William Hill hoping stake in US market pays off
THE Government’s move to cut the maximum stake on in-shop gaming machines to £2 dominated 2019.
William Hill closed 713 shops in the UK as a result, while redundancy and other costs pushed the group into a loss for the year.
However, the change was less painful than expected. Retail profits came in ahead of expectations for the year as whole, with customers moving to stores that remain open.
Unfortunately for William Hill, this isn’t the end of the road for new regulation. Attention is moving beyond the high street to online operations weighing on digital profits this time round. A ban on gambling with credit cards could knock £5-£10million off profit next year, too.
But it’s not game over for bookies. William Hill’s app has had a facelift, and the acquisition of Swedish digital specialist Mr Green should add further expertise. An enhanced European position should reduce risk, although the continent comes with its own regulatory challenges and debt has risen after the deal.
The US presents another exciting avenue. We think it has the potential to become the world’s most valuable betting market. William Hill has run books in over 100 casinos in Nevada for some time, which historically had a near-monopoly on sports betting. Now the Supreme Court has cleared the way for gambling across the country and William Hill has been quick out the gate.
Early growth has been promising, but the market will be no walkover. Rivals are scrambling to secure a piece of the action, and GVC and Paddy Power Betfair should not be taken lightly. Memories of William
Hill’s unsuccessful foray into Australia still linger.
The shares trade at 12.3 times expected earnings, slightly above their longer-term average of 12. The group is targeting a minimum dividend of 8p per share through the current transition, with a dividend yield of 5.2 per cent forecasted.
“This article is designed for investors who make their own decisions without advice, if unsure whether an investment is right for you, you shouldseek advice. Shares can rise and fall in value so you could get back less than you invest.”