Shares Slide as William Hill Confirms Profit Warning
Posted on: January 21, 2019, 07:05h.
Last updated on: January 21, 2019, 07:05h.
Despite “excellent” US expansion throughout 2018, William Hill told investors Monday to expect a 15 percent fall in profits when it issues its full year results on March 1.
The British sports betting giant estimated operating profit will be £234 million ($301 million), after raking in £290 million ($373 million) in 2017. Shares dipped 2.45 percent on the announcement.
The company said tighter regulations and a lackluster retail betting market at home were to blame — and this is before a slash in the maximum odds of fixed-odds betting terminals is expected to decimate the land-based betting sector in the UK.
William Hill’s stateside arm has been busy since the US Supreme Court rejected PASPA, the federal ban on sports betting. Already the retail betting market leader in Nevada, the company launched operations in six more states in 2018 and expects to break even in the US, despite its investment in growth.
In September, William Hill signed a deal with America’s second-biggest regional casino operator, Eldorado Resorts, which has the potential to expand its footprint into 21 casinos in 11 states. Eldorado’s sports books will be exclusively William Hill — but the latter retains complete freedom to pursue deals with other casino companies.
UK Tightens the Screws
But domestically, the picture isn’t so rosy. While the US is liberalizing sports betting laws, the UK — previously one of the most liberal regulated markets in the world — has tightened things up, especially in regard to its KYI (know your customer) regulations.
In February, William Hill was fined £6.2 million ($8 million) by the UK Gambling Commission (UKGC) for KYI compliance failures that allowed ten customers to gamble with money that was the proceeds of crime.
The slash in maximum stakes on fixed-odds betting terminals from £100 ($129) to £2 ($2.57) is due to come into effect in April and the betting industry has warned there will be hundreds of shop closures and thousands of job losses as a result.
In order to offset the loss in government revenue from the machines, there will also be a rise in taxes levied on UK-facing online gambling operations, from 15 percent to 21 percent.
Mr. Green Deal Nears Completion
In late October, William Hill announced it would acquire European-facing online gambling company Mr. Green in a bid to reduce its exposure to the UK market. Group CEO Philip Bowcock said Monday the $242 million ($311 million) deal was nearing completion.
“2018 was a pivotal year for both William Hill and the wider industry,” said Bowcock. “We now have greater clarity around the key challenges and opportunities for our business.
“In 2019 we will remodel our Retail offering while building a digitally-led international business, underpinned by a sustainable approach…” he added.
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