By Geoff Percival
William Hill is the latest European betting firm to take a punt on the US market as tougher regulation in its home market of the UK continues to weaken its business.
The company posted a first-half pre-tax loss of £802.3m (€901m) compared to a profit of £108.6m for the same period last year and warned of more charges as it revamps its retail business due to tougher regulation in the UK market, sending its shares down about 8%.
As it faces impending regulation, the company has considered several measures, which could include closing about 900 loss-making outlets. William Hill said charges relating to shop closures, after the impairment taken for the half-year, could be £50,000 to £60,000 per shop.
The company said it plans to expand further into the US sports gambling market, joining a list of gaming companies betting on the US after a supreme court ruling in May lifted a ban on sports betting.
The company said it has signed agreements with 11 casinos in Mississippi and a casino in West Virginia. The push into the US comes as the UK cuts the maximum stake on fixed-odds betting terminals to £2 to tackle the problem of gambling.
In the last week Ladbrokes owner GVC agreed a venture with MGM. Yesterday, Paddy Power-Betfair’s newest US division — the fantasy sports company FanDuel, which it acquired in May — announced a link-up with Nevada-based gaming group Boyd Gaming, which will see FanDuel gain market access to operate its online sports betting products to around 15 states and Boyd taking an initial 4% stake in the company.
“FanDuel’s partnership with Boyd Gaming further highlights the speed at which market access is becoming secured in the US, even before these states regulate sports betting,” Joseph Quinn at Davy Stockbrokers.
William Hill’s further push into the US should bolster revenue. In the first six months of the year, the company said that US net revenue jumped 50%, with adjusted operating profit up 132%.
Overall revenue rose 3% to £802.6m, helped by the World Cup. The event helped boost online revenue by 11%, with online sportsbook transactions rising 18% and new online accounts rising 16%.
However, the company posted a 3% drop in retail net revenue, partly hit by consumers shying away from spending in town centres.
GVC’s MGM joint-venture will also use Boyd for market access in eight states, but Davy said it sees a tie-up being of bigger benefit to Paddy Power-Betfair than for GVC.
Additional reporting Reuters