Gaming major Lottotech’s shares tumble as govt tightens rules in Budget 2015
A ban on scratch cards games announced under Budget 2015 on Monday, March 23, to take place with immediate effect, has led to a 9.9% fall in the shares of Lottotech on Tuesday, March 24 on the Stock Exchange of Mauritius, followed today by a further fall of 7.25% to take the value of shares down to Rs 7.42 per share. (Image: Lottotech)
The value of Mauritian gaming major Lottotech has seen a tumble on the Stock Exchange of Mauritius (SEM), following the measures announced in the budget against the gambling industry.
A ban on scratch cards games, to take place with immediate effect, has led to a 9.9% fall in the shares of Lottotech on Tuesday, March 24 on the Stock Exchange of Mauritius, followed today by a further fall of 7.25% to take the value of shares down to Rs 7.42 per share.
According to the SEM, about 298,000 shares were traded yesterday for an amount of Rs 2.3 million, while today, Lottotech was one of the most actively traded shares on the stock exchange, with as many as 175,660 shares traded across the counter.
Besides, the shares of Gamma Civic, majority shareholder of Lottotech, also fell 1.4%, reflecting the general unease on the prospects of the gaming industry in Mauritius, following the strict steps taken under Budget 2015.
To recapitulate, the government declared that regulations for the gaming industry included a total ban on advertising and issue of license for a period of 5 years (except for new casinos) making it difficult for new entrants. Existing players will also be impacted by an increase in license and fees together with limitation on range of games given a ban on scratch card games and relocation of all gaming house outside city centres.
Moreover, in an analysis done yesterday afternoon, stockbroking major Axys highlighted thatcher the sales of Lottotech could be reduced by 20% following the budgetary measures. The immediate ban on scratch cards is the single most critical factor affecting company sales, as they represent as much as 20% of the turnover of the company.
Accordingly, the board of directors at Lottotech has issued a communiqué on Tuesday to the effect that they will be engaging in discussions with the Gambling Regulatory Authority and other relevant authorities to seek further clarifications concerning this budgetary measure. In the interim, the company has requested the public to exercise caution while dealing in their shares.
In a related development, gaming major Automatic Systems Ltd (ASL) has issued a cautionary announcement on the SEM, declaring that the public must exercise caution while dealing with their shares, as the budget announcement is likely to have an adverse impact on company performance. It may be noted that ASL closed as one of the bottom 5 shares on the SEM, with a -19.08% fall in share value to Rs 53 per share.