British gambling giant William Hill has seen more than $770.6 million wiped from its value in less than a week. Shares in William Hill are trading 23.44% less than on February 21st because of poor financial results.
William Hill is publicly traded on the London Stock Exchange so must report its financial figures regularly. Year end results always garner the interest of investors as they show the performance and health of a company. Those investors decided William Hill looks in trouble.
Shares in William Hill traded at 192.40 pence per share at the close of business on February 21st. The same shares now only cost 147.30 pence per share, a reduction of 23.44%. This equates to £393,723,000 (AU$770,401,731) fall in the value of the once shining light of British gambling.
Another Huge Loss for William Hill
William Hill posted an astronomical loss of £722 million (A$1.412 billion) in 2018. It lost an additional £37.6 million (AU$73.57 million) for the year ending December 31, 2019. There are few companies in the world that can sustain losses of that size over a significant period of time.
Net revenue fell 2% to £1.58 billion (AU3.09 billion). This, in turn, led to a 37% fall in adjusted operating profit, but that was wiped out by costs.
The company partly blamed the British government for its downturn in fortunes.
Fixed Odds Betting Terminals (FOBT) give players the chance to play casino games in betting shops. They also virtual horse racing and other gambling games. £100 (AU$194.10) per spins was the maximum bet allowed on FOBTs, which led to thousands of gamblers losing small fortunes. Campaigners for the banning of FOBTs called the machines “The crack cocaine of gambling.”
More than 33,000 FOBTs exist in the UK and they made an average of £53,000 (AU$103,556) per machine. Do the maths and that equates to £1.8 billion (AU$3.52 billion) per year.
The British government forced gambling companies, including William Hill, to slash the maximum bet. It now stands at only £2 (AU$3.88) per spin, 50-times lower than previously.
Worse To Come For William Hill?
Things could get even worse for William Hill partly because of lost FOBT revenue. The company closed 713 betting shops in the third-quarter of 2019, the effects of which are still being felt.
An increase in remote gambling tax in the UK saw the company swallow an additional £13 million (AU$24.45 million) in costs. It also owes £3 million (AU$5.87 million) to the UK Gambling Commission for a fine its newly acquired Mr Green casino was hit with.
Mr Green received the fine for failing to protect problem gamblers and guard against money laundering.
One customer was able to deposit £1 million (AU$1.94 million) despite not showing the appropriate source of income proof. Another lost all of their £50,000 (AU$97,745) winnings before depositing thousands more.
William Hill is responsible for the fine’s payment as they acquired the company for £242 million (AU$474.155 million) in 2019.
Could a Takeover Be Imminent?
It is only five months ago that William Hill was the subject of a potential takeover. 888 and Rank offered 352 pence per share, which was rejected by shareholders. That price now looks massively inflated compared to the current share price, which is half that figure.
The company is thriving in the United States where its market share increased to 25% from 15%. It has operated in Nevada since 2012 and takes one-on-four bets.
William Hill withdrew from Australia in March 2018 when it sold its business to CrownBet for A$314 million. CrownBet is owned by The Stars Group who are in process of a mega merger with Betfair owners Flutter Entertainment.