William Hill Posts $77 Million First-Half Loss Due to UK FOBT Reforms, While US Ops Hit $1 Billion
Posted on: August 9, 2019, 10:46h.
Last updated on: August 9, 2019, 11:30h.
William Hill booked a loss of £64 million ($77 million) in the first six months of 2019 as the fallout from fixed-odds betting terminal reforms in the UK set in.
The government’s decision to cut maximum odds on the machines from £100 ($120) to £2 ($2.40) unleashed a regulatory wrecking on the British betting industry, but William Hill appears to be coping less well than some of its competitors in the retail betting space.
Prior to the reforms coming into effect at the beginning of January, the company was generating more revenue from the machines than from sports betting at its brick and mortar outlets. The company reported a 12 percent decrease for its retail segment, driven by a 25 percent drop in income from FOBTs.
Despite having more machines than William Hill, and therefore theoretically more to lose, competitor Ladbrokes Coral reported a slightly smaller first-half decrease of 10 percent. Paddy Power, which was less reliant on the machines, reported a dip of just 4 percent.
William Hill has announced its intention to close 700 of its 2,300 betting shops in the UK as a result of the reforms, which will impact around 4,500 employees.
“In retail, we took the tough decision to announce a consultation process over the proposed closure of around 700 shops to protect the long-term future of the business following the introduction of the £2 stake limit,” said William Hill CEO Philip Bowcock.
“The response of our colleagues has been incredibly professional during this difficult time and I would like to thank each and every one of them for that,” he continued.
But Bowcock added that, unlike other companies, these will be the only closures that William Hill will make.
“We are not salami-slicing,” he said. “We are going once and once only.”
Not All Bad
There were silver linings, particularly William Hill’s US operations, the expansion of which contributed to the first-half 2019 loss.
The US now accounts for 7 percent of group earnings, with sports betting revenues hitting $1 billion in the first half of the year. The relative weakness of the pound versus the dollar also boosted US operations.
The company said the impending acquisition by Eldorado Resorts of Caesars Entertainment could add another £25 million ($30 million) to £30 million ($36 million) in revenue to US business over the next three years.
William Hill has an agreement to provide sports betting operations for Eldorado, which will become the biggest casino operator in the US on completion of the Caesars deal.
Mr Bowcock said William Hil had invested “double-digit millions of dollars” in its American online platform, which it expects to launch in September in time for the new NFL season.
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