William Hill warns on full-year profit, shares slump

* Cites regulatory changes and Cheltenham festival

* Online profit seen falling by up to 25 mln stg

* Shares (Berlin: DI6.BE - news) down 11 pct (Adds CEO, analyst comments, detail)

By Aastha Agnihotri

March 23 (Reuters) - British bookmaker William Hill (Other OTC: WIMHF - news) warned on full-year profit on Wednesday, citing Cheltenham festival losses and new rules that have dented income from high-value online customers, sending its shares down by as much as 14 percent.

A tougher regulatory environment and advances in mobile technology are changing the face of Britain's gambling sector and former market leader William Hill has slipped down the pecking order after merger deals among rivals such as Ladbrokes (Amsterdam: LB6.AS - news) and Paddy Power Betfair.

The larger companies can divert savings into higher marketing spend and potentially offer a wider array of improved products on smartphones and tablets.

William Hill, meanwhile, has been hit hard by regulatory changes that allow customers concerned by the level of their gambling to instigate self-imposed temporary exclusions from a company's betting services.

Customer self-exclusions in the first quarter rose 50 percent from the previous three months, Davy equities research analyst David Jennings wrote in a note.

"It (Other OTC: ITGL - news) seems that William Hill's larger exposure to high-value gaming customers has led to it being impacted more by recent regulatory changes governing self-exclusion," he said.

Profit at William Hill's online segment, which contributes about 35 percent to overall revenue, is expected to fall by between 20 million pounds ($28.2 million) and 25 million pounds this year, the company said.

Online gross win margins were 190 basis points below expectations at 6.2 percent in the first quarter, it said, hurt in part by results at the Cheltenham horse racing festival.

"55 percent of the winners were either the first or second favourite ... so in summary, all the favourites punters wanted to bet (on) actually came first," Chief Executive James Henderson told Reuters.

The company is not alone in cursing Cheltenham this year. Ladbrokes (LSE: LAD.L - news) , which UBS (LSE: 0QNR.L - news) analysts said has greater exposure to horse racing than William Hill, bemoaned "the most expensive week here that we can remember".

William Hill said it expects 2016 operating profit to be in the range of 260 million pounds to 280 million pounds, compared with 291.4 million pounds ($413 million) last year.

Shares in the company were down by 11.3 percent at 329 pence by 1409 GMT, against declines of 2.2 percent and 1.9 percent respectively for Ladbrokes and Paddy Power Betfair. ($1 = 0.7083 pounds)

(Editing by David Goodman)