William Hill consider Australian exit citing regulatory pressures
The hostile environment for gambling operators in Australia may soon claim its most high-profile victim with William Hill considering withdrawing from the market.
The company announced last week that they were launching a strategic review of the business in the face of increased regulation and taxation.
Hills’ Australian arm was created through the acquisition of Sportingbet, including the Centrebet brand, and tomwaterhouse.com in 2013 and employs around 325 people based in Sydney, Darwin and Manila.
However, they have found the environment tough, with the industry facing similar criticism and regulatory pressures to those present in the British market.
The company had tentative talks about a deal with rivals Crownbet that came to nothing, and do not have the scale of the dominant players in Australia – Sportsbet, owned by Paddy Power Betfair, and the newly merged Tabcorp and Tatts Group.
Hills said: “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.”
Citigroup have been appointed as advisers on a sale of their Australian business, although reports from Australia suggesting a deal could be done by next month’s results announcement are understood to be very ambitious.
William Hill Australia could fetch from Aus$200 million to Aus$300 million (approx £115.5m-£173m), although all options are understood to be on the table, including splitting the business off into a joint-venture with another partner or a merger.
Analysts at Goodbody said: “While losing international diversification is a negative, the [William Hill] Australian business is likely to struggle to remain profitable as a standalone business given likely increased taxation and the credit betting ban. Without scale divesting of the business makes sense.”
The news came as the bookmaker brought forward a trading update that revealed the company’s overall profits for 2017 would be ahead of expectations, thanks to a run of favourable sports results.
Hills said full-year adjusted operating profit for 2017 was expected to be around £290 million, up 11 per cent on the previous year.
A statement read: “This is ahead of expectations, reflecting good momentum in both the UK and US markets, stronger gross win margin and the benefits of the transformation programme.”
While Australia has been challenging for Hills, the company’s business in the US puts them in a good position should the Supreme Court allow wider legalisation of sports betting.
Chief executive Philip Bowcock said: “We have delivered a strong result in 2017, reflecting our focus on rejuvenating online, growing the US and building an attractive omni-channel proposition.
“At the same time we are continuously improving how we enable customers to gamble responsibly. 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.”
It was also announced last week that William Hill are to become the first major UK operator to take SIS’s new greyhound service of UK and Irish racing for online distribution through a ‘watch and bet’ service.
PMU bounces back
France’s PMU has recorded a rise in turnover for the first time since 2011, unveiling a provisional operating figure of €9.92 billion.
That represents a two per cent increase on 2016’s totals, which themselves were essentially flat after four years of declining business.
Domestic turnover on racing increased by 0.9 per cent, while the company’s booming international division’s ten per cent increase in contributions ensured that the overall figure for horseracing bets matched the two per cent increase across the business.
With no major international football tournament during the summer, turnover on sport declined on 2016 – when France hosted the European Championship – but still returned increased revenue to the business, as did the poker division.
The PMU is currently under the leadership of interim chief Alain Resplandy-Bernard, who stepped up following the departure of director general Xavier Hurstel last November.
“The implementation of the PMU’s strategic plan is beginning to bear results and in 2017 the PMU returned to the path of growth,” he said.
Record prize-money at Ascot
Ascot is not relying on the pomp and circumstance surrounding the course to attract the best runners as it announced record prize-money for 2018.
In all there will be £13,452,000 on offer this year, up £1.2m, or ten per cent higher, than in 2017 and does not include the industry-owned Qipco British Champions Day. Prize-money at Royal Ascot is also up ten per cent at £7,305,000, while the Qipco-sponsored King George VI & Queen Elizabeth Stakes is up £100,000 to £1,250,000.
The track’s executive contribution to prize-money in 2018 is £7.1m, a rise of nine per cent, with the large independent courses such as Ascot having foregone the extra income generated by the government’s levy reforms to meet the sport’s strategy of funnelling those funds to the lower and middle tiers.
Ascot’s director of racing Nick Smith said: “For us it is a real balancing act. We have got to make sure the Group 1 races remain competitive on the international stage. We’ve got to make sure these races move forward in an appropriate way.”
No race at Royal Ascot will be run for less than £90,000 – Smith said the ambition was to increase that to £100,000 in the near future – and Group 1 prize-money now begins at £500,000, rather than £400,000.
Smith added: “We’re very fortunate in Britain, and specifically at Royal Ascot and with the King George, that there is considerable enhancement to breeding stock by winning, given their enormous profile. But it would be complacent and inappropriate to rely on that.”
RaceTech extend coverage
RaceTech is to expand its outside broadcast portfolio to include coverage of race meetings at Leicester, Stratford and Taunton racecourses, providing full HD pictures for Racing UK from April 1.
The contract takes RaceTech’s total coverage for UK horseracing to more than 850 race fixtures annually.
Chief executive John Bozza said RaceTech was delighted to strengthen its relationship with Racing UK, adding: “The RaceTech crews are looking forward to working with the teams at Leicester, Stratford and Taunton and further supporting our vision of being the technical partner of choice for the UK’s racecourses.”