William Hill Issues Profit Warning As Hammond’s Budget Bites

William Hill has issued a profit warning following Philip Hammond’s recent budget announcement which outlined the fate of fixed odds betting terminals (FOBTs) and tax rates.

Philip Hammond budget hurts William Hill

Multiple changes by Chancellor of the Exchequer Philip Hammond have forced William Hill to amend its profit forecast. (Image: home.bt.com)

With the Chancellor’s budget plans causing a political stir, William Hill’s chief executive Philip Bowcock has said tougher operating conditions will affect the company’s bottom-line.

“Retail continues to be challenged by the wider high street conditions and we have seen gaming as well as sportsbook revenues decline in the period,” Bowcock said in a November 6 trading update.

Budget Spooks Investors

In projecting its full year earnings, William Hill issued a revised forecast of between £225 million and £245 million. Compared to 2017’s underlying operating profit of £291.3 million, the company and its investors are bracing themselves for a shortfall of up to £65 million.

Prompting the recent profit warning was the news that FOBT changes will come into effect in October 2019. Coupled with the maximum stakes dropping from £100 to £2, Chancellor Hammond also raised remote betting duty to 21 percent.

Although operators have been preparing for tougher conditions in the live area for much of 2018, the six percent tax increase on internet earnings has come as an unexpected blow. For William Hill, the prospect of losing money on two fronts drove its share price down by five percent ahead of the trading update.

FOBT Fallout Continues

As well as UK betting operators taking stock of Hammond’s announcement, those in Westminster have also been reviewing the changes. With critics hitting out at what they see as an unnecessary delay to the new FOBT rules, Minister for Sports and Civil Society Tracey Crouch has resigned.

Despite being part of the government alongside Hammond, Crouch stepped down after learning that FOBT betting limits would change in October 2019 and not April 2019 as previously agreed. In her letter to Parliament, Crouch suggested the Chancellor had bowed down to pressure from “those with registered interests,” rather than taking into consideration the needs of the public.

While political infighting will likely continue until the new laws come into effect, operators such as William Hill are being forced to take a more proactive approach. Almost as soon as the budget was announced, Bowcock confirmed that his company had made a cash offer for Mr Green.

If accepted, the £242 million bid would not only give William Hill a greater presence online but help it gain a footing in Europe where Mr Green has an established userbase. However, even with more options online, the operator is still pessimistic about its fortunes in the UK moving forward.

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