Spreading their bets
Bookies redouble expansion in the US after run of rotten luck at home
BRITAIN’S biggest bookmakers are redoubling their efforts to conquer the US after feeling pain in their home market, with both William Hill and Paddy Power Betfair ramping up their expansion across the Atlantic.
William Hill has announced deals with a dozen casinos in Mississippi and West Virginia and is in discussions with operators across a further 14 states.
Meanwhile, Paddy Power Betfair said its recently acquired US subsidiary Fanduel had secured a co-operation agreement with Boyd Gaming. The deal gives the Ireland-headquartered company “potential” access to 15 states.
Uk-based bookies are scrambling to grab a slice of the newly legalised sports betting market in the US, after Supreme Court judges in May backed a New Jersey state ruling to overturn a decades-long ban. The legalisation is expected to be steadily rolled out across the country.
The announcements came as William Hill, the UK’S second-largest bookmaker, took a near-£900m hit in its first half following the Government’s decision to slash the maximum stakes on fixed-odds betting terminals (FOBT).
Gamblers will only be able to wager £2 a time on the machines, down from £100 previously, after pressure from critics who dubbed them the “crack cocaine of gambling”. However bookies warned that the move would lead to large-scale store closures as well as heavy job losses.
The FOBT cap is yet to be enforced but William Hill’s high street stores still saw a 3pc decline in revenues and 7pc drop in profits over the six months to June 26, despite the benefit of the World Cup. Its online business fared slightly better, with revenues up 11pc and profits up 5pc.
Overall revenues rose 3pc to £802.6m but it swung to an £820m half-year pre-tax loss, from a profit of £96.3m in the same period last year. The bulk of this was driven by a £882.8m non-cash impairment to its retail business in the wake of the FOBT review. There was “never a good time” to take the write-down, chief executive Philip Bowcock told The Daily Telegraph, explaining it was better to make an upfront decision.
In a further sign of bookmakers’ eagerness to crack the US, earlier this week GVC, Britain’s largest gambling company and the owner of Ladbrokes and Coral, announced a “gamechanger” deal with US casino giant MGM Resorts International in a bid to become market leader in the next three to five years.
However, Mr Bowcock said William Hill, which already operates 107 casinos in Nevada, would not have entered into such a deal. The company preferred to remain as a “stand-alone” entity rather than pursue joint ventures, he said.
“We have a little more luxury of being able to pick our deals – whether it is a stand-alone organic strategy … or whether it is doing a more strategic deal, which I would never rule out.
“But it has to be on economics that are more favourable to our stand-alone division.”
William Hill shares fell 8.1pc to
268.6p yesterday.