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William Hill takes telephone betting service offshore

Posted on Jul 26 2010
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Chief executive Ralph Topping warned that his business faces increased pressure from foreign-based rivals as well as betting exchanges such as Betfair, and more British jobs are at risk if the government does not ensure a level playing field for the industry.
 
"We've campaigned long and hard on the issue of being allowed to grow our business," he said. "Do we have to close shops before others accept that our UK business is under unfair pressure? As a UK plc operating in a global context and responsible for some 16,000 employees, we do not have the luxury of waiting for years to see how fiscal and regulatory policy develops in our sector."
 
He warned that the company currently has 170 unprofitable shops, 50 of which will have their future under review before the end of the year, which could put another 200 jobs at risk.
 
The company, which last week said it expects to report half-year revenues up 3% and profits flat at £135m despite experiencing its worst ever Royal Ascot, is closing its telephone betting call centre in Leeds, which currently employs 200 people, and moving the 200 staff at its Sheffield facility over to outsourcing group Vertex. At the same time, William Hill's online business, which moved offshore last year, will establish a new telephone betting operation in Gibraltar. William Hill said 160 of the employees in its Leeds business are currently going through a consultation process to try to find jobs for them in other parts of the business.The news is yet another blow for the UK's betting industry. Last year William Hill shattered a 2001 "gentleman's agreement" with the Treasury not to move its online business offshore and switched the operation to Gibraltar. Ladbrokes then followed suit, moving its internet sportsbook operation to Gibraltar from Harrow. Companies that operate internet services offshore generally pay taxes of up to 2% on their profits, and are not subject to the horserace betting levy, which UK-based bookmakers must pay in order to take bets on British races.
 
Last November Ladbrokes went further, closing its Aintree call centre in Liverpool, with the loss of 263 jobs, as the company moved its telephone betting operation offshore in an attempt to save more cash. The company blamed the move on foreign-based competitors being able to undercut its operation due to favourable tax conditions.
 
Ever since that decision, William Hill has been expected to take the axe to its telephone betting operation. This month the company announced that poor horse racing results led to a 33% fall in William Hill's telephone revenue. The company said it had previously "noted the challenge of competing with UK betting exchanges and Irish offshore telebetting operators, all of whom have benefited from significant tax and cost advantages over UK bookmakers" and so "the situation is under active review".
 
Today, Topping said William Hill's existing telephone betting business made a loss of £1.8m in 2009 and a small operating loss is expected to be made in the first half of this year.
 
"Betting exchanges – and particularly Betfair as the dominant market player – have fundamentally changed the structure of the UK betting market with little reaction to this from government or other agencies," Topping said. "This has been exacerbated by competition from offshore telephone operators and the previous government's inertia over the issue of creating a level tax and regulatory playing field."
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