Higher taxes on betting and gaming have sent profits at William Hill tumbling by more than a third.
The bookmaker said operating profit fell by about £21m in the six months to 30 June to £155m, dragged down by an additional £44m in gambling duties from the point of consumption tax and higher machine games duty.
The hit resulted in a 35% slide in pre-tax profit to £78.7m despite revenues remaining flat at £808.1m.
James Henderson, chief executive, said William Hill had delivered a good operational performance despite the significant regulatory and taxation changes.
The government introduced a point of consumption tax in December 2014, as well as increasing the duty on machine games from 20% to 25%.
All bets placed online in the UK are now subject to the 15% point of consumption tax, which is expected to raise £300m a year for the Treasury.
The company had 2,364 betting shops in the UK, down 3% following the closure of 108 outlets in response to the machine gaming duty increase. Net retail revenue fell 3% to £448.9m following the implementation of the “£50 journey” limit on gaming machines in April.
Online continued to perform strongly considering the tax impact, with overall Sportsbook amounts wagered up by 10% and overall net revenue up 7%.
Henderson said the company was making good progress in technology to give customers a better experience on both mobile devices and desktops.
William Hill on Friday also said it had bought a 24.9% stake in NeoGames, a US-focused online lottery software provider, for $25m (£16m) in cash.
Founded in 2005 as an online scratch card pioneer, NeoGames now provides a range of online lottery products and services to lottery operators.
Henderson said the move would support its international diversification and expose the company to an “exciting growth market”.
“NeoGames is a disruptive technology operator offering customers a great experience and lottery rights holders a compelling alternative to established retail lottery operators,” he said.
William Hill has the option of acquiring the remaining 70.6% of NeoGames after either three or five years.
The company said it was making good progress in Australia, where Sportingbet was being rebranded as William Hill Australia.
Amounts wagered with William Hill US were up 49%, with net revenue rising 30%.
The interim dividend was raised by 3% to 4.1p.
Henderson said: “The board is confident that the group remains well positioned to gain share in key markets, notwithstanding the impact of increased taxes and regulation.”
Shares fell 3.5% to 396.2p in early trading in London, valuing the company at £3.5bn. The stock has risen by almost 20% in the past 12 months.
