Entain, the parent company of Ladbrokes, has issued a cautious outlook for its online net gaming revenues in the third quarter and the full year, citing the impact of ongoing regulatory changes in the UK and reduced growth in Australia and Italy.
This announcement led to a decline in the shares of the FTSE 100-listed company, dropping as much as 8.2% to 969.2 pence during trading on Monday, marking a 34-month low.
The British government recently unveiled plans aimed at addressing problem gambling, which include proposals for stricter limits on online betting stakes, enhanced affordability checks for customers, and a statutory levy on betting companies to support research, education, and treatment for problem gamblers.
Entain acknowledged on Monday that regulatory challenges were persisting longer than initially anticipated. Additionally, the company cited adverse outcomes in sports betting as a factor affecting its sports margins for September.
The company, which owns online brands such as bwin and partypoker, anticipates that third-quarter online net gaming revenue will experience a "high single-digit percent" decline on a pro-forma basis.
Similarly, Entain expects full-year group online gaming revenue to decrease by a "low single-digit percent" on a pro-forma basis. This contrasts with its earlier projection of annual growth in the low to mid-single digits.
Entain also disclosed plans to streamline its group structures and operations to enhance operational efficiency and reduce costs. Detailed information about this simplification process will be shared in the company's third-quarter trading update, scheduled for November 2.
CEO Jette Nygaard-Andersen emphasized the company's focus on capitalizing on opportunities in the United States, where it co-owns the sports-betting platform BetMGM with MGM Resorts.
In a move to strengthen BetMGM's offerings, Entain agreed to acquire U.S.-based Angstrom Sports in July, with a potential consideration of up to £203 million. This acquisition aims to enhance BetMGM's presence in the rapidly growing markets of parlay and in-play wagering.
Jefferies analysts commented on Entain's revenue warning and restructuring plans, noting, "Entain's revenue warning and restructuring announcement adds further uncertainty. A focus on optimised capital allocation may provide comfort around reduced M&A."
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