888 profits suffer fresh regulation and ‘customer-friendly sports results’

William Hill owner 888 Holdings has issued a profit warning after the gambling group was hit by new regulatory changes and ‘customer-friendly’ sports results.

Shares in 888 Holdings fell 17.4 percent to 91.25p in early trade after the gambling group told investors that 2023 profits would miss forecasts amid tougher trading conditions.

Third quarter sales fell short of expectations, and 888 predicts sales will be around 10 percent lower, somewhere in the region of £400 million.

The FTSE 250 company, which also owns online gaming brand Mr Green, blamed “customer-friendly sports results” for damaging margins in the UK and abroad in September.

888 further said that compliance rules delayed the recovery of customer activity and revenues in the ‘dotcom markets’, while UK trading was affected by stricter gambling rules.

Lord Mendelsohn, Executive Chairman of 888, said: ‘We are making significant strides to improve the quality and sustainability of our earnings over the long term, but the third quarter performance has fallen below our expectations, and this means that we now expect to end the year with EBITDA lower than our previous expectation.’

But its retail arm, with around 1,350 William Hill stores, continues to perform well, with sales “broadly stable” compared to last year, 888 said.

Revenues in the last three months of 2023 are expected to be higher than in the third quarter, but still down modestly on a year-over-year basis.

Mendelsohn added: “The hard work the team has put in so far this year has laid a very strong foundation for the future of the company, and our synergy is well on track.”

Over the summer, 888 announced that Per Widerström, the former head of Fortuna Entertainment Group – the largest gambling company in Central and Eastern Europe – would become its next CEO.

He will succeed Itai Pazner, who resigned in January after 888 began an investigation into suspected money laundering in some VIP customer accounts in the Middle East.

Shortly afterwards, William Hill was fined a record £19.2 million for ‘widespread and alarming’ social responsibility and anti-money laundering failures.

The Gambling Commission found that one gambler was allowed to open an account and spend £23,000 in just 20 minutes without any checks, while another could immediately place a £100,000 bet even though his credit limit was £70,000.

Over the past 12 months, the commission has issued new guidelines to crack down on ‘VIP schemes’ and require gambling companies to implement more robust measures to identify high-risk customers.

These changes followed a white paper detailing the UK government’s plans to reform the gambling industry, which is likely to result in the introduction of even stricter regulations.