William Hill Gets Boost as Horse Racing TV Spat Hurts Rivals

Updated on
  • Bookmaker’s shops showed all races as screens blank elsewhere
  • Shares gain most in more than a year as profit at top end

William Hill betting shop

Photographer: Rogan Macdonald/Bloomberg

The inability of competitors to screen all U.K. horse races in betting shops gave a boost to British bookmaker William Hill Plc in the first half of the year.

Sports wagers placed at William Hill outlets rose 2 percent to 1.2 billion pounds ($1.6 billion) in the period as the company avoided a spat with a major racetrack owner that prevented most of its main rivals from showing races from 15 tracks. Ladbrokes Coral Plc, whose outlets were among those affected by the partial blackout, last week reported a 7 percent drop in stakes placed over the counter.

Avoiding the dispute handed an advantage to William Hill, which still gets more than half its revenue from betting shops. Chief Executive Officer Philip Bowcock also reported an improved performance in the online business, whose slow development has seen the company fall behind competitors in recent years. The shares gained as much as 12 percent, the steepest advance in more than a year.

“The results show improved momentum in the business with the implication of market-share gains,” Ivor Jones, an analyst at Peel Hunt, said in a note, raising his recommendation to add from hold.

While down 1 percent on the prior year, first-half adjusted operating profit of 129.5 million pounds was at the top end of a range of estimates between 121 million pounds and 130 million pounds. The decline was caused by the absence of a major soccer event in a period that last year included the Euro 2016 soccer tournament.

Steering clear of the broadcasting row “played a part” in the retail division’s first-half outperformance, Bowcock said. The seven-month dispute ended last week when Ladbrokes Coral and Betfred both reached media rights deals with track owner The Racing Partnership.

William Hill also benefited from additional horse racing fixtures and installing more sports-betting terminals in its shops, Bowcock said.

In the online business, sports wagering increased 11 percent to 2.49 billion pounds. Stripping out the three weeks that last year included Euro 2016, the growth was 13 percent. The digital market is “maturing,” Bowcock said, with industry growth slowing from the 20 percent-plus rates of the past.

Regulatory Risks

In the fourth quarter, William Hill and its rivals face the outcome of a U.K. government review of the gambling industry that may result in stricter controls on gambling machines in betting shops. William Hill also faces the prospect of a potential ban on credit betting in Australia, where its online business is one of the market leaders.

“Regulatory risk continues to limit the progress the share price can make,” Peel Hunt’s Jones said in the note.

(Updates with regulatory risks in penultimate paragraph.)
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