Britain’s largest bookmaker William Hill is set to close 109 of its betting shops in the coming months, citing the government’s decision to increase tax on Fixed Odds Betting Terminals (FOBTs).
At the March 2014 Budget, Chancellor George Osbourne announced plans to increase the taxation of FOBTs from 20% to 25% causing the likes of Ladbrokes’ share price to plummet by 12% and William Hill to lose 3% of its market capitalisation. Shortly after Osbourne’s announcement, William Hill released a statement to the London Stock Exchange claiming the tax increase would have a £16 million impact on its finances.
Further to our previous announcement in response to the 2014 Budget, Treasury has subsequently confirmed an intention to tax the gross win attributable to both B2 and B3 content at 25% where the B3 content is provided on gaming machines in Licensed Betting Offices that host both B2 and B3 content. The total impact of this increase in MGD would be £22m (based upon 2013 machines gross win) as opposed to the previously guided £16m impact.
On April 25, William Hill revealed they plan to close 109 of its high street “Retail” betting shops, putting 420 jobs at risk and creating one-off exceptional costs of up to £24 million. After the closures William Hill will still have over 2,300 shops in its portfolio.
Ralph Topping, William Hill’s Chief Executive, said in a statement: “This is particularly disappointing as, through the economic downturn, we have worked hard to grow our retail base but this further planned increase in indirect taxation makes this action necessary.”
The announcement of closures comes on the same day William Hill released its financial figures for Q1 of 2014. Although the group experiences a 39% increase in Online Sportsbook growth and 78% in its mobile operations, total operating profit for the group decreased by 14%.
The group’s financial statement said: “performance was impacted by highly unfavourable football results in Weeks 2 and 12 of the period with an unusually high number of odds-on favourites winning in each of those weeks.
William Hill Q1 Results Highlights
- Online Sportsbook turnover increased 39%
- Mobile Sportsbook turnover increased 78%
- Online gaming net revenue growth of 16% following a 142% growth in mobile
- Bingo net revenue down 5%
- Online poker revenue down 15%
Lead image courtesy of William Hill Plc