William Hill latest operator to be hit by new UK tax laws

William Hill latest operator to be hit by new UK tax laws

Thursday, April 23, 2015 Totally Gaming
William Hill latest operator to be hit by new UK tax laws

William Hill has become the latest betting company to have suffered financial losses due to the introduction of the new UK point of consumption (POC) tax and an increase in machine games duty.

The bookmaker revealed in a trading update that group operating profit during the 13 weeks through to April 1 this year was £16m (€22.5m/$24m) less than the amount recorded in the same period last year. The loss represents a year-on-year decrease of 19 per cent.

Like all other operators offering online and land-based gaming services in the UK, William Hill has had to contend with the introduction of new laws in regards to gaming activity.

The new POC tax requires operators offering online gaming services in the UK to pay a certain rate of tax no matter where they are actually located. This rule has been introduced in an effort to generate additional tax for the UK as well as stop unlicensed companies from operating in the UK market.

In addition, land-based operators have been hit with a new tax rule that requires such companies to pay an increase rate of machine games duty. The new rate is 25 per cent higher than before.

Speaking in the trading update, William Hill chief executive, James Henderson, said that the new tax rules were the direct cause for the drop in operating profit and that the bookmaker had expected this impact.

“As expected, group operating profit was impacted by a £20m increase in gambling duties following the introduction of POC tax in December 2014 and the increase in the machine gaming duty rate in March 2015,” Henderson said.

“However, we are well positioned to benefit as the UK online market evolves following the introduction of POC tax, with our ongoing technology investments expected to benefit both product and customer experience and with a substantial marketing commitment.”

Despite the drop in operating profit, William Hill was able to achieve year-on-year revenue growth across various sections of the business.

Group revenue was up one per cent, an increase that was helped by year-on-year revenue growth within its online division and its US business. However, the firm noted that both its retail and Australian businesses suffered a drop in revenue during the quarter – down two per cent and 11 per cent respectively.

“Our international strategy continues to progress,” Hnederson said. “In Australia, the migration of Sportingbet customers to williamhill.com.au has been successfully completed, with over 95 per cent of Sportingbet VIP clients transacting on the site since launch and with both first time deposits and unique actives showing post-migration increases against Sportingbet last year.

“William Hill US continues to perform strongly, with wagering on a local currency basis 30 per cent ahead of last year.

"Looking forward, as the end of the football season draws closer, we have not as yet made up the shortfall arising from the £14m loss in Week 3 given the relatively weak first quarter sports betting margin.

“Outwith sporting results, we are making good progress on our key projects for the year, including in-house development of our responsive design front-end through Project Trafalgar, an enhanced bonus engine to further increase the competitiveness of our proprietary Vegas casino platform and the completion of our Eclipse machine roll-out in retail.”

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