Entain Plc: 2023 Net Gaming Revenue Forecast

Entain Plc - 2023 Net Gaming Revenue Forecast

Entain Plc (OTC: GMVHY) finds itself among the day’s underperforming gambling stocks, with Ladbrokes’ owner disclosing a less-than-rosy 2023 Net Gaming Revenue (NGR) forecast. The culprit? A slump in the online gambling sector.

The company, which owns half of BetMGM, also informed investors that regulatory challenges in the UK were persisting longer than expected, while growth in Australia and Italy remained stagnant. For the third quarter, Entain anticipates NGR to rise on a high single-digit percentage basis but decline pro forma on a similar scale.

“We now anticipate the Group’s online NGR for the fiscal year 2023 to increase by low double-digit percentages, while pro forma NGR is expected to decline by low single-digit percentages. We reaffirm our EBITDA expectations for fiscal year 2023, ranging from $1.22 billion to $1.28 billion, underpinned by robust operational controls,” stated the company in a release.

Entain, listed on the FTSE and also owning brands like BetCity, Bwin, Coral, and Crystalbet, among others, is planning to unveil a comprehensive trading report on November 2.

Regulatory Challenges

The UK Gaming Commission (UKGC) recently issued new guidelines for online gambling operators, which, although providing long-term clarity, could pose short-term hurdles for operators.

In addition, the fact that Entain has set aside $744.5 million related to a bribery scandal in Turkey that occurred under previous leadership burdens the regulatory front.

On the flip side, the company has pointed out that its long-lasting acquisition spree, including various deals in Eastern Europe, is paying off.

In the statement, Entain revealed that recent purchases are performing well, especially SuperSport in Croatia. Analysts believe the company will continue to pursue deals in Central and Eastern Europe. Part of the allure of Eastern Europe for deal-hungry players in the gambling industry is that these markets are not as developed as the UK, Germany, or Italy, indicating greater growth potential.

In July, Entain announced the acquisition of analytics provider Angstrom Sports for $266 million in cash. While not directly mentioned in the press release, Entain and MGM Resorts International (NYSE: MGM) executives discussed this transaction in a positive light, emphasizing synergies with BetMGM.

BetMGM in Focus

BetMGM is performing excellently and may mitigate some of the challenges in Entain’s operations in other markets.

“BetMGM remains on track to deliver positive EBITDA in the second half and full-year NGR performance at the upper end of our expectations, with particular excitement for the product enhancements we will introduce during the NFL season,” explained CEO Jette Nygaard-Andersen in the statement.

With Monday’s stock decline, Entain has nearly wiped out all the gains accumulated since the start of the COVID-19 pandemic, and its market capitalization now stands at $8.26 billion. This could reignite speculations about the company being a takeover target for various potential suitors, including MGM, which has not hidden its desire to gain full control of BetMGM.

What caused Entain Plc’s underperformance in 2023?
Entain Plc’s disappointing performance in 2023 can be attributed to a slump in the online gambling sector and lingering regulatory challenges in the UK.

What are the regulatory challenges faced by Entain?
Entain is grappling with new guidelines from the UK Gaming Commission and the fallout from a bribery scandal in Turkey, which has led to regulatory complications.

How is Entain’s acquisition strategy paying off?
Entain’s acquisition strategy, particularly in Eastern Europe, is yielding positive results, with recent purchases like SuperSport in Croatia performing well.

What is BetMGM’s role in Entain’s performance?
BetMGM is performing strongly and is expected to offset some of the challenges in Entain’s operations in other markets.

Why is Eastern Europe an attractive market for gambling companies like Entain?
Eastern Europe offers growth potential as these markets are less developed compared to countries like the UK, Germany, or Italy.

What was the significance of Entain’s acquisition of Angstrom Sports?
While not explicitly mentioned, the acquisition of Angstrom Sports by Entain is seen as having potential synergies with BetMGM.

How has Entain’s stock been affected by recent developments?
Entain’s stock has experienced a significant decline, erasing most gains made since the onset of the COVID-19 pandemic.

What is the current market capitalization of Entain?
Entain’s market capitalization now stands at $8.26 billion, a figure that could make it an attractive takeover target.

Is MGM interested in acquiring Entain?
MGM has expressed interest in gaining full control of BetMGM, which could lead to speculation about a potential acquisition of Entain.

When will Entain release a comprehensive trading report?
Entain is set to release a comprehensive trading report on November 2, providing more insights into its financial performance and future prospects.


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