It’s finally here. The long-awaited and consistently delayed UK gambling white paper has been released by the government. While the paper represents the most significant refresh of the domestic betting landscape in decades, the sector must now wait for many of the key proposals to go through consultations and analysts have downplayed the potential impact of the reforms on the big listed digital operators.

Secretary of State for Culture, Media, and Sport Lucy Frazer, who laid out the details of the paper in the House of Commons, said that the government’s reforms have the overarching aim of “bringing our pre-smartphone regulations into the present day with a gambling white paper for the digital age”. The white paper estimates that its proposals could lead to a 3 to 8 per cent fall in commercial gross gambling yield (GGY), with an 8 to 14 per cent decline in online GGY partly offset by gains for high-street operators.

There will be enhanced online protections for consumers, Frazer announced. The Gambling Commission (the UK regulator) will consult on forcing companies to improve their financial vulnerability checks using specific loss thresholds when punter losses are “likely to be unaffordable or harmful”. The government also plans to introduce a stake limit on online slots of between £2 and £15 per spin, with potential specific measures for 18 to 24-year-olds. This was better for the sector than the City had expected – HSBC analysts had predicted an upper online slot limit of £5.

888 (888) is the most exposed to stricter online rules given more than a third of its revenues come from UK online. But Numis analysts think the proposals will have a limited impact on UK digital operators “given the steps taken by these companies over the last few years, specifically targeting lower-staking recreational players, implementing stake limits etc, we would expect little change to forecasts at the group level, even after the consultations have been completed”.

Shore Capital research analyst Greg Johnson said that the investment group expects “only modest financial implications for the larger listed digital players”, again given the pre-emptive measures introduced by companies in advance of the white paper.

Tougher restrictions on marketing are also incoming, the paper confirmed. The regulator will consider tighter rules on companies offering incentives such as free bets and bonuses to customers and will implement changes on consumer consent to ensure punters have more choice around marketing. 

The paper further outlined some notable, if expected, changes to beef up the power of the regulator and improve the system for consumer disputes and redress. The Gambling Commission will collect a new 1 per cent statutory levy from operators – the full details are yet to come – which will be used to fund more research, education, and treatment. An independent gambling ombudsman will also be set up, which is expected within a year according to the government. This body would “adjudicate complaints relating to social responsibility or gambling harm where an operator is not able to resolve these”.

In good news for high-street operators, the white paper’s final reform area addresses regulatory hindrances to land-based operators. Frazer said in the Commons that she wants to “rebalance regulation and remove restrictions which disadvantage the land-based sector”. To that end, the government intends to help casinos by increasing machine allowances, letting them offer sports betting, and permitting them to provide credit to non-UK residents. 

The paper was broadly welcomed by the sector. Flutter Entertainment’s (FLTR) chief executive Peter Jackson called it “a significant positive moment for the UK gambling sector”. The company forecasts that the gross incremental revenue impact from the announced measures to its annual UK revenues could be £50mn-£100mn, on top of the £150mn already removed by its own pre-emptive changes.

Entain (ENT) chief Jette Nygaard-Andersen, meanwhile, said of the paper that “we welcome the clarity that it will bring to the industry and its customers”. Entain estimates an impact from the proposals of less than 1 per cent of its online net gaming revenues in 2024.

Rank Group (RNK), which operates the Grosvenor, Mecca, and Enracha venues, is the clear winner from the reform package given its reliance on physical sites. In its third quarter to 31 March, 70 per cent of the business’ revenues came from venues. Rank said that “overall, we expect the policy changes to be positive for the group”. 

Numis said that the reforms could add £20mn to Rank’s cash profits and could lead to “material earnings upgrades in FY2025”. Shore Capital is bullish on Rank, and its analyst Johnson said that the paper could help the company’s “estate evolve into a higher quality, better positioned gaming proposition”.

There was an immediate share price reaction amongst the gambling stocks. Rank Group was up 10 per cent and 888 up 2 per cent on the day of the paper’s release. Entain and Flutter Entertainment shares were flat, though the latter then rose slightly at the end of the day after it confirmed it had received shareholder approval to proceed with a secondary listing in New York.