William Hill, the bookmaker, has issued a thinly veiled threat to move its internet sports betting operation offshore unless the Government changes the tax regime in the next Budget.
The company, which yesterday confirmed plans for a GBP 350 million rights issue as part of a GBP 1.2 billion refinancing, said that it was relocating 90 jobs in its sportsbook operation overseas, mainly to Gibraltar — a move widely seen as a warning to Treasury. Ralph Topping, chief executive of William Hill, dismissed the present tax regime as “absolutely dopey”, saying that, while British-based web operations paid a 15 per cent gross profits tax and a 10 per cent racing industry levy, offshore operators paid as little as 1.5 per cent in tax.
Asked whether William Hill, which has beefed up its online operations in recent months through deals with Orbis Technology and Playtech, could move offshore, Mr Topping replied: “It’s reviewed every year.”
A move offshore could spark an exodus similar to that seen after Victor Chandler moved to Gibraltar to avoid betting tax. Ladbrokes was among those that followed, although it repatriated its business after Gordon Brown scrapped betting duty in 2001, when he was Chancellor.
William Hill said yesterday that it had negotiated a new GBP 588.5million debt facility after launching a GBP 350 million rights issue at 105p a share, a discount of 57 per cent. Last night, the shares closed down 10p at 236p.
Investors welcomed the refinancing, although there was concern at the interest rate increase from 6.5 per cent to 8.5 per cent this year and 10 per cent next year, which takes account of a GBP 12.5 million arrangement fee.
Separately, the group reported robust 2008 results, with the gross win — the amount left behind by the punter — rising by 6 per cent and operating profits before exceptionals falling by 1 per cent to GBP 278.6 million, slightly ahead of expectations. The final dividend was scrapped as part of the refinancing, but the group, which has almost 2,300 betting shops, said
that payments would resume this year. Since his promotion to chief executive a year ago, Mr Topping has refocused the group’s international expansion. He has sold its betting shop joint venture in Italy and he is reviewing its Spanish joint venture. A sale was “one of several options”.
In the 11 weeks since William Hill’s last trading update, the gross win has risen by 8 per cent.
Mr Topping said the small value of much of its business meant the group was well placed to ride the downturn. “The largest cluster of bets we take are in the range of GBP 3 to GBP 4,” he said.