UK bookmaker William Hill is warning that a tougher regulatory climate in Britain and the costs of its continuing U.S. expansion will lower its profits for the year.
The company issued an announcement cutting its profit estimates for the year. The announcement caused William Hill stock to initially fall by about 9 percent.
William Hill has been a leader in the growing U.S. sports betting industry and continues to expand its operations as more U.S. states legalize sports betting. The bookmaker has opened 18 sports books in the U.S.
“In three year’s time, we should clearly see the U.S. being profitable,” Chief Executive Philip Bowcock told Reuters, saying that higher advertising costs for the company’s mobile platform would hurt earnings in the meantime.
William Hill has committed about $157 to $170 million for expansion in the U.S. for 2019, he said. However, the company expects to lose about $20 million for the same period.
In other markets, the bookmaker said it has been hurt by unfavorable betting results.
“We have benefited from the later stages of the World Cup but otherwise football and racing margins have been weaker than expected, including three loss-making weeks on horseracing during the summer and customer-friendly football results during the international break in October,” Bowcock said in the report. “Retail continues to be challenged by the wider high street conditions and we have seen gaming as well as sportsbook revenues decline in the period.”
William Hill is also facing the changing regulatory climate in Britain, which is preparing to slash the maximum bet allowed on fixed odds betting terminals from 100 pounds to just 2 pounds in October 2019. That will be accompanied by a rise in taxes on online gambling in the UK.
The bookmaker expects the cut will mean the closing of about 900 UK shops, which could result in loss of about 4,500 jobs. The company said it is considering other gaming options, such as sports betting terminals, and is in talks with landlords to lower rents, Reuters reported.
The company said it expects that preparing for changes in regulations and taxes across its business would reduce its online profits by 20 million pounds this year. The company said that applying tougher problem gambling and money laundering procedures has also affected profits.
The company forecast a total operating profit of 225-245 million pounds for 2018, down from 291.3 million pounds in 2017.
