>
FIFA World Cup propels Entain to record quarter as Ladbrokes owner raises full-year profit expectations to nearly £1bn
- Entain expects to report core income of £985m to £995m for the past year
- Online gaming net revenue increased 8% from October to December
- MGM Resorts is reportedly considering a takeover of Ladbrokes owner
Entain has raised earnings expectations after the FIFA World Cup helped it achieve record fourth-quarter online trading and active customers.
The owner of Ladbrokes and PartyPoker expects core revenue for the past year of £985m to £995m, representing a 12 per cent increase from 2021 and an upgrade from previous guidance of between £925m and £975m.
The FTSE 100 company struggled to continue to boost digital net gaming revenue (NGR) as Covid-related restrictions were eased, seeing them rise 8 percent at constant currency levels from October to December.
Celebration: The FIFA World Cup in Qatar helped Entain’s fourth-quarter online gaming net revenue soar 8 percent (Photo: Lionel Messi with the Jules Rimet Trophy)
Retail sales rose slightly faster, supported by a high number of UK customers using gambling terminals and previous winter’s trading impacted by Covid-19.
But much of the company’s growth was driven by the FIFA World Cup in Qatar, which increased its active customer base by 14 percent to record volumes.
The bump from the tournament offset a drop in trade due to inclement weather that disrupted other sporting fixtures in December, including horse racing and lower level football in Britain.
Full-year online NGR was still modestly down, partly due to tighter regulations in Germany and the UK, but overall NGR rose 10 percent across all stores as the easing of Covid rules led to a significant recovery of the number of visitors.
Hold shares were up 2.6 per cent on Wednesday morning at £15.27, meaning their value has risen by about a fifth over the past two years.
Entain’s CEO, Jette Nygaard-Andersen, said: ‘2022 was another year of strong financial, operational and strategic progress for Entain.
“We have continued to grow our revenues in a sustainable and diversified manner by expanding our global footprint, broadening our customer appeal, entering new entertainment territories and providing a safe environment for our customers.”
In recent years, the company has focused on conquering the North American market through its BetMGM joint venture, which it created after the overturn of a US federal ban on sports betting.
BetMGM revealed last Thursday that its annual NGR increased 71 percent to $1.44 billion thanks to the launch in multiple new US states, such as Maryland, New York and Louisiana, and higher gross gaming margins.
While the Las Vegas-based gambling operator posted an estimated core revenue loss of $440 million, it does expect to post positive core revenues starting in the second half of 2023.
Matt Britzman, an equity analyst at Hargreaves Lansdown, said the joint venture is a “shining star” for Entain, but added that it “seems unlikely that either party would want to continue their US gambling exposure in its current form indefinitely.”
The Mail on Sunday reported on January 22 that MGM Resorts was considering a takeover of Entain, after rejecting an £8.1bn bid for the owner of Gala Bingo two years ago.
Whether such a transaction goes through will depend heavily on what the UK Gambling Commission publishes in its long-awaited white paper, but the report is expected to recommend stricter regulation for the gambling industry.
“If we had to put money on it, a bid from MGM to take full control seems like the most likely outcome — time will tell,” Britzman said.