A racegoer watches Thistlecrack race in the Ryanair World Hurdle during St Patrick's Day at the Cheltenham Festival.
The bookmaker on Wednesday warned that it expects operating profit for the year to be between £260 million and £280 million - a decline from last year's figure of £291.4 million.
William Hill blamed "weaker than expected Online performance" for the slump and CEO James Henderson said the company is "experiencing softer
The company says there are two factors between the online weakness. The first is a regulatory crackdown on problem gambling online. William Hill says more customers have been timing out - being kicked off the site for being gambling too long - and choosing to voluntarily bar themselves because they know they've got a problem.
The company says this "is impacting the level of actives across the Online business, particularly in gaming" and, if it continues at the current rate, will cost William Hill £20 million to £25 million over the year.
The second problem is an age-old one for bookmakers - results not going their way. William Hill says online margins are 1.9 percentage points below forecasts "affected as previously highlighted by European football results and also by the worst Cheltenham results in recent history."
But William Hill wants investors to know it is getting its online business back on track. The company says new interim online MD Crispin Nieboer has drawn up an action plan that include "refocusing the business on maximising UK customer yields, improving performance in non-core markets, and assessing opportunities for cost efficiencies."
William Hill says the rest of the business is doing well, although its network of High Street bookmakers also made a loss on the Cheltenham horse racing festival.
CEO James Henderson says in the update:
Today's statement reflects the combined effect of our assessment of the impact of recent regulatory changes and unfavourable sporting results including the worst results at Cheltenham in our recent history. We are also experiencing softer UK growth as a consequence of acquiring lower value customers. While the rest of the Group is performing in line with our expectations, we continue to focus on improving Online's performance so that we can, once again, outperform the market.
William Hill also confirmed in the statement that it is "in advanced discussions with a partner which would see it invest in OpenBet." However, it stresses a deal is not certain.