Bookmaker William Hill plc (LON:WMH) sees full-year profit-beating expectations but has kicked off a strategic review of its Australia business following a regulatory clampdown.
Adjusted operating profit for the year to December 26 is anticipated to come to £290mln, up 11% on the previous year and ahead of expectations.
READ: William Hill worth a modest punt according to Credit Suisse
The company said the better-than-expected profit was driven by growth in the UK and the US, stronger gross win margin and the benefits of its transformation programme.
However, the Australia business faces a hit to profits from a government ban on bookmakers offering lines of credit as part of a major crackdown on problem gambling.
A 15% point of consumption tax on online gambling has also been rolling out across a number of Australian states. The levy is designed to claw back taxes from foreign bookmakers, who have until now enjoyed tax concessions.
“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,” William Hill said.
READ: William Hill in merger talks with Australian rival CrownBet
William Hill said the Australian business was affected by reduced credit betting volumes in the past nine weeks.
Yet, overall retail and online gross wins were ahead of expectations and “significantly” ahead of the same period in 2016 thanks to favourable football and horseracing results.
Wagering growth rates slowed but group net revenue was “very strong”, the company said.
The group added that gaming growth rates continued to accelerate in online but eased in retail.
"We have delivered a strong result in 2017, reflecting our focus on rejuvenating online, growing the US and building an attractive omni-channel proposition,” said chief executive Phil Bowcock.
“We are excited about the opportunities ahead in 2018 - a World Cup year - with our competitive position reasserted in the UK and with the potential for sports betting to open up in the US."