Entain Reports Strong Q4 Results as YoY Net Gaming Revenue Rises by 11%

Entain also revealed that its sportsbook arm — BetMGM — is the U.S. market leader in iGaming, holding a 30% market share.

Last Updated: Feb 1, 2023 4:11 PM ET Read Time: 4 min
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UK global gaming giant Entain Plc reported on Wednesday that fourth-quarter group Net Gaming Revenue (NGR) rose a healthy 11% (+7% on a constant currency basis) over the same period in 2021. 

Taking into account the company's 50% revenue share of legal sports betting operator BetMGM — a joint venture with MGM Resorts — Entain will see its FY NGR climb by 15% YoY, adjusting for currency fluctuations.

Even more significantly, Entain's quarterly earnings update released on Tuesday revealed that FY group EBITDA is expected to come in at a range of $1.21 billion — $1.23 billion ahead of previous guidance and up an impressive 12% on a year-over-year basis.

BetMGM remains a highly interesting takeover target for MGM Resorts which is anxious to repatriate the sportsbook which is the third largest online sports betting site in the U.S., trailing only FanDuel and DraftKings.

Entain also posted strong Q4 group online NGR growth of 12% YoY — a new record — driven largely by what the company described as a "successful" 2022 FIFA World Cup that saw its customer base continue to grow at a record pace, up 14% YoY. 

Meanwhile, the bookmaker's Q4 retail business continues its post-COVID recovery by turning in a healthy 10% YoY gain as a result of increased activity at gaming and betting terminals across its vast network of UK shops under its highly popular Ladbrokes and Coral retail brands.

Entain CEO Jette Nygaard-Andersen delivered an upbeat assessment of what she described as the operator's "strong financial, operational, and strategic progress for Entain" in 2022. 

"We have continued to grow our revenues in a sustainable and diversified way by expanding our global footprint, broadening our customer appeal, entering new areas of entertainment, and providing a safe environment for our customers. All of this has led to a record number of active customers in Q4, as well as a full-year EBITDA performance ahead of our previous expectations.

The only negative result from the Q4 earnings update was that full-year YoY online NGR fell by 1% due to additional regulatory costs incurred in the UK and Germany. However, this slight drop-off was more than offset by tremendous growth in retail NGR which soared by 66% YoY and now exceeds pre-pandemic levels. 

Strong BetMGM performance heightens takeover speculation

Another highlight of Wednesday's report was Entain's reiteration of recent guidance regarding BetMGM's expected entry into profitability by H2 2022.

BetMGM currently ranks third among the "Big Three" U.S. sportsbooks with a 19% share of GGR in the states in which it operates. Entain also revealed that its American JV sportsbook arm is the U.S. market leader in iGaming, holding a 30% market share. 

The U.S. sportsbook is generally regarded as the crown jewel in the respective portfolios of both its parent owners — Entain and MGM Resorts — but the Las Vegas-based MGM is determined to own the unit outright and has spent the past two years regretting its original decision to proceed with the JV. 

Entain previously rebuffed takeover bids from both MGM Resorts and DraftKings. Many analysts now believe that the prospects of a deep UK recession and continued weakness in the British Pound against the U.S. dollar make the UK operator highly vulnerable to a renewed MGM Resorts bid for the other half of BetMGM.

In the conference call following the earnings update, industry analysts pressed Entain CEO Nygaard-Anderson on the mounting reports that MGM Resorts is preparing a takeover bid for either BetMGM or Entain as a whole.

The CEO tried her best to dismiss such speculation, however.

"There’s really no change to our previous comments here," said Nygaard-Anderson. "When it comes to our US business, both parents are focused on maximizing the success of BetMGM. We work really well together, and I hope the results that we showed last week prove that point. 

Added the CEO, somewhat defensively: "I would also say that neither parent would do anything to create disruption or distraction that jeopardizes BetMGM."

Entain expects Brazil to legalize online sports betting in 2023

Another key takeaway from Tuesday's earnings update was Entain's "underlying excitement" and expectation that Brazil will finally legalize online sports betting in 2023 after the country's former President Jair Bolsonaro failed to approve such legislation under pressure from right-wing religious groups. 

However, it is generally believed that Brazil's new President Lula da Silva is anxious to pass a sports betting bill so that his government can reap the tax revenue on the country's estimated billion-dollar "grey" online sports betting market.

In December, Entain recently relaunched its UNIKRN sportsbook and skill-based wagering platform in both Canada and Brazil, an early sign that the operator is bullish on Brazil's imminent entry into the global regulated online sports betting market. 

Currently, several major offshore operators are raking in hundreds of millions of dollars of sports bets each year from Brazilian customers. Although there are no official statistics available, an Aposta Hub survey of the most-searched betting sites on Google revealed that bet365 led the way, followed by Betfair, Betano, EstrelaBet, Betsul, Betmotion, and 1Xbet.

Gaming industry experts estimated in August that had sports betting legislation been in place for the World Cup, the country would have collected R$3 billion ($564 million) in tax revenues in addition to R$2 billion ($376 million) from the sale of operating licenses.

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