The group that owns Ladbrokes, Sportingbet and other gambling brands revealed a £40-million hit to its earnings in 2024 due to regulatory headwinds from Britain and the Netherlands. This prompted analysts at the company’s parent company to lower their estimates.
Entain’s share price dropped immediately after the news, by 37 1/2p or 4.5 percent, to 793p at lunchtime, despite announcing a 14 per cent revenue increase in 2023, with trading from BetMGM (its American joint venture), which exceeded market expectations.
Entain stated that while it expects the British rule changes will be positive for its company over the long-term, there may be some disruptions to players in the short term. Entain said that Dutch authorities had recently proposed tighter deposits limits, which could affect this year’s earnings.
Stella David said that Entain, as the interim chief executive of the company, had faced a “number of challenges both industry-wide, and Entain specific”, over the last year. However, the group was confident it would “deliver future growth” with positive signs coming from Brazil.
David, 61 years old, former chief executive officer of William Grant & Sons (the spirits group), said: “We started the new fiscal year with a plan to accelerate our operations strategy. We are making progress on a number of initiatives, including refocusing our market portfolio, prioritising organic growth, driving our share in the US, and expanding our margins.”
She stated that the employees of the group had united to “navigate” the business during a difficult and sometimes eventful year. Entain, she said, was making progress in refocusing the portfolio and prioritising organic expansion and margin expansion. “We are confident that our focused execution and continued focus will drive organic growth well into 2025,” she said.
David was named interim chief executive following the abrupt departure of Jette Nygaard Andersen, 55 years old, from Entain , in December. After almost three years, the Dane left the company due to mounting pressure from activist shareholders such as Eminence Capital and Sachem Head.
Although Nygaard-Andersen had been praised for her work in improving player safety and tightening anti-money-laundering initiatives, the activists expressed concern at what they felt was Entain’s scattergun acquisition strategy. Ricky Sandler (54), the founder of Eminence, and one of those who spoke out most in the fight between investors and Entain, a London-listed gambling company, claimed victory in January when he was named a nonexecutive Director. He is a member of the governance and capital allocation boards and has indicated that he will work with Entain to “identify an additional nonexecutive board mutually acceptable to Eminence” and the company.
Eminence had previously indicated that it was looking to appoint new non-executive board members. Sandler suggested in an open letter sent to the board last June that the company explore selling some or all its stake in BetMGM. BetMGM is a joint venture between MGM Resorts International and Eminence.
Sandler expressed particular concern about Nygaard Andersen’s £750m purchase of STS Holding – a Polish sports betting company – and asked why Entain issued new equity that was “highly underestimated” to fund the transaction. He accused her of having “an empire-building, shareholder-value-destroying strategy”.
Entain (formerly GVC Holdings) is one of the largest gaming and sports betting groups in the world. It has almost 4,900 betting shops in total, about 2,400 of which are located in the UK. It owns proprietary technology and controls brands such as BetCity and Bwin. It has over 24,000 employees and operates in 40 countries.
It agreed a deferred prosecution agreement with HM Revenue & Customs and the Crown Prosecution Service in December. The company agreed to pay a £615m penalty for alleged bribery committed by GVC in its Turkish operation between 2010 and 2017. This business has since been sold. Entain’s post-tax losses were pushed up to £879m by the cost of settlement and impairment charges, mainly relating to its Australian operations.
The company reported that its underlying earnings for the year were down by 2 percent to £974 millions, which was slightly higher than the consensus estimates of £960million and near the midpoint of the range it had set out between £955million to PS1billion.
According to the reported figures, net gaming revenues grew 11 percent to £4.83billion, while underlying earnings increased 1 percent to just under £1billion. The underlying pre-tax profit grew from £321.8 to £444.9. The total £113 million is made up of a second interim dividend of 8,9p or £56.5million.
David was viewed as an outsider for the permanent job. Andreas Meinrad (56), the chief executive officer of BVGroup and Rob Wood (44), Entain’s chief financial officers, are among the names that have been mentioned as being hotly tipped.