William Hill plc (LON:WMH) said it was on track to meet full year market expectations as the bookmaker reported a 3% increase in retail net revenue in the 17 weeks to October 24.
The online business delivered a 6% increase in revenue with wagering up 13% against a strong performance in the year-ago period when the Euro 2016 tournament was taking place, and gaming net revenue was up 14%.
The US business achieved a 28% gain in net revenue with amounts wagered up 33%, boosted by the Mayweather-McGregor boxing match.
Australian government bans free bets and credit lines
The Australian division, however, saw revenue fall 2% as the amount wagered dropped 5% against “challenging” market conditions.
Online gambling sites operating in Australia will be banned from offering lines of credit under new reforms to take effect in February 2018.
“With the credit betting ban now passed by the Australian Government and the potential for a Point of Consumption Tax to be adopted by other states, we continue to manage spend carefully while extending and diversifying our product range,” William Hill said.
William Hill to deliver £40mln in cost savings
William Hill said its overall performance remains in line with market expectations and it is on track to deliver a previously announced £40mln of annualised cost efficiencies by end of 2017. The savings will be used to support reinvestment in the business, including marketing spend to promote its improved online offering.
The company has been trying to transform its operations as more consumers use mobile phones to place their bets, rather than high street shops.
UK government to crack down on FOBTs
The group is also facing a crackdown by the UK government on Fixed Odds Betting Terminals (FOBTs) which account for the biggest chunk of William Hill’s revenue.
The Department for Culture, Media and Sport has proposed that the maximum stake on FOBTs should be reduced from £100 down to £50, £30, £20 or £2. The department has launched a 12-week consultation to allow bookmakers to state which option they prefer.
The clampdown on FOBTs in the UK is the "most pressing challenge" for William Hill, according to George Salmon, equity analyst at Hargreaves Lansdown.
"The government consultation is still ongoing, but it’s as much of a sure thing as anything in gambling that the new limit on stakes will be well below the current £100 cap," he said.
"Slashing the maximum to just £2 is still among the favourites, and with machines responsible for millions in revenues each year, this would seriously impact the group’s bottom line."
Chief executive Philip Bowcock said the company looks “forward to receiving much needed clarity” from the UK government.
He added: "Overall, I am encouraged by the huge amount of progress the William Hill team has made this year in improving our customer proposition and delivering on our strategy. We remain on track to deliver on market expectations for 2017."
Numis 'cannot ignore' challenges of UK and Australian regulatory headwinds
Numis left its rating at ‘hold’ and target price at 289p, saying that revenue was in line with its expectations with good progress in online and a solid performance in retail offsetting challenges in Australia.
Shares in the company were flat in morning trading at 276p.
“We remain supportive of the clear improvements made by the company over the last 12 months,” Numis said.
“However, we cannot ignore the challenges William Hill still faces from both UK and Australian regulatory headwinds (Triennial review, potential increase in both UK and Australia POC tax). “