William Hill’s third quarter results show poker revenue down 24%. William Hill’s poker room is on the iPoker network owned by Playtech which reported a 27% poker decline in its own Q3 results.
Poker has been the odd man out for both companies whose other businesses are doing well. At William Hill, net revenues for the group were up 9% and operating profits rose 26% mainly due to their sports betting business.
The German Intrastate Treaty on Gaming which imposes a 5% tax on each wager caused William Hill to pull out of the German sports betting market a few months ago. The company argues that the Treaty breaches EU law: “We believe the new treaty … is not compliant with the fundamental principles under the EU Treaties to allow services to be provided free of unnecessary restrictions.”
The company has also been blacklisted by Belgium and has had to withdraw from business in the kingdom. The company is extremely unhappy with the lack of an EU level response and joined in signing an open letter and complaint to the EU Commission about Belgium’s treaty breaking gaming regulations.
In spite of poker’s revenue falls, profits at William Hill Online, the joint venture with Playtech, are up 42% to £34.8m. The company has announced that it is now engaged in a process to formally value Playtech’s stake in the joint company. If the valuation is acceptable it is likely that William Hill will exercise its option to buy out Playtech and bring the company fully into the group.
The quarterly report points out that the company will have a second chance to buy out Playtech in two years’ time if they let the current option lapse. Either way: “Playtech is a key software partner for William Hill Online and, on this basis, we look forward to continuing a long-term relationship with Playtech, regardless of the outcome of this valuation process.”
The company has also decided to try to buy Sportingbet, a UK company also quoted on the London Stock Exchange. Decisions on a possible bid await the results of another valuation process which should end early in 2013.
Amid this corporate manoeuvring, the CEO Henry Birch is leaving the company and Andrew Lee has been appointed Managing Director responsible for William Hill Online.