William Hill Issues Profit Warning After Disappointing Cheltenham
While for many the Cheltenham Festival was a week of great fun and entertainment it seems that this was not the case for bookmakers William Hill.
Due to poor horse racing results at the festival combined with high-value online customers reducing their gambling, William Hill was forced to issue a profit warning. In a surprise update this week the bookmaker said that it expects operating profit for this year to fall to between £260 million and £280 million from £291 million last year. Prior to the warning analysts’ average forecast was for profit in the region of £307 million.
As a result the bookmaker’s shares fell more than 13% and shares in other bookmakers, such as Ladbrokes and Paddy Power Betfair, also dropped.
According to William Hill’s chief executive James Henderson, the Cheltenham festival was the worst in living memory and unfavourable European football results left online revenues about £15 million worse than expected.
Cheltenham was a disaster for bookmakers as three out of four favourites in championship races won and the second favourite won the fourth. Overall, nine favourites and one joint favourite won in the 28 races over four days.
Henderson also said that customers are limiting their time spent gambling online or asking to be excluded. So called ‘time out’ requests by customers have increased by more than 50% this year with a total cost of £2 million so far. As a result online revenues are expected to fall by £20 –£25 million this year.
While these issues affect the entire industry William Hill is heaviest hit as it is the UK’s biggest online operator and has many high spending customers.