illiam Hill reported today its half-year results for the 26 weeks ended 2 July 2019, with comparatives relating to the 26 weeks ended 26 June 2018. Results were in line with the company’s expectations during a period of transition and “Year 1” of a new strategy, including the US expansion.
Group net revenue was up 1% to £811.7 million (USD 979.7 M), impacted by £2 stake limit on gaming machines in betting shops and reflecting the acquisition of Mr Green & Co. Adjusted operating profit decreased by 33% to £76.2 million reflecting the £2 stake limit and investment in US expansion.
Exceptional charge and adjustments amounted to £114.3 million, with £97.1 million relating to mitigation measures following the £2 stake change, including the proposed closure of 700 betting shops, which led to a statutory loss before tax of £63.5 million.
The company reported it’s building a scale business in US sports betting with $1 billion of amounts wagered and 27% market share across seven states in the first half of 2019. It is also on track to launch market-leading and proprietary sports betting technology platform ahead of NFL season. The brand is now live with sports betting in eight US states, and two more to go live imminently: Iowa and Indiana.
The announced Eldorado Resorts acquisition of Caesars Entertainment, if completed, would provide access to 34 additional casinos, which William Hill anticipates would generate between $20 to $35 million additional retail EBITDA within three years, and to five incremental states including New York.
Furthermore, the sportsbook operator is diversifying online with contribution from international markets increasing to 33% of net revenue in the first half of the year, up from just 24% last year. Online UK net revenue was down 1% reflecting weaker sports results year-on-year and enhanced customer due diligence. Product improvements are driving improved customer metrics and 7% UK net revenue growth in the second quarter. Online international revenues increased by 66% and the firm saw a positive momentum from Mr Green. William Hill also remarked its international hub established in Malta, providing a base within the European Union.
As for remodelling retail following implementation of £2 stake limit on B2 gaming products on 1 April, revenue impact was in line with the company’s previous guidance. Decisive action was taken in that sense with start of colleague consultation on proposed closure of 700 shops.
In the UK, a distinctive new brand proposition was launched in time for the new domestic football season, and commitment was taken alongside four other leading companies to increase funding for treatment of problem gambling.
Full-year performance is expected to be in line with previous guidance. Philip Bowcock, Chief Executive Officer of William Hill, commented: “We are making good progress against the five-year strategy we outlined last year, delivering strong revenue growth in the US and other international markets and positioning William Hill well for future growth. We continue to expand rapidly in the US, both in Nevada and in the new states, with over $1 billion wagered with us in the first half. We are now live in eight states and will expand into at least two more states in H2.”
“In Retail we took the tough decision to announce a consultation process over the proposed closure of around 700 shops to protect the long-term future of the business following the introduction of the £2 stake limit,” he continued. “The response of our colleagues has been incredibly professional during this difficult time and I would like to thank each and every one of them for that.”
Bowcock concluded: “Underpinning William Hill’s progress is our sustainability strategy and long-term ambition that nobody is harmed by gambling. The voluntary whistle-to-whistle ban has begun and we have, together with other leading operators, committed to a significant increase in funding for safer gambling measures, including for treatment. We continue to work on additional measures to protect our customers and lead the regulatory agenda.”
The British bookmaker has been growing quickly in the U.S. market as it looks to soften the impact of a regulatory crackdown in the UK which is hitting revenues and forcing the closure of almost a third of its stores.
Now, William Hill is hoping it can generate around 45% of its revenues in the U.S., where it is positioning itself in time for the start of the new NFL season in September by opening dozens of new sportsbooks, as reported by MarketWatch. Joe Asher, the group’s U.S. CEO, said: “Sports betting is starting to grow rapidly across many parts of the U.S. and that’s going to continue. Nearly a dozen states will have sports betting by year end and the trend towards legalization is clear.”
Around four months after the PASPA’s repeal, U.S. casino operator Eldorado Resorts took a 20% stake in William Hill’s U.S. sports betting business, which in return was given exclusive rights to run sports books at all 26 Eldorado-owned properties.
Eldorado’s blockbuster $17.4 billion deal in June to take over Caesars Entertainment looks set to boost William Hill’s U.S. ambitions, giving it access to an additional five states to offer mobile betting in the renowned Caesars Palace hotel and casino in Las Vegas. The deal is due to close in 2020, subject to approval of shareholders and regulators.
The UK’s main listed bookmakers have all struck lucrative deals in the U.S. since the market opened up. PaddyPower Betfair owner Flutter Entertainment, for instance, took a majority stake in U.S. fantasy sports site FanDuel, while GVC , which owns Ladbrokes Coral, signed a $200 million joint venture with MGM casinos.
William Hill’s U.S. operation is still loss-making as it continues to reinvest any profits made into growing the business. It still has the flexibility to do a deal with a media company in the U.S.