Down but not out: gambling stocks have a bright future

The British gambling sector has been hit by taxes and tighter regulation. But the depressed share prices have yet to factor in the compelling long-term growth outlook, says Stephen Connolly.

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Britain's £14.5bn gambling industry was dealt a double whammy last year. First, the government slashed the maximum stake on highly profitable fixed-odds betting terminals (FOBTs), electronic slot machines containing a range of games, from £100 to £2. Second, to make up for the lost tax revenue, it hiked duties on online and mobile casino-style games from 15% to 21%. On balance, this is likely to be neutral or maybe slightly positive for the public finances, but it certainly tears a hole in the industry's profits; many highstreet betting shops will disappear.

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Investment columnist

Stephen Connolly is the managing director of consultancy Plain Money. He has worked in investment banking and asset management for over 30 years and writes on business and finance topics.