* Cites regulatory changes and Cheltenham festival
* Online profit seen falling by up to 25 mln stg
* Shares down 11 pct (Adds CEO, analyst comments, detail)
By Aastha Agnihotri
March 23 (Reuters) - British bookmaker William Hill warned on full-year profit on Wednesday, citing Cheltenhamfestival losses and new rules that have dented income fromhigh-value online customers, sending its shares down by as muchas 14 percent.
A tougher regulatory environment and advances in mobiletechnology are changing the face of Britain's gambling sectorand former market leader William Hill has slipped down thepecking order after merger deals among rivals such as Ladbrokes and Paddy Power Betfair.
The larger companies can divert savings into highermarketing spend and potentially offer a wider array of improvedproducts on smartphones and tablets.
William Hill, meanwhile, has been hit hard by regulatorychanges that allow customers concerned by the level of theirgambling to instigate self-imposed temporary exclusions from acompany's betting services.
Customer self-exclusions in the first quarter rose 50percent from the previous three months, Davy equities researchanalyst David Jennings wrote in a note.
"It seems that William Hill's larger exposure to high-valuegaming customers has led to it being impacted more by recentregulatory changes governing self-exclusion," he said.
Profit at William Hill's online segment, which contributesabout 35 percent to overall revenue, is expected to fall bybetween 20 million pounds ($28.2 million) and 25 million poundsthis year, the company said.
Online gross win margins were 190 basis points belowexpectations at 6.2 percent in the first quarter, it said, hurtin part by results at the Cheltenham horse racing festival.
"55 percent of the winners were either the first or secondfavourite ... so in summary, all the favourites punters wantedto bet (on) actually came first," Chief Executive JamesHenderson told Reuters.
The company is not alone in cursing Cheltenham this year.Ladbrokes, which UBS analysts said has greater exposure to horseracing than William Hill, bemoaned "the most expensive week herethat we can remember".
William Hill said it expects 2016 operating profit to be inthe range of 260 million pounds to 280 million pounds, comparedwith 291.4 million pounds ($413 million) last year.
Shares in the company were down by 11.3 percent at 329 penceby 1409 GMT, against declines of 2.2 percent and 1.9 percentrespectively for Ladbrokes and Paddy Power Betfair.($1 = 0.7083 pounds)
(Editing by David Goodman)