Ladbrokes and William Hill Report Tough 2007
Ladbrokes and William Hill are possibly the two most recognised names in the UK gambling industry, however both companies have recently reported a tough 2007 to their shareholders. The landscape of online gaming operators is particularly difficult to predict as earlier this month we brought you news that iPoker and 888.com, two companies greatly impacted by UIGEA, were actually reporting revenue increases for 2007.
William Hill released their end of year report for 2007 this week, which saw a gross win increase of 6% at £983.7 million, but operating profits were down 2% at £286.7 million. They had a particularly disappointing internet performance in 2007, with gross win down by £10.7 million. It was speculated in the UK business press this week that the group would be buying rivals Paddy Power, rumours which have been dismissed by CEO Ralph Topping.
Ladbrokes, on the other hand, have reported increases in their gross profit and win in 2007, with win up 30% to £1.2 billion and profits up 45% to £344.2 million. The poker room, however, has not been so successful. Extra costs from customer acquisitions, rakeback and other promotions has seen poker net revenue decline by 11% to £31 million. Unique active players for the year were down 1.9 percent at 151,000 and yield per unique active player was down 9.7 percent to £205.
This is all indicative of how tough and competitive the poker landscape is becoming. Recently PartyPoker reported a similar loss in profits, despite an increase in active players, because of a significant revamp in their customer loyalty programme. As customers are becoming more savvy and selective about their choice of poker room, the profit margins for poker rooms that manage to retain them get smaller.
In their company report Ladbrokes detailed the reasons for the decline and plans for the future:
"Net revenue for the second half declined year on year by 7.8 percent to £15.3 million. In the second half our customer loyalty programme was enhanced and 3D poker was soft launched in November. The popular Ladbrokes Poker Cruise took place early in 2008 and the coming year will see further developments to the site including multi-currency tables and a full launch of the new 3D application, complemented by a more aggressive affiliates programme."
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