William Hill Struggling to Deal With New FOBT Laws
For the past eight months, lawmakers in the United Kingdom have ramped up regulations on the gambling industry. As a result, several of the top gambling operators here are losing revenue. New laws on fixed-odds betting terminals have led to William Hill struggling to increase its profits.
William Hill is one of the biggest gambling companies in the UK. Unfortunately, new regulations and expansion into the United States are taking their toll. Let’s look at what regulations have been put on this industry and how they are affecting William Hill.
UK Government Continues to Ramp up Gambling Restrictions
The UK has one of the most profitable gambling markets in the world. Millions of people gamble here through land-based shops and websites every month. Unfortunately, thousands of people here are now suffering from gambling addiction.
The government realizes this and is now working hard to step up restrictions on the industry. Back in February, lawmakers announced a wave of new gambling advertisement laws. There is also a ban being considered on using credit cards to gamble.
In April, the government here announced a “National Strategy” to combat gambling addiction. Several gambling addiction treatment centers are now opening around the country.
One of the biggest regulations made here is on FOBTs. In the past, these machines would accept wagers up to £100. Now, the largest possible bets have been lowered to just £2. The government claims that FOBTs are one of the leading causes of gambling addiction in the UK.
It’s great to see lawmakers take an active approach to combat problem gambling. Unfortunately, it’s led to William Hill struggling to increase its profit margins.
William Hill Struggling With New Laws on FOBTs
Last month, we covered news on how the UK gambling crackdown is affecting land-based betting shops. Most of the gambling shops in this country rely on FOBTs to bring in revenue. With the maximum stake now lowered, many major gaming companies are seeing their revenue earnings plummet.
New revenue reports show that William Hill is being severely impacted by the new laws. Through the first six months of 2019, this company’s net revenue increased by just 1% year-on-year to £811.7 million. Land-based shops account for 48% of this revenue.
Unfortunately, this does not mean the company is experiencing a profit increase. In fact, profit earnings have dipped significantly this year. The lowered FOBT wagers and cost of expanding into the US has lowered profits by an astounding 33%.
William Hill struggling to make a profit from its land-based shops isn’t shocking given the new regulations. To see this company lose money on the US market, however, is a little surprising.
Expansion Into the US Is a Risk for William Hill
Since May of 2018, the US has allowed individual states to set their own laws on sports betting. In the past, only Nevada was legally allowed to offer sports betting odds. Today, 10 states have outright legalized sports betting and several more have pending legislation to allow it.
The states now offering sports betting odds are teaming up with companies that operate online gambling sites in Europe to offer sports gambling odds inside casinos. William Hill is now active in eight US states including Nevada and New Jersey. Unfortunately, the cost of operating here is taking its toll.
As we just mentioned, expansion into the United States has lowered the company’s profit by 33%. That isn’t concerning company officials. Philip Bowcock, chief executive of the company, is praising the positive results seen in the US market, as reported by the Yorkshire Post.
“We continue to expand rapidly in the US, both in Nevada and in the new states, with over $1bn wagered with us in the first half,” he said. “Online international revenues have grown strongly, up 66%, with the acquisition of Mr. Green. We are becoming more diversified with non-UK markets now contributing a third of online revenues, up from just 24% last year.”
We’ll need to wait and see how William Hill deals with its retail betting shops losing money. In time, this company may choose to offer all gambling services online. Make sure to stay tuned for more updates on this situation over the next few months!
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