Pre-tax profits fell to £78.7m in the first six months of the year, down 35% from £121.8m a year earlier.
It
paid an additional £44m in gambling duties, following changes to the
taxation of online betting and fixed-odds betting terminals.
William Hill also said it had bought a 29.4% stake in online lottery firm NeoGames for $25m (£16m).
Shares in the bookmaker fell 4% in early trade.
'Exciting opportunity'
In
December last year, a new Point of Consumption Tax came into effect,
which applies to gambling profits generated from UK customers.
In addition, Machine Games Duty - the levy paid on fixed-odds betting terminals - was increased to 25% in March.
The
company's chief executive, James Henderson, said: "We have delivered a
good operational performance in the past six months during a period of
significant regulatory and taxation change for the industry.
"Whilst
factors such as the Point of Consumption Tax and the increase in the
Machine Games Duty rate have impacted our cost base as expected, we
continue to progress our strategy and invest in our long-term growth
drivers."
William Hill's profits were also hit by one-off costs relating to the rebranding of its operations in Australia.
The fall in profit came despite a slight increase in net revenues to £808.1m from £805.2m a year earlier.
The bookmaker also said that the introduction of the government's National Living Wage would cost it about £1m-£2m in 2016.
Referring
to William Hill's purchase of the stake in NeoGames, Mr Henderson
described the online lottery market as an "exciting opportunity".
NeoGames' business is focused on the US, where lottery spending per head is the highest in the world, William Hill said.
The UK firm also has an option to buy the remaining 70.6% of NeoGames, which it can exercise after either three or five years.
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