William Hill sells Italian venture to rival







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William Hill sells Italian venture to rival

3/7/2008

Simon Bowers

William Hill has withdrawn from Italy after 18 months, writing off £1m and agreeing to sell its embryonic joint venture. The move comes six months after the bookmaker was forced to write off £26m as it ditched an in-house betting software development programme.

Ralph Topping

New chief executive Ralph Topping is also planning to overhaul William Hill's underperforming online poker operation. The poker business, which has struggled to increase player numbers, is a major licensee for software firm CryptoLogic but an exclusive deal between the two comes up for renewal at the end of the year. Topping is considering switching to one of a handful of poker network providers that are increasingly dominating the industry, offering hundreds of millions of dollars in prize money every month.

Italy, along with parts of Spain, has been targeted by several British bookmakers as the government has begun to liberalise its betting shop industry. Gala Coral's Eurobet has 403 shop and kiosk licences in Italy while Ladbrokes has 142 licences and has acquired 25 already trading betting shops.

About 12,000 Italian licences were granted in 2006, adding to about 1,000 existing sites, but William Hill's joint venture with Spanish gaming firm Cordere won only 57. Yesterday William Hill, which has managed to open no more than a couple of Italian betting shops, said the operation was "insufficient in scale to provide an attractive long-term return". It has agreed to sell the joint venture to Turkish rival Intralot for €5.5m (£4.3m).

The UK bookmaker will make a £1m write-off as it exits Italy. It remains committed to its joint venture in Spain with Cordere, which trades as Victoria, though European expansion will not be a priority while the group focuses on returning its struggling online business to growth.

Topping, has been reviewing priorities for Britain's largest bookmaker and believes the online business will eventually generate 25% to 30% of group gross win (balance of earnings after paying out winnings). Within that, online gaming - including poker - is expected to overtake conventional betting.

William Hill's online division last year saw gross win slide 8% while operating profit fell 17% as the website lost to competitors. The group has brought in software firm Orbis to upgrade betting capability and the revamped website will be launched in November.

Meanwhile, Topping is believed to regard the group's current online poker deal with CryptoLogic as unsustainable. He is seeking to pool player numbers with other smaller online poker businesses in to compete with larger players. If a collaborative solution is not found, William Hill will sign up with a large poker network provider.

London-listed Playtech is believed to be a contender to succeed CryptoLogic. The number of players on its iPoker network overtook numbers playing with PartyGaming's PartyPoker, making iPoker the third largest poker liquidity pool after PokerStars and Full Tilt which continue to take bets from the US despite introduction of tough anti-online gaming laws.