William Hill reported today its 2019 fiscal year financial results, with net revenues down 2% year-on-year to £1.6 billion and underlying operating profits on the red 37% to £147 million, mainly due to rising operating costs stemming from increased investment.
Retail Stake Limit Hit
William Hill was most affected by the implementation of the £2 staking limit, but partially offset the negative effects from closing down of 713 shops in the UK by growth in online operations and investment in the U.S. and managed to post net profit loss results in the upper layer of the estimated range between £143 million to £148 million.
The impact of the measure has actually been less bad than the company expected, with retail profits ahead of expectations, as customers migrated to the remaining street shops and revenue from gaming machine operations holding up reasonably well.
As the limit was implemented mid-year, its effect is expected to drag into next year too, and this is not the only consideration for William Hill regarding its domestic market.
Optimism Despite Tightening Regulation
Raising concerns about the negative effects of gambling in the society and the determination of the UK Gambling Commission to introduce changes in the regulation, switched the focus to online operations, with the ban on gambling with credit cards expected to knock £5 million to £10 million off profit, and If the trend of tightening regulation continues, it could turn into a strong headwind for becoming more and more vital for the company online revenues.
Total net revenue for 2019 was down 2.4% to £1.58bn, with retail contributing by £717.0 million, down 19.9% year-over-year, with £400.0 million of the retail total attributed to sports betting, and self-service betting terminals /SSBTs/ contributed to 19% of all sports betting and 62% of football wagering.
Revenue from gaming, however, posted a significant drop of 36.1% to £317.0 million, bringing its contribution to group revenue to go down to 45.3%, and practically making the online business of William Hill its principal source of revenue.
£738.3 million were attributed to online gaming, up 16.4%, with 35% of it, £257.3 million derived from markets outside of the company’s domestic UK one, a significant increase from the 24% in 2018.
“We move into 2020 in a stronger position. Almost a quarter of revenue is now generated outside the UK compared to 15% in 2018”, Ulrik Bengtsson, CEO, William Hill.
US Expansion Continues
Regarding its gambling operations on the other side of the Atlantic, William Hill US delivered growth in a seventh consecutive year, up 18.2% to £1.28 billion, 69% of which wagered via digital channels, and revenue climbed 6.6% to £83.6 million.
Growing regulatory headwinds at home direct the company into the opening and growing U.S. markets, where William Hill currently operates in 11 states and have expectations to launch in 8 more during 2020 as U.S. has the potential to become the world’s most valuable betting market and the UK-based operator seeks to break even.