Cheltenham Gala: An Albatross for William Hill, UK Betting Parlour Revenues

Though Cheltenham was a lavish affair, not everyone had such a great time.

Share Warning

Bookmakers such as William Hill were handed their proverbial lunches revenue-wise. Poor racing results combined with a reduction in online gambling activity from high-rolling customers resulted in a profit warning to William Hill shareholders.

The Drop

Last year's £291 million showing will drop to between £260 million and £280 million this year. Within that range, the figure final figure promises to fall substantially short of average forecasts for this year's event of £307 million.

Share Impact

The developments have resulted in a share decrease of 13% for William Hill already, with competitors such as Ladbrokes and Paddy Power Betfair also experiencing share drops.

Bad Timing

According to William Hill CEO James Henderson, the worst Cheltenham festival revenue performance for his company “in living memory” was ill-timed with unfavourable European football results to fall £15 million shot of expectations.

Too Many Winners

In a wager environment where favorites winning increases the cumulative payout for bookmakers, the horse-racing results at Cheltenham hurt all oddsmakers with three out of four favourites in championship races winning and the second favourite winning the fourth. Overall, nine favourites and one joint favourite won in the 28 races over four days. The high amount of favorites winning took the bite out of William Hill et al's forecasts.

The “Time Out” Trend

Further, consistent with a prevailing trend of punters setting limits on their personal activity, relatively high amounts of regular and VIP customers requested exclusion. These “time out” requests by customers, in which they are by personal choice removed from eligibility of gambling on designated events or for designated time periods, have increased this year by over 50% this year with a total cost of £2 million to providers so far. The “time outs” are expected by current estimates to take a £20 –£25 million bite out of online revenues this year.

The Hurt on Hill

As the UK's biggest operator, serving the most “high roller” clients, William Hill stands to take the heaviest hit of all operators.