Philip Bowcock, chief executive at William Hill, suggests that his company has the brand presence to withstand the loss of TV advertising, writes Scott Longley.
Philip Bowcock, chief executive of William Hill, said he personally would like to see the gambling industry reined in when it comes to TV advertising and suggested his company would benefit from the general lack of available airtime due to its existing brand recognition.
Bowcock was speaking after the company released its well-received half-year results which showed the online business managing a partial turnaround led by a 10 percent rise in gaming revenues while the UK retail results were solid despite the comparator period from last year which included the Euros.
The results came on the same day as The Times newspaper launched another attack on the industry which broadened out on previous attacks regarding FOBTs to point to perceived government failures with regard to online stakes and ads for gambling on TV.
Bowcock said the industry needed to “get back to being on the front foot” in defending its right to do business but suggested it should be prepared to cede ground on advertising. “My personal view is that there is too much gambling advertising on TV,” he said. “But from a business perspective, we think we already have the brand recognition. It is an additional barrier to entry.”
He added that he felt the sector was working towards solutions with regard to concerns over the numbers of people that are resorting to self-exclusion in the UK. Pointing to the soon to be fully-introduced national self-exclusion scheme, he added that the sector now “has the algorithms, we can see the markers of harm.”
Presenting the results to analysts, Bowcock said the UK high-street sector was awaiting the recommendations of the government’s triennial review but he made the point that whatever was said about staking levels for FOBTs, the industry would likely have a year to get to grips with the situation ahead of full implementation.
“There will be a 12-week consultation period after the announcement which we expect in October and then a six to nine-month implementation period,” he said. “In effect, it is a year away so we will have time to get organised.”
Should the review come up with a £2 stake limit for B3 machines in betting shops, it would crater William Hill’s retail profit. Paul Leyland, partner at gambling consultancy Regulus Partners, pointed out that depending on substitution levels across the machine types, it could more than wipe our retail profit and substantially hurt total group profit where retail represents 82 percent of the total.
Leyland added, though, that the company is “no longer in an operational tailspin”, a fact recognised by investors who helped push the share price up 8 percent on the day. Bowcock said the company was being rewarded for “doing what we said we’d do.”
The self-help saw the online net revenues rise 5 percent to £290m helped by a 10 percent rise in gaming revenues. Sportsbook was down 1 percent due largely to a four basis points fall in gross margin to 6.9 percent. Stripping out last year’s Euros, the sportsbook amounts wagered was up 15 percent while active players rose 7 percent.
In retail, net revenue was down 2 percent with OTC revenue down 7 percent and gaming up 3 percent. Bowcock admitted that when it came to the introduction of self-service betting terminals (SSBTs) William Hill was slightly off the pace in terms of numbers but he said the proprietary terminals it was installing were better than the competition in terms of product.
The company is also introducing a new ‘Plus’ loyalty card for SSBT customers which it said that 80,000 customers have signed up to but he admitted the company “didn’t have an awful lot of omni-channel customers.”
In terms of international operations, Bowcock said the Australian business had been concentrating on improving the product ahead potential regulatory change. The government is set to introduce a ban on credit betting and it is also considering following the lead of South Australia and introducing a point of consumption tax regime.
A brighter regulatory situation exists in the US where William Hill has hopes that the Supreme Court decision on sports-betting in New Jersey could open up the wider US market.
Analysts welcomed the signs of a reversal of fortunes. Simon Davies at Canaccord Genuity said it was a “reassuring performance”, adding that the “key positive” was the online revival. Ivor Jones at Peel Hunt added that the overall results – which saw pre-tax profit fall 7 percent to £93.5m – “made a step backwards appear like a step forwards.”
“Today’s interims seem like progress; wagering was in growth across the business, which appears to have gained market share in the UK,” Jones added.