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William Hill expands in US as FOBT clampdown hits hard

| By iGB Editorial Team
US casino deals unveiled as bookmaker posts pre-tax loss in wake of UK government's FOBT decision

The scale of William Hill’s expansion plans in the US and the challenge of managing the impact of UK fixed-odds betting terminal (FOBT) regulation changes were outlined today (Friday) as the bookmaker posted a big pre-tax loss for the first half of the year.

Hills confirmed this morning that it has signed sports betting partnerships with 11 casinos in Mississippi and a casino in West Virginia, with talks ongoing with operators spread across a further 14 US states.

However, despite revenue climbing by 3% year-on-year to £802.6m (€902m/$1.04bn), exceptional charges and adjustments of £915.9m, including £882.8m in relation to retail, meant that Hills posted a pre-tax loss of £819.6m in comparison with a £93m profit for the corresponding period last year.

Bowcock said the bookmaker is “beginning to put in place plans to mitigate the impact of the Triennial Review” – in which the UK government has slashed the maximum stake on FOBTs from £100 to £2 – but added in a conference call this morning that the bottom-line impact revealed in the latest figures “should not come as a surprise to anyone”.

He added: “I believe there is a future for high-street betting shops, but we have to accept that the £2 betting stake will bring a lot of change.

“Retail remains a valuable part to our business and offers the customer value. We have much more clarity on our strategic goals and how to achieve them.”

By 10.30am this morning on the London Stock Exchange, William Hill’s share price had dropped by more than 7%.

In the US, net revenue increased by 50% year-on-year to £39.6m and adjusted operating profit also rocketed by 132% to £17.6m, with Bowcock adding that the market represents a significant opportunity for the company and its shareholders “over the medium to long term”. However, with a note of caution, he highlighted “unknowns, including the number of states that will regulate, the speed of regulation and the type of product [that will be regulated]”.

William Hill confirmed today that, subject to regulatory approvals, it will provide sports betting risk management services and its proprietary technology for retail and on-premises mobile sports betting to Hard Rock Casino Hotel & Casino Biloxi, Island View Casino Resort (Gulfport), Palace Casino (Biloxi), Treasure Bay Casino (Biloxi) and WaterView Casino (Vicksburg), in addition to six other casinos in Mississippi. All properties are expected to be live by the end of August, pending the award of licences.

In West Virginia, William Hill will provide retail, mobile and online sports betting to a “soon-to-be-announced” casino partner.

The bookmaker’s US presence already includes sports betting operations in Nevada, Delaware and New Jersey and a race book in Iowa. Hills has also linked up with IGT for the Rhode Island Lottery Sports Betting RFP.

“In the US, it is a very exciting time, but it is not going to be without its challenges,” Bowcock added. “Having an established US business has been an advantage for us post-PASPA. We’ve barely scratched the surface and it’s a very exciting time ahead.”

The bookmaker is putting the foundations in place for significant expansion in the US. Last month, Hills brought in Sharon Otterman as its new chief marketing officer in the US as part of its growth plans.

Aside from the retail-related issues, the latest figures showed that total online net revenue in the first half of the year increased by 11% to £320.9m, with more than one million online activities during the Fifa World Cup.

Bowcock also set out the company's commitment to responsible gambling, echoing the comments of William Hill’s director of corporate communications, Ciaran O’Brien, who last month told iGamingBusiness.com that the bookmaker must “move much faster” to tackle problem gambling.

Bowcock said: “Fundamental to delivering over the long term will be our sustainability strategy, which marks a significant cultural change for the company.

“Gambling-related harm is a serious issue and it is important that we face up to this challenge. We have set ourselves the ambition that nobody is harmed by gambling and set out a detailed programme of actions as we start out on this journey.”

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