William Hill hit by UK POC tax and gaming machine duty in Q1

Operating profit for the first quarter of the year was down £16 million (€22.5 million/$24 million), or 19%, on the corresponding period of 2014.

The bookmaker noted that this was due to an additional £20 million cost from the UK’s POC tax and an increased rate of machine games duty, which now stands at 25%.

William Hill’s online and Australia arms were hit hardest in the first quarter, with operating profit falling 38% and 39% for each division respectively.

However, the bookmaker was able to record a slight increase in operating profit for its US business, while its retail operations remained flat.

Elsewhere, group revenue improved slightly by 1% in comparison with the same quarter of last year.

Although its retail and Australian businesses suffered year-on-year losses of 2% and 11% respectively, the William Hill online division saw net revenue increase by 9% year-on-year while revenue from its US arm was up 10%.

William Hill also noted that its US business experienced an increase in sports wagering, with the quarter producing a 42% increase on the amount wagered in Q1 of 2014.

James Henderson, chief executive officer of William Hill, said: “As expected, group operating profit was impacted by a £20 million increase in gambling duties following the introduction of POC tax in December 2014 and the increase in the machine gaming duty rate in March 2015.

“However, we are well positioned to benefit as the UK online market evolves following the introduction of POC tax, with our ongoing technology investments expected to benefit both product and customer experience and with a substantial marketing commitment.  

“Our international strategy continues to progress. In Australia, the migration of Sportingbet customers to williamhill.com.au has been successfully completed, with over 95% of Sportingbet VIP clients transacting on the site since launch and with both first time deposits and unique actives showing post-migration increases against Sportingbet last year.

“William Hill US continues to perform strongly, with wagering on a local currency basis 30% ahead of last year.

"Looking forward, as the end of the football season draws closer, we have not as yet made up the shortfall arising from the £14 million loss in Week 3 given the relatively weak first quarter sports betting margin.

“Outwith sporting results, we are making good progress on our key projects for the year, including in-house development of our responsive design front-end through Project Trafalgar, an enhanced bonus engine to further increase the competitiveness of our proprietary Vegas casino platform and the completion of our Eclipse machine roll-out in Retail.”