A loss of around an extra 3,000 shops would lead to over 15,000 job losses.


·     Any reduction in betting shop numbers will have a direct impact on the amount that horse racing receives from betting. Whilst the Levy will be hit, the most obvious effect would be on media rights payments which are mainly paid on a per-shop basis. We estimate that every shop closure reduces horse racing's income by just over £30,000 per annum. If only 1,000 shops close, the loss in media rights will negate the effect of the Levy extension to include offshore revenue, and if 3,000 shops close then the negative impact is greater than the income received from the whole of the Levy.



Substitution Myths


·     Our experience of stake changes and customer behaviour is that there is very little substitution from Machines to OTC Sports betting.


·     Following the April 2015 implementation of the £50 stake journey, shops which lost Machines revenue did not see any uplift in OTC business.


·     The annual Mintel betting shop research paper shows that in each of the last 3 years, c95% of Racing customers have not used a Machine in the last 12 months. This was also our experience in H1 2017, when we operated with heavily reduced Horse racing pictures and did not see any appreciable impact on our Machines' business. 




Paul Tymms, Director of Investor Relations                

Donal McCabe, Group Communications Director


+44 (0)20 8429 7777




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