Short Sellers target UK betting’s regulatory exposure

City news sources report that an £80 million bet has been placed against GVC Holdings, believing that the FTSE250 betting group’s share price will significantly devalue within the coming weeks.

The short position against GVC has been taken by Chicago-based hedge fund Citadel, a $32 billion fund led by renowned activist investor Ken Griffin.

Citadel analysts have confidence in betting that GVC’s share price will devalue, driven by a belief that UK gambling incumbents will face further regulatory disruption in 2020.

Speculating on the decline of a company’s value, short-selling sees investors borrow shares from banks. The shares are sold with the hope of buying the investment cheaply when the prices decline, with investors pocketing the difference.

This weekend, citing data from London markets analyst IHS Markit, The Sunday Times branded GVC Holdings as the UK’s most bet against company by reporting that £180 million of its shares (3.7% cap) had been taken up by short-sellers.

FTSE counterpart Flutter Entertainment is reported as another UK betting firm targeted by market short-sellers with 7.5% of its shares reported to be ‘out on loan’.

UK gambling incumbents face a critical six-month trading period, in which the UK government will enforce its industry-wide credit card ban on 14 April.

Furthermore, UK betting leadership waits for the UK Gambling Commission (UKGC) to confirm the regulatory scope and criteria for its review of the 2005 Gambling Act, which could see further restrictions imposed on operators.

Following a year of regulatory adjustments, this week City analysts await for the publication of full-year results of UK betting’s leading operators, commencing with William Hill (26 February) and followed by Flutter and Stars Group Inc ( 28 February). GVC Holdings will close the FTSE roster by publishing accounts on Thursday 5 March.

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