British gambling firm Entain has warned of a decline in its online net gaming revenues for the third quarter and the full year on Monday, blaming the drop on UK gambling policy reforms and on recent unfavorable sports results. Following the business’ warning, shares in the FTSE 100 firm fell 8.2% to a 34-month-low of 969.2 pence by 0808 GMT.
The British government recently laid out long-awaited plans to crack down on problem gambling with proposals that would see new limits on online stakes, increased affordability checks on customers, and a new statutory levy on betting firms to fund research, education, and treatment for problem gamblers. When the group released half-year results in August, Entain had forecast “low to mid-single digit pro forma” full-year online revenue growth.
The owner of online brands Ladbrokes, bwin and partypoker said it expected third-quarter online net gaming revenue to be down by a “high single-digit percent” on a pro-forma basis, contributing to a “low single-digit percent” fall in pro forma online gaming revenues for the full year.
Entain blamed the gloomier outlook on a combination of “adverse sporting results” hurting margins in September, “ongoing regulatory headwinds” from government reforms in key markets including the aforementioned UK review, and “slower growth than expected” in its Australian and Italian businesses.
Despite the downgrade, Entain said its projected earnings before interest, tax, depreciation, and amortization remained in line with expectations of £1 billion-£1.05 billion ($1.2 billion – $1.28 billion) for the full year, “supported by robust operational controls”.
Jette Nygaard-Andersen, Entain's Chief Executive
Ivor Jones, an analyst at Peel Hunt, said Entain had warned over revenues but maintained its earnings guidance, showing the gambling group must have “compensated” for weak online revenues with strong growth from its retail operation and discipline on costs.
Jette Nygaard-Andersen, Entain’s Chief Executive, stressed that the gambling operator “[continued] to see good underlying growth in our online business” as well as strong full-year earnings “despite softer than expected revenue growth in Q3 and the ongoing roll-out of industry-leading safer gambling measures.”
The company’s CEO added that the company was focused on capitalizing on opportunities in the United States, where it jointly owns sports betting service BetMGM along with casino giant MGM Resorts.
The company agreed to acquire U.S.-based Angstrom Sports for a potential consideration of up to $266 million (£203 million) in July, as it looked to beef up BetMGM’s offerings, particularly in the fast-growing markets of parlay and in-play wagering.
