William Hill taxes worst week

William Hill was hit hard this quarter by new taxes and a rough week in European soccer. (Image: Alamy)

William Hill saw profits fall by 19 percent in the first quarter of 2015, impacted by a number of factors including what the company called its worst week ever in its bookmaking operations.

That historic week came in January, when a series of high-profile soccer matches in the English Premier League and throughout Europe broke for well-supported favorites.

That series of unfortunate (or fortunate, from the perspective of bettors) events took place during the third week of January, when William Hill says they lost £14 million ($21.1 million) because of wins by high profile clubs like Manchester United, Tottenham, Arsenal, Barcelona and Real Madrid.

One particular match that has been pointed to was a stunning 5-0 win by Chelsea over Swansea, which also took place that week.

The one-week hit was so large that William Hill still hasn’t been able to make up for it since then.

“Looking forward, as the end of the football season draws closer, we have not as yet made up the shortfall arising from the…loss in Week 3 given the relatively weak first quarter sports betting margin,” said William Hill CEO James Henderson.

New Taxes Also Reduce Profits

That wasn’t the biggest hit to William Hill’s bottom line, however.

The company said that they faced £20 million ($30.1 million) in new costs associated with new taxes, including the point of consumption tax on UK online gambling revenues and increased taxes on controversial fixed-odds betting terminals in their retail locations.

However, Henderson said that the company will be able to roll with these changes in tax laws and continue to succeed moving forward.

“We are well positioned to benefit as the UK online market evolves following the introduction of [the point of consumption tax], with our ongoing technology investments expected to benefit both product and customer experience and with a substantial marketing commitment,” Henderson said.

There was certainly some good news in certain areas for William Hill during the first quarter of the year.

For instance, operating profits were up slightly in the United States, with sports betting wagers up 42 percent in the country (through the company’s operations in Nevada).

Online sports betting was also up 16 percent, and all Internet segments were up other than poker; however, overall operating profits from William Hill’s online division were down significantly despite a rise in revenues, likely due in part to the effects of the point of consumption tax.

Mobile Gaming Continues to Prosper, Australian Profits Down

As with most companies in the online gambling business, the biggest growth market for William Hill continues to be mobile gaming.

Revenue from phone and tablet offerings was up an astounding 48 percent year-over-year, though once again, the point of consumption tax in the UK still cut into profits here.

Revenues and profits also dropped in Australia.

The company eliminated the Sportingbet and Tom Waterhouse brands, migrating players from these properties over to William Hill earlier this year. Both marketing costs and race field fees were up in the market, which may have cut into William Hill’s profits here.

Over the past year, William Hill has closed about 100 shops in the UK, as well as reorganizing how the company staffs these retail outlets. According to Henderson, these changes have helped offset some of the increased tax burden the company has faced.