William Hill has seen its interim profits cut by almost half after the bookmaker was hammered by the UK government crackdown on fixed-odds betting terminals (FOBTs).
The betting giant saw adjusted pre-tax profits plunge 47 per cent to £50.8 million for the six months to 2 July, after it was hit by the change in minimum stake, as well as heavy investment in the US.
The figures come weeks after the group announced plans to shutter 700 betting shops across the UK, putting 4,500 jobs at risk.
William Hill said it had to cut jobs in response to the government’s decision to slash the maximum stake on the controversial FOBTs from £100 to £2 in April, which has weakened the bookmakers’ sales.
Despite the policy change, the company saw revenues edge higher, moving up 1 per cent to £811.7m for the six-month period.
The company said it was buoyed by “strong” growth in the US, as it looks to move away from its high dependence on the UK market.
Nevertheless, it said its profits were hit by heavy investment into expanding overseas, which also included the £245m acquisition of Swedish bookmaker Mr Green earlier this year. In the UK, William Hill saw online revenues fall by 1 per cent as it was affected by “weaker sports results” over the period.
Chief executive Philip Bowcock said: “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.
“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.
“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.”
The company added that it had made progress in collaborating with other major gambling firms over measures to “enhance safer gambling and address public concerns”.
Greg Johnson, an analyst at brokerage Shore Capital, noted: “As expected, operating profit in the six months was down sharply, reflecting the regulatory headwinds including the introduction of a £2 staking limit and increased compliance measures in digital.
“A result of £76m was nicely above our estimate of £70m, which is encouraging, although this reflects lower start-up losses in the US and favourable sporting results in Q2. Excluding US expansion losses (£10m against our estimates of £20m), the performances across digital, retail and the US (Nevada), were all in-line or slightly behind our forecasts.”
AJ Bell investment director Russ Mould said: "Investors appear prepared to take the long-term view on bookmaker William Hill after first-half profit was hit by a crackdown on fixed odds betting terminals and investment in the US.
"While America has often been a graveyard of UK corporate ambitions, think Tesco’s failed Fresh & Easy venture, the UK gambling sector is seen as being well placed to take advantage of the opening up of sports betting across the pond, even if it has made a slowish start.
"The industry arguably had its fingers burned before with online betting in the States but there are hopes for a more successful outcome this time.
"William Hill’s joint venture with US-based Eldorado effectively provides it with a licence to operate and the latter’s merger with Caesars Entertainment could have a major benefit to William Hill as the scale of the enlarged business would be material, with 60 casinos across 16 states.
"William Hill is entitled to operate mobile sports in states where Eldorado obtains a licence, as well as to exclusively operate sports books in the acquired casinos.
"While the US is all about expansion, the UK is likely to continue to be a story of retrenchment as the company shutters a large number of its high street premises."