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Ladbrokes, William Hill Not Expecting More UK Retail Shop Closures

James Murphy
by in Gaming Industry on
  • William Hill and Ladbrokes owner Entain both indicate that they plan no further closures of high street betting shops.
  • The retail operations of UK facing bookmakers have been devastated by the COVID-19 pandemic along with a cyclical move toward online betting.
  • Both companies stress that the retail sports betting experience is ‘unique’ and difficult to replicate online.

Good news for the beleaguered UK retail betting sector as well as the broader urban core. British bookmaking giants William Hill and Ladbrokes are both indicating that they expect no additional closures to their high street betting shops. Retail betting worldwide has taken a huge hit due to the COVID-19 pandemic and nowhere has it been more severe than England. This came on top of a broader structural change to the industry that has seen a move toward online betting.

Betting shops in England are slated to reopen on April 12 under guidelines advocated by Prime Minister Boris Johnson along with a number of other ‘non essential’ businesses and personal care service providers. Bingo halls and casinos will follow on May 17 along with more business types including barbershops and gyms as well as restaurants for outdoor dining.

2020 saw the closure of more than 460 betting shops in the London area alone. The closures create not only loss of jobs but a spate of retail vacancies which is a bad omen for high street shopping areas that had experienced something of a revival until the COVID-19 pandemic. There’s also a ‘downward spiral’ of lost revenue when one local business closes. On top of everything, empty storefronts looks bad and creates the optics of an area in decline.

William Hill (LSE: WMH.L) closed 119 betting shops in the early days of the COVID-19 crisis. 2020 was a particularly eventful year for the iconic UK betting chain and they’re in the process of being acquired by US gaming giant Caesars Entertainment. The deal could close as early as late March though there’s much speculation that Caesars (NASDAQ: CZR) will offload the European retail component of William Hill. There’s been no validation of that, however, and with the company committed to maintaining the William Hill brand for their third party US sportsbook operations there’s at least a case to be made that they’ll hold on to the UK retail operations as well. There are now 1,414 betting shops in the UK operating under the William Hill brand.

Ulrik Bengtsson, chief executive of William Hill, told the Financial Times that they were planning no further shop closures:

“Clearly I think we are going to see a structural change in the high street more broadly and that will at some level affect William Hill, [but] the experience we provide in the shops is quite hard to replicate online.”

He also said that once stores reopened they quickly bounced back in terms of revenue:

“Retail has undergone regional disruption although where stores did re-open, they quickly traded towards pre-COVID levels.”

Entain (LSE: ENT.L) owns a couple of well known UK retail brands in Coral and Ladbrokes as well as a variety of online facing brands including Bwin and Partypoker. They’re also MGM Resorts’ (NYSE: MGM) partner in BetMGM, the company’s interactive and sports betting division. They’ve also had a whirlwind year which included a rejected takeover bid from the aforementioned MGM. Entain CEO Jette Nygaard-Andersen said that his company won’t close more than they usually do in a given year, typically amounting to 2% of their outlets. He also indicated that the retail bookmaking shops had ‘proven pretty resilient’.

Nygaard-Andersen praised the Entain employees and credited the company’s diversified business model for their ability to remain profitable despite the COVID-19 pandemic:

“Today’s results demonstrate the extraordinary resilience and professionalism of our people, as well as the importance of having a truly diversified business model that is not overly reliant on any one product, brand, territory, or channel”.

“The strong underlying momentum within our business, the rapid growth of our US joint-venture, and our continuing international expansion mean that we are as confident as ever in the long-term prospects for Entain.”

Entain’s online operation revenue increased 28 per cent to £2.7bn ($3.73 billion USD) in 2020 compared with 2019, while its retail sales fell 40 per cent to £857m ($1.18 billion USD) in the same period. Underlying operating profit online rose almost two-thirds to £679m ($939.4 million USD) compared with a loss of £19m ($26.2 million USD) incurred from its retail operations.

William Hill took a bigger hit on retail and didn’t recoup as much online. The company’s betting shop business lost £29.5m loss ($35.8 million USD), but did experience growth of 3% in online revenues. The group made a pre-tax profit of just £9.1m in 2020 as a result ($12.5 billion USD) , down 91% on 2019.

At the time of publication, James Murphy has positions in CZR, MGM and ENT.L.

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