International edition
November 16, 2018 | Edition Nº3617

Blaming impact of measures against problem gambling and FOBTs

William Hill UK warns gambling crackdown will hit full-year profits

William Hill UK warns gambling crackdown will hit full-year profits
William Hill still plans to close up to 900 betting shops that have become unprofitable – nearly two-fifths of the total – following the government’s decision to slash maximum stakes on FOBTs from USD114 to USD 228.
United Kingdom | 11/07/2018

The firm claims the main impact is from tougher affordability and source of income checks on online customers, which have prompted some to switch to other betting firms and led to William Hill shutting more accounts.

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illiam Hill has warned of lower full-year profits following the closure of a number of customer accounts to combat problem gambling and money laundering, as well as the government’s clampdown on fixed-odds betting terminals (FOBTs).

The bookmaker also blamed a tax increase and tough conditions on the high street, as it downgraded its full-year profit forecast to between USD 257m and USD 280m. Analysts had pencilled in profits of USD 277m; last year the company made USD 332m.

In a trading update, William Hill said it benefited from the later stages of the World Cup, but lost out to punters on football results in October and had three loss-making weeks on horse racing during the summer.

It said online profits this year would be USD 23m lower this year than previously thought, and USD 28m down next year, partly due an increase in remote gaming duty from 15% to 21%.

          William Hill still plans to close up to 900 betting shops that have become unprofitable – nearly two-fifths of the total.

But the main impact is from tougher affordability and source of income checks on online customers, which have prompted some to switch to other betting firms and led to William Hill shutting more accounts.

The government has forced bookmakers to carry out more checks on people betting online, to tackle problem gambling and prevent money laundering. William Hill was fined USD 7m by the Gambling Commission in February for failing to combat money laundering in the two years to August 2016.

The watchdog found that 10 customers were able to deposit money linked to criminal offences, including one customer who was stealing from their employer to fund a gambling problem and another who was defrauding elderly victims.

It was the commission’s second-biggest penalty on record, following a USD 8,9m fine for the betting firm 888 last year for its failure to protect vulnerable customers. About 7,000 of them were still able to access their accounts and place bets despite voluntarily asking to be excluded.

William Hill still plans to close up to 900 betting shops that have become unprofitable – nearly two-fifths of the total – following the government’s decision to slash maximum stakes on FOBTs from USD114 to USD 228. As a result, it took a USD 1044m accounting charge in the first six months of the year, pushing it into a first-half loss of USD 930m.

Philip Bowcock, the William Hill chief executive, said: “We are continuing to experience a period of significant change for our industry and have already made important changes over the last two years to transform our digital business, broaden the management team and enhance our financial flexibility ahead of key regulatory changes.”

Campaigners have criticised the Gambling Commission for not doing enough to stop problem gambling. In June, the industry watchdog warned betting companies would face a “relentless escalation” in penalties if they did not introduce extra checks on online customers.

The commission’s enforcement report found failings in respect of “VIP customers” who lost hundreds of thousands of pounds and used stolen money to fund their problem gambling. The regulator imposed £18m of fines on gambling companies in the year to 1 April, up from £1.6m the previous year.

New rules that took effect on 31 October promise tougher action against gambling companies that break advertising rules by appealing to children or glamourising gambling, or breach consumer law by making it hard for customers to withdraw their money, or send ’spam’ marketing emails or texts.

Faced with the clampdown in the UK, William Hill is pushing into the lucrative US sports betting market, where several states have legalised betting on football, baseball, basketball and other sports following a supreme court ruling in May.

Bowcock said William Hill was the only company to be taking sports bets in the first five states to have regulated sports betting – Nevada, Delaware, New Jersey, Mississippi and West Virginia. “Our goal is to be in every state,” he said.

Nicholas Hyett, equity analyst at Hargreaves Lansdown, said: “There’s a pot of gold at the end of the rainbow, and that’s the $5bn-$19bn US sports betting market. William’s Hill’s been fast out the stalls, an advantage of already being an established player in Nevada, and has started racking up the bets.”

William Hill shares fell by 8% in early trading, and later traded down 3.4% at 206.4p.

 

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