Contrasting fortunes for Ladbrokes and William Hill as online gambling continues to grow
Gambling has grown hugely as an online activity in recent years, but the fortunes of two of the main players in the online market look very different right now.
This week Ladbrokes
confirmed the departure of its head of product, Richard Ames, who was overseeing its trading and IT offer. Confirmation followed media reports about his departure.
The move is in part a response the the bookmaker suffering problems with its online trading platform. In late June it was forced to issue a profit warning on its digital division after failing to launch its revamped website in time for the Euro 2012 football championships.
Ladbrokes had been hoping to transfer all customers over to the new website in time for the football tournament but was forced to postpone after unsatisfactory feedback about some functions.
The creation of a data warehouse to support the new online business has also been beset by problems after it proved more complicated than expected.
Richard Glynn, the chief executive, is expected to say shortly that Ladbrokes won’t now be able to deliver its technology platform until the year-end, missing events like the Olympics and several months of the new football season.
The delays will cut half-year digital profits to about half of the £31m achieved during the same period last year.
Ladbrokes has spent £50m developing its own in-house digital technology,which has ended up needing capital diverted from its advertising budget to complete.
With Ames having left the business, Nick Rust is expected to take over leading Ladbrokes’ digital offer.
Chief executive Glynn is under growing pressure to convince investors that he can deliver a successful turnaround online, as Ladbrokes is lagging rivals including market leader William Hill, and has been for several years.
It held takeover talks with 888 Holdings and Sportingbet last year and has recently been linked to etdaq, the betting exchange owned by Irish billionaire Dermot Desmond.
But Ladbrokes persuaded investors it was better off pursuing an organic growth strategy instead. However, in the eighteen months since the plan was unveiled the investment has not delivered.
The online market for gambling is growing hugely yet Ladbrokes’ digital profits will be the lowest this year than they have been since 2004.
A good performance from Ladbrokes’ betting shops is expected to boost half-year results this week, with consensus pointing to a near 6% rise in operating profit, excluding “high-rollers”, to £103.4m.
And last Friday, William Hill
added to the pressure on Glynn when it reported a 23% jump in online operating profits to £68.9m.
William Hill Online, its joint venture with Playtech
, increased revenues 30% to £198.4m despite concerns that predictable results from Euro 2012 would take a bite out of the bookie’s profits during the period.
Online profits were up 23% to £68.9m as the company spent £55.5m on marketing to drive more customers to mobile betting in particular. Mobile accounted for 22% of all online sports bets taken during the period and Topping said he expected to make further progress in attracting those who like a flutter on the move.
The bookie said it had continued “amicable” discussions with Playtech over its option to buy out the software company’s 29% stake in William Hill Online.