In a week in which Entain posted a mildly positive set of results for the second quarter of 2024, Evoke – the parent company of William Hill – were able to do anything but.
The firm, which is a rebranded version of the 888 holding group that agreed to buy William Hill’s European division in 2021, has revealed shocking losses of £147 million for the first half of 2024 – with earnings plummeting by a whopping 67%.
Bosses, despite describing the results as ‘disappointing and not acceptable’, are remaining bullish about the future – although the earnings call reveals once again just how tough conditions are in the UK gambling sector, and slightly farther afield, at the moment.
Going Down
To offer some context, Evoke posted a loss of £45 million in the first half of 2023, so they’re now more than £100 million worse off than the same period a year ago.
That has come partly as a result of the acquisition cost of William Hill, as well as the group’s expensive decision to exit the burgeoning American market after failing to be competitive there.
For that January-June 2024 period, the group posted earnings of £43.8 million, pre-tax and interest. In the first six months of 2023, the same metric was up at £130.8 million.
As you can imagine, those are the kinds of return that generally put the wind up shareholders, with Evoke’s share value plummeting since mid-July – when it stood at £86.30 – to just £53.35 earlier this week.
In a bid to artificially correct the market, Evoke’s top brass embarked on a monumental 1.3 million share buy-back splurge.
But it will take a lot more than that to restore the faith of investors in a firm whose share price has fallen 49% in the past 12 months, although Evoke chief executive Per Widerstrom is choosing to remain positive.
“We understand exactly what went wrong and we have taken corrective actions to address the problems,” he commented.
“We are completely transforming this business. Whilst the scale of change is significant, it is necessary for us to deliver mid- and long-term profitable growth and value creation.”
Others have also chimed in with potential explanations of the firm’s struggles. Insiders believe that tough trading conditions on the high street have impacted the footfall at William Hill betting shops – an arsenal of which Evoke acquired as part of their takeover.
According to the financial reporting, William Hill saw a downturn of some 8%, year on year, in bets taken in the UK – although the holding company’s online division actually saw a 1% increase.
Meanwhile, their chief financial officer, Sean Wilkins, has laid the blame at the door of unexpectedly poor returns on the firm’s marketing outlay, which included considerable expenditure on artificial intelligence.
In the context of solid, if unspectacular, earnings from Entain for the same period, and with Flutter reporting gains of 20% and net profit of £230 million in the second quarter of the year – thanks largely to Euro 2024, the prognosis does not look good for Evoke and William Hill.
Flutter have made the switch to the American market successfully, parlaying the success of its FanDuel brand there with continued strength from Betfair and Paddy Power closer to home.
However, there’s still caution to be upheld – according to the Racing Post, the number of British horse races with £500,000 or more traded on the Betfair Exchange has fallen to less than 10% in 2024….compared to over 90% in 2016.
In four years out of five between 2012 and 2016, more than 90 per cent of British races on the exchange had more than £500,000 traded on them in the win market; this year the total is less than ten per cent https://t.co/5UdPq3eGp6 pic.twitter.com/aM8Z5H3o0o
— Racing Post (@RacingPost) August 14, 2024
Wake Me Up When September Ends
If trading conditions were tough in the first half of 2024, they may be about to get even harder as a handful of measures recommended in the government’s gambling sector White Paper are rolled out.
The introduction of a maximum stake on online slots, which will be set at £2 for under-25s and £5 for those older, is unlikely to aid betting sites’ bottom line – previously, there was no upper limit on staking.
As if that wasn’t troubling enough for operators, there will also be a more forceful roll-out of affordability checks on punters, with a pilot scheme that is set to last until spring 2025.
As part of that, any punter that loses £500 or more per month will be asked to provide documentation of their salary, other earnings or savings in a bid to prove they can afford to lose what they are betting.
However, by February 2025, that wagering threshold will have fallen on a descending scale to just £150 per month – with the stark possibility that punters will instead look to black market operators, rather than provide their sensitive private data to the bookies.