Betting Terminals Ease William Hill Profits Fall

Controversial fixed-odds betting terminals (FOBTs), dubbed by critics the crack cocaine of gambling, have helped lift revenue to £808m at Britain's biggest bookie.

Shares (Berlin: DI6.BE - news) in the bookmarker opened 5% lower, as analysts digested the results, which also showed that profit before tax fell 35% to £78.7m for the first half.

The bookmaker reported that the weekly gross win per betting terminal machine rose 1.9% to £949 in the first six months of 2015.

FOBTs are a crucial source of revenue in the highly competitive high street bookmakers' market.

The government has limited high street bookmakers to just four machines per store, but even so, machine revenue now comfortably outweighs traditional over-the-counter betting at William Hill (Other OTC: WIMHF - news) .

Without machine revenue the bookmaker's high street business, which comprises 55% of total group revenue, would be loss making.

The machines' profits are now taxed where the machines are located, rather than where the gambling company's servers are located - which, for William Hill and many other betting companies, is in Gibraltar.

And since March machine games duty has been increased from 20% to 25%. William Hill's results reveal these measures led to increased costs of £44m.

William Hill boss James Henderson said: "We have delivered a good operational performance in the past six months during a period of significant regulatory and taxation change for the industry.

"Whilst factors such as the Point of Consumption Tax and the increase in the Machine Games Duty rate have impacted our cost base as expected, we continue to progress our strategy and invest in our long-term growth drivers".