The Motley Fool

All bets were off as the William Hill share price crashed 12% yesterday

Image source: Getty Images.

Shares in bookmaker William Hill (LSE:WMH) slipped by about 12% yesterday, and the rout is continuing today. In fact, shares across the gambling industry were all down similarly yesterday including those in Flutter Entertainment (LSE:FLTR), the owners of Paddy Power and Betfair.

Work done by the Gambling Related Harm All-Party Parliamentary Group (APPG) prompted the Department for Digital, Culture, Media and Sport to bring forward a £2 limit on fixed-odds betting terminals (FOBT) from 2020 to April 2019. Shares across the gambling industry declined from the announcement date to the implementation date but had made modest recoveries up until yesterday.

5G is here – and shares of this ‘sleeping giant’ could be a great way for you to potentially profit!

According to one leading industry firm, the 5G boom could create a global industry worth US$12.3 TRILLION out of thin air…

And if you click here we’ll show you something that could be key to unlocking 5G’s full potential...

On Monday 4 November the APPG produced its interim report on the impact of the online gambling industry. The report calls for a £2-limit on online slot machine games, but also recommends deposit limits, and banning credit card use on gambling sites.

The report also calls for bookmakers to spend even more on software and treatments to assist problem gamblers and to contribute to a research fund into gamblings harm. The gambling commission, the regulator of the industry, was also accused of being “not fit for purpose“.

Given the previous success of the APPG, investors are rightly concerned that at least some of their suggestions will end up being enforced, which will mean less revenue and increased costs for the UK operations of Flutter Entertainment and William Hill – the largest and second-largest UK-listed gambling stocks by market cap – beyond the impact of the FOBT restrictions and increased due diligence requirements already introduced.

William Hill reckons that up to 900 UK stores could become unprofitable due to the FOBT stake limit, and 700 stores were earmarked for closure in its August half-year report. Flutter claimed in a contemporaneous report that its sports-betting led estate in the UK and Ireland meant it was comparatively more profitable on a per-store basis (even with a doubling of tax on sports betting in Ireland) and saw an opportunity to move in where its competitors were leaving, but still reported half-year retail revenues had fallen by 4%.

If the impact of current regulatory measures on UK gambling retail operations was bad, it is likely that new online regulations will be worse,  especially so if the scope goes beyond just a fixed limit on online slot machine games. Both companies’ online segments are becoming more important, especially so for William Hill, which is planning to close stores.

International online exposure and expansion would seem to be the key to watering down the effects of an increasingly scrutinised UK gambling market. This is particularly true for US expansion, where more states are legalising and regulating online gambling. Flutter is ahead of William Hill here, with 15% of revenues coming from the US, compared to William Hill’s 7%, with both planning further pushes.

Both companies likely have enough diversification to withstand whatever changes come in the UK market, so long as they continue to drive US expansion, and other markets do not match the pace of UK regulatory tightening. Overall I think Flutter is better positioned at present; its shares have recovered a tiny amount today while William Hills slumped further.

I would not want to bet on any of them at the moment though. I will be looking to pick winners somewhere else.

“This Stock Could Be Like Buying Amazon in 1997”

I'm sure you'll agree that's quite the statement from Motley Fool Co-Founder Tom Gardner.

But since our US analyst team first recommended shares in this unique tech stock back in 2016, the value has soared.

What's more, we firmly believe there's still plenty of upside in its future. In fact, even throughout the current coronavirus crisis, its performance has been beating Wall St expectations.

And right now, we're giving you a chance to discover exactly what has got our analysts all fired up about this niche industry phenomenon, in our FREE special report, A Top US Share From The Motley Fool.

Click here to claim your copy now — and we’ll tell you the name of this Top US Share… free of charge!

James J. McCombie has no position in any of the shares mentioned. The Motley Fool UK owns shares of Paddy Power Betfair. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

Where to invest £1,000 right now

Renowned stock-picker Mark Rogers and his select team of expert analysts at The Motley Fool UK have just revealed 6 "Best Buy" shares that they believe UK investors should consider buying NOW.

So if you’re looking for more top stock ideas to try and best position your portfolio in this market, then I have some good news for your today -- because we're offering a full 33% off your first year of membership to our flagship share-tipping service, backed by our 'no quibbles' 30-day subscription fee refund guarantee.

Simply enter your email address below to discover how you can take advantage of this.