William Hill expects 11 percent profit growth from 2017, but new restrictions down under mean the group is considering the sale of its once-lucrative Australian division.
British bookmaker William Hill has said it is considering selling its Australian division amid tightening regulations in the $18bn market.
Will Hill Australia makes up around seven percent of the group’s overall revenue – or £1.6bn last year – but new restrictions on betting and a Point of Consumption Tax are pushing it towards either a sale, or a strategic merger to absorb the additional costs.
The news comes soon after the firm was rumoured to be bidding for James Packer’s majority stake in resident sports betting company, CrownBet. Having ultimately sold the stock to a consortium of shareholders led by CrownBet’s CEO, this remains a distinct possibility.
In a trading update mid-January the group said its performance had been strong in 2017, but would be “undertaking a strategic review” of its Australian unit in light of the impending changes and falling margins.
Australia is a market of only 25 million people, but per capita has traditionally been the most the lucrative in the world. The industry attracts around $1,000 in annual GGY per person.
Yet in a similar situation to the UK, both the media and political buy phentermine hydrochloride discourse have soured on the sector in recent years, leading to a package of legislative measures, soon to be introduced, aimed at shoring up the country’s tax take and reducing problem gambling.
A range of online firms left the market in 2017 including PokerStars and 888 after being threatened with blacklisting which could jeopardise licences elsewhere.
The firm’s board said in a statement: “Given the credit betting ban in Australia and the likely introduction of a point of consumption tax in a number of states, it is clear that profitability will increasingly come under pressure and therefore we are undertaking a strategic review of our Australia business.”
While a merger is also an option, selling off the Australian division is considered the most likely option, making Hills better placed for a more transformative transaction with another global brand.
“This, by no means, will result in a slash-and-burn”, a source close to the situation confirmed to the FT.
Spinning-off the Australia arm in a joint venture with a local partner is thought to be a consideration.
William Hill has held repeated talks with both 888 Holdings and PokerStars’ parent company, The Stars Group, in recent years. Either firm could be the subject of a potential merger with Hills at some stage this year.