- New taxes and a credit betting ban have reduced volumes in Australia
- Profits for 2017 are expected to be 11 per cent higher than 2016
William Hill has hinted it may sell off its Australian business after a regulatory crackdown as it unveiled rising profits which were ahead of expectations.
The bookmaker said that new taxes on gambling and a credit betting ban had reduced volumes in Australia and were clearly going to hit profitability.
‘Given the credit betting ban in Australia and the likely introduction of a Point of Consumption tax in a number of states, it is clear that profitability will increasingly come under pressure and therefore we are undertaking a strategic review of our Australia business,’ the group said.
William Hill said that new taxes on gambling and a credit betting ban in Australia hit profits
It comes as William Hill said profits for 2017 would be 11 per cent higher than 2016, thanks to improving online betting and favourable football and horse-racing results -although wagering growth slowed a touch.
Full-year adjusted operating profit for the 52 weeks to December 26 are expected to be £290million, ahead of analysts’ expectations.
The betting giant reiterated an ongoing trend, whereby online betting continues to grow while betting in shops is in decline. Trading momentum was strong in both the UK and US, with double-digit growth in the latter.
Shares in the FTSE 100 listed company rose 0.6 per cent to 337.2p in morning trading.
‘We have delivered a strong result in 2017, reflecting our focus on rejuvenating online, growing the U.S. and building an attractive omni-channel proposition’, chief executive Philip Bowcock said.
Neil Wilson, senior analyst at ETX Capital, said: ‘Regulatory pressures mean it is now undertaking a strategic review of its Australian business.
‘After announcing exploratory talks with CrownBet over a potential merger of Australian assets, management may decide it’s better to walk away from the lower profitability and focus on its core domestic and the fast-growth US divisions.’
Wilson said the US had potential because of a possible deregulation of sports betting under the Trump administration.
‘A ‘big bang’ liberalisation of the US market may not yet be reflected in WMH valuation, but even without that William Hill is making good running in this market,’ he added.
George Salmon, equity analyst at Hargreaves Lansdown, said: ‘World Cup years are always big for the bookies. With trading in the UK and US looking better, unlike the England football side, William Hill is going into 2018 with improved momentum.’
‘Unfortunately, there are some parallels with the England cricket team too. Betting on credit has been banned in Australia, meaning that’s proving a difficult territory at the moment. This probably explains why the group entered talks with CrownBet about a possible sale of its Australian business.’