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William Hill plunges into £720m loss after government crackdown on betting machines

Caitlin Morrison
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William Hill plunges into £720m loss after government crackdown on betting machines

William Hill has plunged into the red and blamed the fallout from the anticipated introduction of a £2 maximum stake on fixed odds betting terminals (FOBT) next month.

The bookmaker reported a loss of £722m for 2018, compared with profits of £147m the previous year. Revenue rose 2 per cent, from £1.59bn to £1.62bn.

The company said the huge loss was largely due to an exceptional charge of £883m linked to the government’s decision to reduce the maximum stake on FOBTs from £100 to £2.

The government announced plans to tighten the rules around the betting machines, which have been dubbed the “crack cocaine of gambling”, last year in a bid to curb gambling problems.

However, the move was met with outcry from bookmakers, who said the tougher regulation would lead to the loss of thousands of jobs in the industry.

Philip Bowcock, chief executive of William Hill, said 2018 had been a “busy and decisive year”.

“We know the next few years will require careful navigating and investment, but with a clear strategy and diverse, experienced leadership teams in place we are ready to capitalise on the opportunities available to us,” he added.

However, Emma-Lou Montgomery, associate director at Fidelity Personal Investing, said the company’s optimism may not be enough to reassure workers and investors.

The restrictions on FOBTs are expected to reduce William Hill’s profits by between £70m and £100m annually, which is “really very broad”, Ms Montgomery said.

The wide range of estimates “shows that the true impact can’t be assessed until customers have been given time to play under the new rules”, she told the Independent.

“William Hill is being cautious in setting out how bad the damage could be and with good reason. But it hasn’t sat on its hands. The fact that the group has put into play a series of measures to mitigate the impact goes in the gaming group’s favour,” she said.

“But for shareholders as well as the 4,500 or so employees in the 900 shops with the threat of closure hanging over them, they can only hope the odds are in their favour.”

She added: “Concerns about FOBTs have been the focus of attention in the sector ever since the cap was mooted. For William Hill to turn this around, replace any income lost from FOBT and move on, it may have to reshape the business.”

William Hill is not the only company facing a different future due to new gambling regulations. Rivals Ladbrokes Coral, Betfred and Paddy Power are all likely to be affected to varying degrees.

“There’s no doubt that the reduction in the maximum FOBT stake from £100 to £2 will have an impact.,” Ms Montgomery said

“What this suggests is that - as retailers and the pub industry have already found - they need to adapt to changes. And rapidly.

“And with more attention likely to focus on areas such as gambling as time goes by, and with there also likely to be calls for even greater protection for consumers, the likes of William Hill need to stay one step ahead by developing other income streams, which it is doing in the US.”