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William Hill narrows losses after cutting shop estate
26th February, 14:29William Hill, the UK bookmaker, almost wiped out its losses from last year after shrinking its shop estate following the implementation of punitive regulations on betting machines in the UK.
The FTSE 250 gambling company reported on Wednesday that losses before tax had improved from £722m to £37.6m in the year to December 2019 after it closed 713 shops followingthe cut in the maximum stake permitted on fixed odds betting terminals -- a highly addictive type of slot machine -- in April.
Adjusted operating profits, which take out the restructuring costs associated with the stake cut, were down 37 per cent to £147m but were still ahead of consensus and management expectations, in part due to beneficial sports results.
Betting companies with high exposure to the UK have had to take on a string of regulatory measures in the past year as the UK gambling authority has increased its efforts to tackle addiction. As well as the cut to the stake on FOBTs -- from £100 to £2 -- companies have faced increased tax on online gaming and stricter age verification.
A ban on using credit cards to gamble is due to be imposed in April this year.
"I think it's important to recognise that we will always have regulation and we will always have regulatory challenges," said Ulrik Bengtsson, who took over as chief executive in September, adding there was "real appetite for a sensible and evidence based review" of the UK's gambling legislation.
Companies have begun to turn their attention to other countries, particularly the US where an act banning the legalisation of sports betting was overturned in May 2018.
This month William Hill, which has been active in Nevada since 2012, announced a media partnership with the US TV network CBS that will allow it to provide betting odds across the broadcaster's TV channels and websites.
It expects to break even in the US this year.
William Hill said it had made a "decisive response" to the stake cut and there were no plans to close more high street shops. Revenues across its retail estate were down 13 per cent on a like-for-like basis, which it said was better than expected.
Mr Bengtsson said the company now made almost a quarter of its revenues outside of the UK, as opposed to 15 per cent in 2018. He said that he had an ambition to grow that share although would not give specific figures.
Paul Leyland, an analyst at Regulus Partners, warned that despite its expansion overseas, William Hill still had around 70 per cent exposure to the UK "which faces a potentially bruising review of its gambling regulations".