Gambling companies such as William Hill and GVC Holdings even corrected their profit forecasts for the current year yesterday. The share values of the companies then fell by more than 30% each.
William Hill shares in free fall
One of the biggest losers on the stock exchange in the gaming sector was William Hill at the start of the week. The British bookmaker had exceeded its sales targets in 2019, but now forecast a drop in sales of between £ 100m and 110m (approx. € 109m to 120m).
Has gambling investor Fred Done miscalculated?
British gaming operator Fred Done (CEO of sports betting provider Betfred) bought 874,189,537 William Hill shares earlier this month. According to Done, the stocks were heavily undervalued. In particular, William Hill’s expansion into the United States has set the course for growth. In the corona crisis, the investment could turn out to be a misstep.
The decline in sales is primarily the result of canceled sports betting. They are related to game cancellations in most European and North American professional sports leagues. In the last year alone, William Hill generated 53% of its total revenue from sports betting.
According to CEO Ulrik Bengtsson, William Hill must now focus on the future and take stabilization measures:
“We are taking precautions to maintain our operational capabilities, secure and improve our liquidity, and to ensure that we are in a strong position to resume full operations when the sports calendar is back to normal.”
GVC Holdings faces major challenges
GVC Holdings, the parent company of the sports betting operator bwin, is currently expecting a significant drop in sales.
Due to the failure of international sporting events, the company expects a drop in sales of up to GBP 150 million (approx. 163 million euros).
Should all betting shops in the UK have to close, this could cost GVC Holdings and its sports betting branches up to £ 50m monthly. However, GVC is in a robust position and can manage the effects of the corona virus, said GVC CEO Kenny Alexander.
Looking for salvation in online gambling?
It is uncertain whether the companies’ online gambling offerings will absorb the losses from land-based gambling. After all, the game cancellations do not only affect land-based betting shops.