William Hill is reducing its exposure to the turf

Calculated before exceptional items such as financing charges, the firm made �111m ($177m) during the first half of the year.

William Hill, whose shares have outperformed the FTSE 100 index by over 40% since it was floated last June, said it would be boosting its dividend by 21%.

Many of its rivals have suffered in recent months, blaming unfavourable results in horseracing, and regretting that 2003 had no betting bonanza comparable to last year's football World Cup.

But William Hill has prospered by the sweeping introduction of fixed-odds betting terminals throughout its branch network.

A funny old game

Times are tough for smaller bookmakers, which are always vulnerable to swings of fortune on the field of play.

Profits fell by one-quarter at Paddy Power, for example, after a record number of successful favourites at the Cheltenham festival and a well-backed Grand National winner.

But William Hill, and its slightly larger rival Ladbrokes, have already begun to insure themselves against such misfortunes.

They have taken full advantage of the steady liberalisation of UK gambling law to extend their franchise across as many media as possible.

Safe bet

At the forefront of this drive are fixed-odds betting terminals (FOBTs), which allow punters to play roulette and other casino games.

These have caught on quickly, providing more predictable revenues and higher profit margins than traditional betting.

By the end of the first half of 2003, William Hill had 2,525 FOBTs in its 1,600 branches, up from 1,745 six months earlier.

This contributed to an 18% increase in "gross win" - a measure of net takings - for William Hill's retail division.

And at the firm's interactive division, which provides online betting - including a new attraction, virtual greyhound racing - saw gross win jump by 32%.