William Hill blamed the government’s clampdown on fixed-odds terminals (FOBTs) as it warned that up to 900 betting shops could close, putting 4,500 jobs at risk.
The bookmaker reported a loss of £820m in the first six months of the year, as the decision to slash maximum stakes on FOBTs from £100 to £2 forced it to record a £915m accounting charge. Stripping out the one-off cost, it made a £96m profit, down 13% on last year.
The bookmaker warned that the curbs on FOBTs, which the government described as a “social blight”, would reduce its high street revenues by up to 45%, rendering 38% of its shops unprofitable.
It predicted costs of up to £60,000 per shop closure, or more than £50m, with operating profits likely to decrease by up to £100m a year. Each bookmaker employs about five staff, meaning about 4,500 jobs are at risk if 900 shops close.
The gloomy prognosis sent shares in the bookmaker sliding, closing down more than 8% at 287p, the biggest faller on the FTSE 350 on Friday.
But William Hill said it had been encouraged by its nascent US operation, which has been growing fast since the supreme court overturned a longstanding ban on sports betting earlier this year.
With William Hill’s UK network of high street bookmakers set to shrink, its chief executive, Philip Bowcock, said the company’s US operation could surpass its domestic business. “In time, yes, depending on regulation, our US business could be bigger than the UK,” he said. “The US population is seven times that of the UK and they like to gamble more, I think. Gambling is seen as part of everyday life, you’re not a social pariah if you enjoy it.”
William Hill announced plans for further expansion in the US, where states are drawing up gambling regulations, mostly demanding that gambling firms do deals with casinos if they want to enter the market.
The firm has already struck sports betting deals with 11 casinos in Mississippi and one in West Virginia, giving it a presence in six states, with discussions taking place in 14 more.
Bowcock said he believed William Hill was better placed to conquer the US than rivals such as Ladbrokes’ owner GVC, which announced a tie-up with casino owner MGM Resorts earlier this week.
He refused to be drawn on whether certainty about FOBTs and US sports betting could trigger a consolidation in which William Hill becomes a buyer or a target, but admitted that “everybody is talking to everybody”.
Ivor Jones, an analyst at broker Peel Hunt, said the company was seizing its US opportunity because it has to, with its UK retail business “on life support”. He said: “William Hill is one player among many which hope to profit from the US sports betting market as it develops.
“We forecast a period of intense and expensive competition as new states regulate and success with regulation [multiple states regulating quickly] will lead to a higher spike in competition and startup losses. It will be hard to know the right time to buy into William Hill’s US story, but we are sure this isn’t it.”
The company was fined £6.2m by the Gambling Commission in February for failing to protect customers and prevent money laundering.
It said it was restructuring its compliance functions and closing a number of customer accounts, which could affect its second-half performance. The regulator had found that 10 customers were able to deposit money linked to criminal offences.
Source: The Guardian