888 companies suffer from new regulation and “customer-friendly sports results”
- 888 told investors that revenue in the third quarter did not meet expectations
- The company attributed the drop in revenue to “customer-friendly sports results”
- He further said that compliance regulations were slowing the sales recovery.
William Hill owner 888 Holdings has issued a profit warning after the betting group was hit by new regulatory changes and “customer-friendly” sports results.
888 participation shares fell 17.4 per cent to 91.25 pence in early trading as the betting group told investors that profits ahead of poor results for 2023 would fall short of forecasts amid more challenging trading conditions.
Turnover in the third quarter fell short of expectations and 888 predicts revenue will be around 10 per cent lower, around £400m.
Forecast: 888 Holdings warned on Thursday of weaker-than-expected annual earnings
The FTSE 250 company, which also owns online gaming brand Mr Green, blamed “customer-friendly sporting results” for hurting margins in the UK and overseas in September.
888 further said that compliance regulations were slowing the recovery of customer activity and revenue in ‘dotcom markets’, while UK trading had been hit by tighter rules of the game.
Lord Mendelsohn, chief executive of 888, said: “We are taking significant steps to improve the quality and long-term sustainability of our revenues, but performance in the third quarter has been below our expectations, and this means we now expect end the year with EBITDA below our previous expectations.’
But its retail division, which houses about 1,350 William Hill stores, continues to perform well, with revenue “broadly stable” compared to last year, 888 said.
Revenue in the last three months of 2023 is expected to be higher than in the third quarter, but still slightly lower year-over-year.
Mendelsohn added: “The hard work the team has put in so far this year has laid a very solid foundation for the future of the business, and our synergy is on track.”
Over the summer, 888 announced that Per Widerström, former head of Fortuna Entertainment Group, the largest betting firm 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 alleged money laundering in some VIP client accounts in the Middle East.
Shortly afterwards, William Hill was fined a record £19.2m for “widespread and alarming” failings in social responsibility and anti-money laundering.
The Gambling Commission found that one punter was allowed to open an account and spend £23,000 in just 20 minutes without any controls, while another was able to immediately place a £100,000 bet despite his credit limit being £70,000. .
Over the past 12 months, the commission has drawn up new guidelines aimed at cracking down on “VIP schemes” and requiring betting firms to put in place stronger measures to identify at-risk customers.
These changes came before a white paper was published detailing the UK government’s plans to reform the gambling industry, which will likely result in the introduction of even stricter regulations.