William Hill has asked its landlords to reduce its rents by 50% to help it offset the cost of revenue lost due to imminent curbs on fixed-odds betting terminals (FOBTs).
After a long and bitter political battle over FOBTs, which provide about half of bookmakers’ high-street revenues, the maximum bet on the machines will be reduced from £100 to £2, starting on 1 April.
In an open letter to about 2,000 landlords, first reported in Property Week, William Hill said it needed them to slash rents, effective immediately, to avoid the closure of up to 900 of its 2,300 shops.
“The change in regulations will mean that many shops will see costs rise significantly at a time when revenues will decline by in excess of 50% in many cases,” the company wrote.
“We are therefore asking all our landlords to help us maintain our position at William Hill as the leading gambling operator on the high street so that our shops can continue to offer a great service to our customers and help maintain the viability of our high streets.
“We can’t afford to wait for things to happen as this will simply result in the creeping closure of more and more shops.”
A William Hill spokesman told the Guardian: “Our hope is that for many landlords, a shop paying a lower level rent is better than an empty shop.”
If its roughly 2,000 landlords agree, the rent cuts will be backdated to 25 March.
A slew of bricks-and-mortar retailers, saddled with the fixed cost of rentals, have sought rent reductions from reluctant landlords after being hit by a shift to online shopping.
While gambling has also shifted online, bookmakers had been partially isolated from the pain by extra income from FOBTs.
“That [FOBTs] was a very profitable business and could only really take place in a physical store, so it wasn’t disrupted in the way other parts of the retail market have been,” said Nick Hyett, an equity analyst at Hargreaves Lansdown.
“The behind-the-till part of a bookies is not as profitable as it was and it was being subsidised by FOBTs.”
He said William Hill had a strong negotiating position with landlords because more widespread weakness on the high street might make it difficult for them to fill empty shops.
