William Hill Loses £820M When Government Slashes FOBT Stakes to £2March 12, 2020
William Hill Loses £820M When Government Slashes FOBT Stakes to £2
William Hill Plc is a bookmaker that is based in Central London, England. Bookmaker or otherwise known as a bookie or turf accountant is an organization or a person that manages and pays off bets on sporting and other events at an agreed-upon odds.
The company was founded by William Hill in 1934 when gambling was seen as illegal in Britain. Although the company has gone through many changes, from being acquired by Sears Holdings in 1971, then by Grand Metropolitan in 1988, and Brent Walker in 1989. The company operates worldwide, employing approximately 14,000 people with the main offices in the UK, Republic of Ireland and Gibraltar.
However, William Hill reports a loss of over £820M following fixed-odds betting terminal (FOBT). This was due to the action taken by the Government when they announced plans to slash the maximum stake for fixed-odds machines. This action taken impacted greatly on William Hill. The FTSE 250 company took exceptional charges of £916M including an £883M hit from the decisions on FOBTs. William Hill suffered a lost of £819.6M before the tax in the six months to 26 June, they were down from a £93.6M profit a year earlier.
This was linked to the UK Government’s decision to reduce the maximum stake on FOBT from £100 to £2, a regulatory charge that William Hill described as “unprecedented”. The firm also mentioned that: “Its impact on their customer’s behavior won’t be known until some years later when implementation, however, we are currently estimating that this might help scale back the retail division’s annualized adjusted operating profit following the mitigation measures by about £70-£100m”. The remaining exceptional charges also included restructuring costs from a turnaround program.
The results sent show that the shares were gone down more than 9% in morning trading. Chief Executive Philip Bowcock mentioned that: “William Hill has performed greatly throughout the first half of 2018 and, following the major regulatory decisions in the UK and US, we now have greater clarity over the challenges and opportunities that lie ahead of us.
“Throughout the first half, our online business continued to deliver double-digit growth. In the retail, we are beginning to put in place plans to mitigate the impact of the triennial review.”
Betting corporations like Hill are taking advantage of a recent ruling by the US Supreme Court that has struck down a federal law that had prohibited gambling on individual sporting events. The States will now be able to choose individually whether to legalize sports betting.
William Hill also said that it has signed deals with 11 casinos in Mississippi and one casino in
West Virginia to run sportsbooks and plans to take the first sports to bet in Mississippi in August. It accepted the first bet in New Jersey through its Monmouth Park sportsbook in June and launched its new sportsbook at the Ocean Casino in Atlantic City.
The company is also trying to expand its offering in Delaware as a risk manager for the state lottery. Bowcock stressed that Hill was staying aware of risks to consumer’s well-being, gambling-related harm is a serious issue and it is necessary that we face up to this challenge.
“We have set ourselves the ambition that nobody is harmed by gambling and set out a detailed program of actions as we start out on this journey.”