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NEWS 6 October 2016

Expert panel discusses industry M&A outlook following Brexit vote

By Tom Lewis
A panel of industry experts gathered in London today to discuss the potential impact of the UK’s vote to leave the EU on industry M&A activity.

Hosted by law firm Healys LLP, the panel consisted of Fred Gushin of Spectrum Gaming Group, Partner at Healys David Schollenberger, gambling consultant Steve Donoghue, SQS Group’s Nick Pointon, Simon Oaten of Deloitte and Drihem and Co. CEO Tal Itzhak Ron.

Asked what Brexit means for M&A in the UK gambling industry, Simon Oaten responded: “I hate to say it, because whenever you talk about Brexit the most commonly used word is uncertainty, but that’s the reality at this point in time.

“I think domestic M&A and consolidation will continue, driven by the same fundamentals, but I think international will have less pace than it might have had otherwise.

“For foreign investment, the price and currency advantages are there, but that has to be coupled with the regulatory uncertainty that comes with it.”

Steve Donoghue continued: “An area where it matters is going to be for staff – we will go for a hard Brexit. If you have staff in Gibraltar, they’re in real trouble with regards to crossing the border.

“Once we leave the EU, GDP will drop. UK gambling is correlated to UK GDP, so there will be a drop in the market for gambling.

“The government will then realise that they need revenue. Who can they go to for revenue, that won’t make people march in the streets? The answer is gambling.

“I can see increased taxation and a decreased market, and I think that due to the change in personnel in Number 10 and at the Department for Culture, Media and Sport, there is now a far higher chance that we will see fixed-odds betting terminals being squashed.

“For the UK gambling industry in the short to medium term, what we are seeing is very bad news.”

On the opportunities foreign companies can find in the aftermath of the Brexit decision, Managing Director of Spectrum Gaming Group, Fred Gushin, shared his thoughts: “There are always challenges and opportunities in these situations.

“I think you have to look to look at it from the broader perspective of the entre gaming industry at this point in time.

“It’s going through tremendous transformations, for example with the saturation of land-based gambling in the USA and Asia. In that context there are definitely opportunities for M&A – acquisitions like Gtech’s recent acquisition of IGT will continue with or without Brexit.

“Brexit may accelerate it in some ways, and it may also create opportunities for British companies, looking internationally.

“Historically they haven’t been international players, with the exception of the likes of Genting and Crockfords, but basically, there could be consolidations, there could be accelerating mergers and there could be accelerating business opportunities.”

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