Shares in William Hill (WMH) crash 11% to 329.3p after the UK bookmaker issues a profit warning following a terrible Cheltenham festival and tighter regulations that aim to combat problem gambling.
The group says operating profit will be between £260 million and £280 million compared with £291.4 million in 2015, which was itself a 22% year-on-year decline.
It has been hit by legislation introduced in October 2015 which requires gambling companies to offer time-outs and automatic self-exclusions online. These enable punters to restrict themselves from placing bets, with self-exclusion lasting from six months to five years.
William Hill says the use of these features has accelerated in recent weeks and, should the trend persist at current levels, it will reduce profit in the online business by between £20 million and £25 million in 2016.
Davy analyst David Jennings says William Hill has been affected more than its peers by the new regulations because of its larger exposure to high-value gaming customers.
On top of this, the group has been hit by what it describes as ‘the worst Cheltenham results in recent history’ and unfavourable European football results. Gross win margins are 1.9 percentage points below expectations at 6.2%.
In another sign of how gambling companies are trying to mitigate regulations and taxes via acquisition, William Hill says it’s in advanced discussions with a partner to invest in OpenBet, the betting platform software company.
Last year the £3.3 billion cap tried, but failed, to buy online gambling group 888 (888).
