An old English nursery rhyme tells of the ‘Grand Old Duke of York’ marching his men to the top of a hill only to march them down again. This seems to be the case with investors’ hopes of good dividends and share value with British betting shop chains.

First came the good news: William Hill, the UK’s second largest betting chain and recent addition to the London’s FTSE 100 index of blue-chip stocks, reported a 40% increase in profits for the first half of the year, £118.4 million pre-tax.

Hard on the heels of that announcement came the bad news: their shares fell by 4% in value with news of lower winnings in July and August. The betting public backed more favourites at the races after previous heavy losses to the ‘bookies’ at the big Cheltenham race meeting and with the surprise win of Greece at Euro 2004.

Ladbroke of the Hilton Group last month posted even higher profit figures for the first six months this year of £154 million and analysts still see both companies as good bets for investment. Ladbroke with their three-string bow of betting shops, telephone and interactive betting is growing faster, although William Hill is still market leader in telephone and interactive betting. Both companies are turning their eyes towards casinos after deregulation. Ladbrokes would be returning to the industry after quitting it some years back and for William Hill it would be a new venture.

Expansion does not stop there for William Hill according to their chief executive David Harding. Already planning a television channel for the autumn, featuring real and virtual betting and trying to ‘replicate the betting shop experience’ with greyhound and US horse-racing, he admitted they would be, ‘crazy to ignore’ the company's diversification into casino operating.

Their online casino, created from scratch three years ago, grew by 37% due mainly to the popularity of its poker and casino games. The group’s telephone betting business has also increased profitability by 22%.

William Hill has spent £75 million buying back 3.4% of its shares so far and may bring this number up to 10%. David Harding explained how their betting shop profitability had been boosted by virtual betting machines and fixed odds betting terminals (FOBT) offering roulette, as recently licensed by the British Government for all betting premises. Already they have almost reached their target of 5,200 machines for the year, and this is just one step away from running proper slot machines in fully-fledged gaming properties.

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