William Hill hammered as Cheltenham punters clean up
British bookmaker William Hill warned on full-year profit yesterday, citing Cheltenham festival losses and new rules that have dented income from high-value online customers.
Operating profit this year could be as low as £260m (€328m), the company said.
The update to the market sent shares down by as much as 14pc.
A tougher regulatory environment and advances in mobile technology are changing the face of Britain's gambling sector and former market leader William Hill has slipped down the pecking order after merger deals among rivals such as Ladbrokes and Paddy Power Betfair.
The larger companies can divert savings into higher marketing spend and potentially offer a wider array of improved products on smartphones and tablets. William Hill, meanwhile, has been hit hard by regulatory changes that allow customers concerned by the level of their gambling to instigate self-imposed temporary exclusions from a company's betting services.
Customer self-exclusions in the first quarter rose 50pc from the previous three months, Davy equities research analyst David Jennings wrote in a note.
"It seems that William Hill's larger exposure to high-value gaming customers has led to it being impacted more by recent regulatory changes governing self-exclusion," he said.
Profit at William Hill's online segment, which contributes about 35pc to overall revenue, is expected to fall by between £20m and £25m this year, the company said. Online gross win margins were 190 basis points below expectations at 6.2pc in the first quarter, it said, hurt in part by results at the Cheltenham horse racing festival.
"Fifty-five percent of the winners were either the first or second favourite... so in summary, all the favourites punters wanted to bet (on) actually came first," chief executive James Henderson told Reuters.
The company is not alone in cursing Cheltenham - a favourite among Irish punters - this year.
Ladbrokes, which UBS analysts said has greater exposure to horse racing than William Hill, bemoaned "the most expensive week here that we can remember".
William Hill said it expects 2016 operating profit to be in the range of £260m to £280m, compared with £291.4m last year. Shares were down by 11.3pc at 329 pence by lunchtime. (Reuters)