William Hill bookmakers share price slumps after low football and racing margins

It could be a good time to buy William Hill shares which are currently trading at 175p

William Hill share prices rose when it was announced that the United States of America would be opening up for business in the coming years, although they have taken a more recent downturn after a profit warning was issued by one of the world’s leading bookmakers.

Chiefs have warned that profits would be lower than anticipated in 2018, citing tougher regulation although that hasn’t stopped bet365 from continuing its astonishing growth, with William Hill bookmakers board members likely to be held accountable for the group’s stuttering performance.

It is believed that full operating profit will be somewhere between £225m and £245m, with the bookmaker having enjoyed bigger profits of £291m in the previous twelve months.

It appears as though stiffer regulation has been a contributory factor, with chief executive Phillip Bowcock admitting that it’s been difficult thanks to more stringent checks on online customers, although many would argue that this falls into an operator ensuring that their players are gambling responsibly.

Tax changes have also been highlighted as a possible reason for downturn in profits, with profits expected to be down £20m in 2018 and £25m in 2019, with the group hoping that the US opening up will then see profits grow again by 2020.

Chief executive Philip Bowcock said: “Looking at the second half performance so far, we have benefited from the later stages of the World Cup but otherwise football and racing margins have been weaker than expected, including three loss-making weeks on horseracing during the summer and customer-friendly football results during the international break in October.

“Retail continues to be challenged by the wider high street conditions and we have seen gaming as well as sportsbook revenues decline in the period.”

A rosier picture is emerging in the US where Hills have now started trading and it appears that $200m has so far been wagered, with the group’s goal now to operate in every possible state.

“I’m pleased to report that we’ve built on our market leading position in Nevada to make rapid progress in other states as they legalise sports betting, and are the only company to be taking sports bets in the first five states to have regulated,” Bowcock added.