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Worries over legislative changes dent William Hill optimism

Labour suggestions that the racing industry levy should also cover all sports has given cause for concern for William Hill.

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Source: Bloomberg

The markets are expecting William Hill to post first-half adjusted earnings per share of 142p up from the previous six months’ 126p level. Sales have increased from £734 million up to £796 million and profits are also expected to increase by over 30% to £148.8 million.

The last six months have seen the benefits of the end of the European football season, Wimbledon and the World Cup in Brazil. The World Cup was particularly successful as more than £200 million was wagered throughout the tournament.

England’s early departure from the tournament did not prevent William Hill from seeing double the takings they made from the previous World Cup in South Africa. The most successful match was actually in the group stages and was settled by last season’s Barclays Premier League player of the year.

The last week has seen the Labour party float the idea that if they were in power, they would look to introduce the same racing levy that is currently only applicable to horse racing. If this did become law it would affect up to 40% of wagers placed in stores and 70% of those placed online. Although the current polls would suggest that a Labour win at the next election is less likely than a Conservative one, the fact that a policy like this could be supported by voters from both parties might lead to the Conservatives using it as a template.

The shares are currently trading mid-range on the relative strength index and have just moved above the 100-day moving average indicating a lack of direction. While the 330p level has seen buyers move in on a number of occasions, this has waned at any level above 360p.

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