William Hill said its 2017 results will meet market expectations after a “positive” start to the year but warned of rising costs after regulators imposed a new levy on online horseracing betting.

In a trading update, the group reported a 9% increase in net revenue in the 17 weeks to 25 April, driven by 16% growth in online betting as horseracing results as the Cheltenham and Aintree festivals swung in the company’s favour.

The online division saw a 9% increase in sportsbook amounts wagered and the gross win margin improved 1.2 percentage points (ppts) to 7.5% as strong horseracing results offset a lower-than-expected football outcome.

Online was also supported by investments in its digital offering including a new Android app in Sportsbook and a redesign of mobile and desktop in Gaming.

Ahead of the Cheltenham and Aintree festivals, the company made online improvements including a new registration, account recovery, age verification, bet slip and cashier processes.

The group saw a 24% increase in new accounts across the two festivals.

William Hill said that from April online bookmarkers needed to start paying a 10% levy on UK horseracing gross wins to fund the sport. The company estimates this will cost £5bn between April and December.

The group has been slashing costs as part of a restructuring ahead of the new levy.

Philip Bowcock, who was confirmed as the group’s chief executive in March, said William Hill is on track to deliver £40mln of annualised savings by the year-end.

“It has been a positive start to the year for William Hill across the board. Our Online business continues to deliver growth thanks to the improvements in product, user experience and marketing we have made. Retail is also seeing positive trends while our key international markets continue to perform well with double-digit wagering growth.”

n the retail division, net revenue climbed 1% with a 2% rise in sportsbook amounts wagered, boosted by horseracing betting. However, the gross win margin fell 0.8 ppts to 18.0%, reflecting favourable UK football results in the same period a year earlier.

Its Australia business achieved a 41% jump in net revenue as sportsbook amounts wagered surged 53%, offsetting a 1.2 ppt drop in the gross win margin to 8.2% due to a disproportionate number of victories by favourites in horseracing.

The US business saw a 19% increase in net revenue with amounts wagered up 29% and the gross win margin 0.5 ppts lower at 6.2%.