Rank CEO believes gambling reforms to come before general election

John O’Reilly confirms potential £4m online profit hit should slot stakes be capped at £5 as he suggests gambling reforms will be delivered by the autumn  

Rank Group CEO John O’Reilly has suggested that proposals laid out in the white paper into the Gambling Act 2005 review will be implemented prior to the anticipated autumn general election.

Speaking to EGR following the operator’s latest H1 fiscal year 2023-24 results presentation, the CEO said 2024 could replicate 2005 when the original Gambling Act was approved by parliament one month before the subsequent general election.

While no official date has been set for the nation to head to the polls, Prime Minister Rishi Sunak has said it will be in the second half of 2024, with expectations for it to fall in the autumn following parliament’s summer recess and ahead of the winter break from mid-December.

Since the white paper’s release in April 2023, the Gambling Commission (GC) has launched two tranches of consultations, the first of which included slots stake limits and the much-derided affordability checks, which closed in October. The second tranche is due to close this month and includes topics such as free bets and bonuses.

And with polling suggesting the Conservative Party is heading for a large defeat later this year, there are concerns that if legislation is not pushed through then further delays may appear if the new government decides to tinker with proposals or go back to the drawing board.

Reflecting on a similar situation in 2005, O’Reilly said: “The original act was delivered in the parliamentary washup before the election, and it went through both houses very quickly. I believe that the act passed through the house the day parliament broke before the electioneering period. A lot can be done in washup. 

“Ministers have the expectation that these reforms will be on the statute by the summer, and with the prediction being that we will have an autumn election, the expectation is the reforms will be delivered before we go into the election period.”

One of the measures that could arise from the white paper – and was explicitly referred to by Rank in the group’s financial report – is online slots stake limits.

Rank noted that should a cap per spin of £5, with a reduction to £2 for under-25s, be introduced as proposed by the Department for Culture, Media and Sport (DCMS), it could have a £4m impact on profit for the London-listed firm’s digital arm.

Underlying operating profit for the digital division in the past six months landed at £10.1m, so the estimates are significant in their potential damage.

O’Reilly explained to EGR that stake limits would result in the “most material impact” of all the proposed measures included in the white paper.

“We are working hard with the DCMS and having ongoing discussions with the GC on the shape of the reforms,” he said.

“The most material thing is the slot stake limits, which has been left in the hands of the government. The DCMS Select Committee suggested that £5 was the answer. If it was to be £5, we think that for the group, it would be around a £4m per annum EBIT headwind.”

Away from regulatory headwinds, O’Reilly laid out to EGR the operator’s plans to beef up its digital arm throughout 2024 and beyond.

Plans for the division include a new content management system (CMS), a new app for Grosvenor and the continued improvement for the Stride platform.

Rank Group’s CEO confirmed the revamped Grosvenor app will launch between April and June, with a slight possibility of it releasing sooner, but O’Reilly did insist the operator didn’t want to “rush this out”.

He added: “We want to deliver something that is a meaningful and beneficial experience to the consumer. We’re adding more functionality and capability and a larger suite of native games for the customer.”

Another major development for online is the aforementioned migration of its sites onto a new CMS in the next few months, with Grosvenor Casino being the first brand to be transitioned, followed by Mecca. 

On the development of the Stride Gaming platform, which O’Reilly said is timetabled to be delivered by the end of the year, the CEO added: “It is partly about breaking down the code to be more modular. This will mean that it will be faster to develop, deliver and to roll out improvements to the customer.

“It provides scalability and helps give consumers a more robust platform. There will be a new bonus engine and a new cashier. We have teams working furiously hard to deliver features that the business is requiring and each piece of work is going well.”

O’Reilly concluded by noting the digital side of the business is now at an “inflection point” as he looked ahead to making gains on the back of product improvements.

“We said some of this at our Capital Markets Day in November, but we have an expectation of 8% to 12% growth in the digital business, and we’ve done the hard yards in terms of acquisitions and migrations onto proprietary technology.

“What we are doing now is investing in that technology to deliver speed to market. The more robustness and scalability and all those hard yards get delivered this year.”

He concluded: “Every day and every week that goes by the offering to the customer gets a little bit more personalised, and that’s the important thing. Being relevant to the customer in real time, which is an important focus for us in the digital business.” 

 

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