Betting stocks tumble on TV advertising ban

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Betting stocks tumble on TV advertising ban
Betting stocks tumble on TV advertising ban

Betting company shares including those of Paddy Power-Betfair fell on the back of the leading players in the UK market agreeing on a ban on television advertising during live sporting events.Few stocks escaped a global rout, yesterday. Nevertheless, the main UK-focused betting stocks all tumbled. Paddy Power-Betfair was down by close to 3%; Ladbrokes-Coral owner GVC fell over 5.6% and William Hill shed nearly 3% of its value.The ban would most noticeably remove betting odds advertising during the programming of live football matches. All sports will be included with the exception of horseracing due to its dependence on betting.The move is a voluntary one by members of lobby group the Remote Gambling Association — which includes Paddy Power and its main British rivals — in the UK and still requires approval. However, it is expected to be approved by the UK’s main gambling industry associations next week, paving the way for full implementation of the ban sometime during the first half of 2019.Such action would allow the betting industry ease growing political pressure, in the already tightening regulatory market of the UK, for action to guard against the rise in problem and underage gambling.
“We understand that the commitment will be whistle-to-whistle — removing advertising from a set period before the start of a sports event; perhaps around five minutes, until a set period after the event has been completed; again perhaps around five minutes.“In many ways, it would be similar to the policy that came into effect in Australia last March,” said Davy analyst Michael Mitchell.Davy said the near-term earnings impact on the likes of Paddy Power-Betfair, from such a ban, should be modest, but said it could play out positively for the bigger players; making it more difficult for them to lose market share to smaller players and more easy to get better returns on marketing spend.“In theory, there should be scope for some cost savings. However, we expect these to be reasonably immaterial at this point. In the case of Paddy Power-Betfair and GVC, we suspect both spend in the region of £40m-£50m [€45m to €55m] annually on UK television advertising. Some of this spend is now likely to be re-directed to other advertising channels or methods, including promotions,” said Mr Mitchell.“Television advertising for major operators is, generally, a defensive strategy, generating less attractive returns on investment.“Additionally, more established brands with larger retail estates should benefit relative to less resilient peers,” he said.[redmore]890403[/readmore]Anti-gambling campaigners in the UK have long-since been concerned about the volume of betting ads screened on British television. While talk of the voluntary ban has been welcomed, campaigners also want a ban to be imposed on football team sponsorship, as well as pitch-side advertising that can be picked up by television cameras.
Davy said that the proposed ban could raise further concerns about the regulatory environment in the UK. Regulatory moves there have seen many of the leading players look to expand in Australia and the US as a defence mechanism.“However, it is a necessary development in our view and nudges the sector towards a more sustainable footing,” said Mr Mitchell.
Source: Business News