888 profits suffer fresh regulation and ‘customer-friendly sports results’
- 888 told investors that turnover in the third quarter had missed expectations
- The firm blamed ‘customer-friendly sports results’ for the decline in revenue
- It further said that compliance regulations were slowing the recovery in sales
William Hill owner 888 Holdings has issued a profit warning after the gambling group was hit by new regulatory changes and ‘customer-friendly’ sports results.
888 Holdings shares slumped 17.4 per cent to 91.25p in early trading as the betting group told investors that earnings before nasties for 2023 would miss forecasts amid more challenging trading conditions.
Turnover in the third quarter missed expectations, and 888 predicts revenues will be around 10 per cent lower at somewhere near £400million.
Forecast: 888 Holdings warned of weaker-than-anticipated annual profits on Thursday
The FTSE 250 business, which also owns online gaming brand Mr Green, blamed ‘customer-friendly sports results’ for damaging margins across the UK and overseas in September.
888 further said that compliance regulations were slowing the recovery in customer activity and revenues across ‘dotcom markets’, while UK trade had been affected by stricter gambling rules.
Lord Mendelsohn, executive chair of 888, said: ‘We are making significant strides to improve the quality and long-term sustainability of our revenues, but performance in Q3 has been below our expectations, and this means we now expect to end the year with EBITDA below our prior expectation.’
But its retail arm, home to about 1,350 William Hill outlets, continues to perform well, with revenue ‘broadly stable’ when compared to last year, 888 said.
Revenues in the final three months of 2023 are anticipated to be higher than in the third quarter, but still modestly down year-on-year.
Mendelsohn added: ‘The hard work the team has undertaken so far this year has set very strong foundations for the future of the business, and our synergy delivery is well on track.’
Over the summer, 888 announced that Per Widerström, the former head of Fortuna Entertainment Group – Central and Eastern Europe’s biggest betting firm – would become its next chief executive.
He will succeed Itai Pazner, who resigned in January after 888 began a probe into suspected money laundering on some VIP customer accounts in the Middle East.
Soon afterwards, William Hill received a record £19.2million fine for ‘widespread and alarming’ social responsibility and anti-money-laundering failures.
The Gambling Commission found that one punter was allowed to open an account and spend £23,000 in just 20 minutes without any checks, while another was able to immediately place a £100,000 bet even though his credit limit was £70,000.
Over the past 12 months, the commission has brought in new guidance aimed at cracking down on ‘VIP schemes’ and requiring betting firms to implement more robust measures to identify at-risk customers.
These changes came ahead of a white paper detailing the UK Government’s plans for reforming the gambling industry, which is likely to result in even tougher regulations being introduced.
