Increased UK machine games and online gaming taxes take their toll
British online and land gambling operator William Hill plc has posted H1-2015 results to end June reporting a 12 percent fall in operating profit, which the company attributes to increased machine games duty and a new tax on bets made online by UK-based customers.
Operating profit was GBP 155.7 million for the half-year, down from GBP 176.9 million in the comparative period in 2014.
Group revenue was almost flat at GBP 808.1 million, with encouraging online growth, especially in Australia, of 7 percent.
London analysts said that the new taxation on FOBTs and online gambling activity has cost William Hill GBP 44 million so far, hammering pre-tax profits by 35 percent to GBP 78.7 million.
Shares in the land and online bookmaker fell by over 6 percent Friday following the results.
The group said the increase in duty on fixed-odds betting terminals from 20 percent to 25 percent introduced last March, as well as higher taxes on online betting was reflected in the lower profits.
Chief executive James Henderson said: 'We have delivered a good operational performance in the past six months during a period of significant regulatory and taxation change for the industry.
'Whilst factors such as the Point of Consumption Tax and the increase in the Machine Games Duty rate have impacted our cost base as expected, we continue to progress our strategy and invest in our long-term growth drivers.'
Despite the challenges, the group's digital operations improved revenues by 16 percent, whilst gaming machine revenues were up just one percentage point with adjusted gross win per machine week up to GBP 949.
Looking ahead, William Hill warned that the introduction of the National Living Wage for workers over 25 is expected to cost it GBP 1million to GBP 2million in 2016, whilst profits would likely be further impacted by the 'GBP 50 journey' during the second half.
The latter refers to betting rules implemented by the UK government this year requiring punters in betting shops making deposits of GBP 50 or more to report to the shop staff in order to make their deposits at the higher level instead of depositing directly into the machines.
On the positive side, the company says that the UK government remains attractive with growing emphasis on betting and online gambling, and good returns and growth coming from the United States business.
Online Casino News Courtesy of Infopowa