No Deal Brexit seems to be a reality. Despite Tory opposition, the Internal Market Bill is likely to pass. Already, an initial vote was taken in Parliament, coming out at 340 to 263.

At stake is eliminating EU oversight of Northern Ireland’s border. Even worse, the United Kingdom as we know could end in political dissolution. What will happen if Scotland gains independence and Wales follows suit? What if massive mergers are rent asunder?

All kinds of issues are at stake, but for now we want to know how it will affect UK gaming assets. This sector might not know what will be hitting it. Right now William Hill and 888 are at two-year highs. Flutter and GVC continue this way as well. Playtech is even back to pre-pandemic levels.

Only Rank seems to be facing reality. As a land-based casino, it has had to refocus to maintain or even improve online gaming figures, but not much has happened. Meanwhile it is a volatile time in the London Stock Exchange.

Political realignment will no doubt impact GVC and Flutter. Who will survive? Smaller, leaner operations are in waiting in the wings. Hopefully these two UK gambling companies can weather the storm. At present, 888 and William Hill are adept at doing so. Of note, they have low debt and a clean corporate structure.

Flutter by contrast is weighed down with debt. In fact, Debt to EBITDA is now 3.5 times, despite its stated goals of only 1-2 times. Dividends have been suspended to boot. It seems not to be concerned about No Deal Brexit but the figures tell the tale.

Someone else is loaded with debt. GVC is 75% over its £2B debt load floating rate. Will it remain resilient? Any market restructuring is likely to push revenues down, resulting in the selling of recent acquisitions.

William Hill has a stronger balance sheet compared to the larger gaming groups. It has a completely fixed rate debt but a whopping £500M is due this year. As for 888, its debt is major. Both companies are poised to handle a hit unlike others.

No will undergo a leveling of course if the companies can keep it together. GVC is a growth stock and Flutter is holding its own in a low- or no-growth environment. To avoid panic, asset sales may become an issue.


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