Bookmaker William Hill said its expansion into Australia would pay off after its results today highlighted weak points in the new business.
Expanding from its base on the UK high street, the bookmaker has spent almost £900m sterling this year to buy out its online partner and acquire rival gambling company Sportingbet, taking it into Australia for the first time.
First half earnings came in just ahead of forecasts but also showed that Sportingbet was paying a hefty premium in Australia to sign up new customers compared with what William Hill spends.
Analysts said initial returns from Australia were lower than expected and that favourable sports results could not necessarily be maintained, tempting investors to cash in gains.
The company's chief executive Ralph Topping defended the Sportingbet deal, noting that Australia was one of the world's largest online gambling markets.
"You never buy a perfect business. This business has a lot going for it but there are imperfections in it and there is upside for us on the digital side," Topping said.
"This was the last significant asset in Australia and we bought it and we take a long-term view of businesses," he said, defending the £459m deal completed in March.
William Hill also paid £424m in April to buy out a minority stake in its online business from software group Playtech.
Topping, who has worked for William Hill for more than four decades, said the company planned to beef up the Australian website, offer gamblers more wagers and improve marketing.
He cited as a model the turnaround in online business in Britain where William Hill has become the leading player in a fragmented market over the past five years.
The Australian online gambling market is estimated to be worth around $6 billion annually. Sportingbet, Paddy Power and Australia's Tabcorp are the three leading players. Australia currently accounts for less than 10% of William Hill's turnover.
