- 888 Holdings issues profit warning.
- Revenue affected by sports results.
- UK gambling regulations tighten.
The owner of William Hill, 888 Holdings, issued a profit warning due to new regulatory changes and ‘customer-friendly’ sports results.
In early trading, 888 Holdings shares dropped by 17.4% to 91.25p after the wagering group informed investors that earnings before deductions for 2023 would fall short of expectations due to more challenging trading conditions.
The revenue for the third quarter fell below projections, and 888 anticipates that revenues will be 10 percent lower at approximately £400 million.
The FTSE 250 business, which also owns the online gaming brand Mr. Green, attributed ‘customer-friendly sporting results’ for impacting margins across the UK and overseas in September.
Additionally, 888 mentioned that compliance regulations were hindering the recovery of customer activity and revenues across “dotcom markets,” while stricter gambling laws had affected UK commerce.
Lord Mendelsohn, executive chair of 888, stated, “We are making significant strides to improve the quality and long-term sustainability of our revenues. However, performance in the third quarter fell below our expectations, and we now anticipate ending the year with EBITDA below our prior expectation.”
However, its retail division, consisting of approximately 1,350 William Hill outlets, continues to perform well, with ‘broadly stable’ revenue compared to the previous year, according to 888.
Revenues in the final three months of 2023 are expected to be higher than in the third quarter but still slightly lower compared to the same period last year.
Mendelsohn added, “The team’s efforts so far this year have established a very solid foundation for the company’s future, and our synergy delivery is on track.”
During the summer, 888 announced that Per Widerstrom, the former director of Fortuna Entertainment Group, the largest betting company in Central and Eastern Europe, would become its next CEO.
He will succeed Itai Pazner, who resigned in January after 888 launched an investigation into suspected money laundering in some Middle Eastern VIP customer accounts.
William Hill received a record-breaking fine of £19.2 million for “widespread and alarming” social responsibility and anti-money laundering failures.
The Gambling Commission discovered that one player was allowed to open an account and spend £23,000 in just 20 minutes without any verification. While another was able to promptly place a £100,000 wager despite having a £70,000 credit limit.
In the past year, the commission has issued new guidance aimed at cracking down on “VIP schemes” and mandated that betting companies implement more stringent measures to identify at-risk consumers.
These modifications occurred prior to the publication of a white paper outlining the UK government’s intentions to reform the gambling industry, which is likely to result in the introduction of even stricter regulations.
