William Hill, the U.K. bookmaker, has issued a warning on the company’s projected full-year profits which have been attributed to the losses from the Cheltenham horse racing festival and also new rules that dampen income gained from online high-value customers. Share were down 14 per cent on the news.
Britain’s gambling sector is facing new challenges with lawmakers implementing tougher regulations and technological advances within the industry, prompting market leader William Hill to slip from its top position after rivals Ladbrokes and Paddy Power Betfair sealed merger deals.
Savings incurred from the merged companies will allow them to have bigger budgets for marketing and make further improvements to the diversification of products on smartphones and tablets.
New regulatory changes allowed customers who are concerned about their gambling habits to impose on themselves temporary exclusions from company betting services which have been causing problems for William Hill.
Davy equities analyst, David Jennings noted that self-exclusions imposed by customers to themselves increased by 50 percent compared to three months prior:
“It seems that William Hill’s larger exposure to high-value gaming customers has led to it being impacted more by recent regulatory changes governing self-exclusion.”
William Hill’s online business contributes to 35 per cent of its total income, but the regulations could cause full-year earnings to decline somewhere between 20 million pounds and 25 million pounds.
Online gross win margins are down 6.2 percent in the first quarter 190 points below expected margins, partly due to unfavorable results for the company from the Cheltenham horse racing festival.
Chief Executive, James Henderson told press that:
“55 per cent of the winners were either the first or second favourite … So in summary, all the favourites punters wanted to bet (on) actually came first.”
Ladbrokes, a competitor bookmaker, also experienced problems with the results of the racing festival due to its large exposure to horse racing results. It called the festival “the most expensive week here that we can remember.”
William Hill’s adjusted 2016 operating profits were adjusted within the range of 260 million pounds to 280 million pounds as opposed to 291.4 million pounds from the year previous.
Company shares fell to 329 pence in the afternoon, down 11.3 per cent. Competitors, Ladbrokes shares fell 2.2 per cent and Paddy Power Betfair was also down by 1.9 per cent.