UK bookies William Hill’s 2013 operating profit will come in around £334m, in line with analysts’ expectations, according to a trading update issued on Friday. Full audited results will be issued on Feb. 28, but Hills’ back of the napkin computations expect full year revenue to rise 16%, with retail up 8% and online up 10%. Hills’ shares closed out Friday’s trading down 3.4% to 360.1p.
Hills’ Q4 figures were even more impressive, with online revenue up 14%. Online sportsbook revenue rose 30% thanks to a 38% rise in handle and a gross win margin of 8.1%. Mobile sports wagers were up 97% year-on-year. Online gaming revenue was up a more modest 2%, but mobile gaming revenue was up 199%, accounting for 23% of the total online gaming pie.
Q4 retail revenue rose 13% (slipping to 4% once you strip away the effect of the UK’s new Machine Games Duty). Over-the-counter (OTC) wagering revenue rose 4%, twice the 2% rise in OTC handle thanks to a healthy 20.3% gross win margin. Gaming machine revenue rose 24% (up just 3% after accounting for the MGD effect) as gross win per machine per week rose £2 to £920.
On a regional basis, Hills’ Australian divisions Sportingbet and TomWaterhouse.com struggled as a result of a poor showing during the Spring Carnival racing period. However, Hills says improved marketing has resulted in a “significant reduction” in cost per acquisition from H1 2013, while December 2013 saw TomWaterhouse.com record its first monthly profit. In the United States, Hills’ Nevada-based sports betting operations saw handle rise 34% and revenue up over 150% thanks to an 8.3% hold.
Looking ahead, Hills CEO Ralph Topping believes the company is well-positioned to absorb the coming blows of the UK’s new point-of-consumption tax (POCT) in December 2014 and possible curbs on betting shops’ fixed-odds betting terminals (FOBT). Hills insists that it is willing to continue working with the government to implement harm reduction measures related to machine gaming, but insists that any such measures need to be based on “facts, academic research and a proper economic impact assessment,” not Daily Mail polemics.
To help keep its brand firmly fixed in UK punters’ thoughts, Hills has tapped Creative to handle its advertising account in a deal believed to be worth around £15m. Hills announced it was looking for new Mad Men in September after deciding no to re-up with agencies Fabula and Beattie McGuiness Bungay. Hills’ media planning and buying account will continue to be handled by Vizeum.
