William Hill Projects £30m Loss
Announcing its trading statement, William Hill has revealed that it expects to lose £30 million over lockdown closures. However, the bookmaker also reported growth in its online operations, as more people chose to place bets at home.
Impact of Lockdown
British bookmaker William Hill has published its trading statement, at the close of the fourth quarter. It details how the company has weathered the coronavirus pandemic that affected business for the greater part of last year. Despite the lockdowns, William Hill says its total net revenue for the fourth quarter grew by 9% year on year.
The statement also reports that sportsbook staking saw an increase of 16%, thanks to expansion and boosted product offerings. Sports results were good for gross win margins, and the sportsbook net revenue went up 20% year on year.
William Hill was not entirely unscathed by COVID-19 though, as high-street retail was forced to close at a number of points during the year. Disruption to the sporting calendar also impacted the availability of betting odds. Consequently, the group’s total net revenue for the year fell by 16%, to £1,324 million.
William Hill was able to act flexibly in response to retail closures during lockdown, which saw net revenue drop by 30%. This primarily impacted the first quarter of 2020, although a knock-on effect was felt throughout the year. The business was able to recover when retail reopened, and was almost set to break even at the end of the third quarter.
However, during the fourth quarter, more restrictions were put in place, as virus rates peaked and the new variant emerged. Betting shops were forced to close again, and the year ended with an estimated loss of £30 million. William Hill confirmed that it has repaid the £24.5 million of furlough funds that it received, and that its staff received full pay throughout the year.
The trading statement points out that there were a number of highlights for William Hill during 2020, one of which was the successful integration of Mr Green, which was launched in two regions. As a result, online international net revenue went up by 12%. William Hill was able to overcome regulatory changes and the cancellation of sporting events by implementing a multi-brand strategy in combination with product improvements. This saw gaming grow by 18%.
In fact, during 2020, William Hill’s UK online net revenue grew 5%, thanks in part to platform and product improvements. As sports schedules returned to some kind of normality towards the end of the year, gaming net revenue grew by 20% in the final quarter.
The statement also notes the company’s commitment to protecting customers from gambling harms during the pandemic. It put in place special safety measures in response to concerns that the financial insecurity, stress and boredom of lockdown could contribute to a rise in problem gambling. The Betting and Gaming Council, which represents the UK’s casinos, bookmakers and online operators, led its members in a pause on TV and radio gambling adverts during the first lockdown of 2020.
William Hill’s CEO, Ulrik Bengtsson, has a positive outlook on how the company tackled the difficulties of 2020. It was a year of highs and lows, not only for its business in the UK, but its expansion into the US sports betting market too. Bengtsson said:
“2020 was a year like no other. It tested our agility and flexibility and we delivered, keeping our customers and team safe, whilst materially improving our competitive position through product enhancements and geographical expansion. The offer received for the Group recognises the substantial progress we have made as well as the opportunities and challenges ahead of us.”
William Hill has also been making headway in the US, where state by state the sports betting market is opening up. Last year it experienced a surge in its online growth there, pushing net growth up by 32%. However, lockdown restrictions kept casinos closed for long periods, and American sports events were disrupted too. As part of a pre-existing agreement with Caesars, William Hill took over its sportsbooks.
Despite the pressures of the pandemic, William Hill was able to expand its US operations into five new states. It also launched its mobile platform in five states, causing net revenue to grow 121% during the final quarter. Both CBS Sports and ESPN, two us the US’s most popular sports media groups, now feature William Hill’s odds and betting apps.
Without a doubt, the biggest news for William Hill in 2020 was its acquisition by Caesars Entertainment. The boards of both companies announced that they had reached an agreement on September 30th, which would see Caesars buy out all of William Hills’ assets for a price of 272p per share. On November 19th, shareholders agreed to the terms of the acquisition.
All Caesars needs to do now is obtain approvals from gaming authorities in the US. Once that has been done, it could be set to complete the acquisition as soon as March 2021. Caesars’ interest lies mainly in the value of William Hill’s wealth of experience in sports betting, something that most gambling operators in the US are lacking. Bengtsson added:
“I remain immensely proud of the William Hill team which has been relentless in its focus on delivering a great product and service to our customers, with player safety at its heart. Customer, Team, Execution have been our guiding lights through this unusual year, and they will remain so as we look forward through 2021.”
Despite the unprecedented pressures of the pandemic in 2020, the future looks bright for William Hill. Overall, its revenues did drop, but online interactions rose in response to a targeted strategy. It is making leaps and bounds in the US, although the future of William Hill’s UK operations remains uncertain, especially with the government’s review of the 2005 Gambling Act underway. William Hill will publish its financial results for 2020 soon. An announcement is to be made on February 24th.