The owner of bwin and Ladbrokes — and part-owner of BetMGM — says that a weakening global economy is starting to take a toll on the amount of online wagering by sports bettors.
Entain PLC announced Thursday that its net gaming revenue from online sports betting (which is just part of its business) was down by 6% for the first half of 2022, and that total sports wagers were lower by 3%.
The U.K.-based company added that net gaming revenue from its online sportsbooks was also down by 6% for the three months ended June 30 (or 9% on a constant currency basis, which is calculated by applying 2022 exchange rates to figures from 2021).
Online sports wagering overall was up only slightly for the quarter, by 1% (albeit down 1% on a constant currency basis).
“A weaker macro-economic environment is reducing customers’ rate of spend, moderating overall Online growth versus our previous expectations,” Entain said Thursday in its second-quarter update.
And here come the headwinds
Entain has a host of retail and online betting brands in its portfolio. Those businesses are based in more than 30 "regulated or regulating territories" around the world, giving the company broad insight into how bettors are feeling.
However, the global economic outlook has taken a turn for the worse this year, particularly with Russia’s invasion of Ukraine helping to push commodity prices higher. Those rising prices have prompted central banks around the world to hike interest rates, which puts further financial pressure on consumers.
The Bank of England’s governor reportedly warned Tuesday that the economic picture has “deteriorated materially” and cautioned that more pain could be in store. Stock prices have been hammered amid the uncertainty, including those of gaming companies like Entain and DraftKings.
“As a business, we are relatively resilient to cyclical macroeconomic effects,” Entain CEO Jette Nygaard-Andersen said Thursday during a conference call for analysts and investors. “However, no business is completely immune. We've seen some moderation in the rate of spend by customers, resulting in lower underlying growth across many of our markets versus our expectations earlier in the year.”
Nygaard-Andersen added that Entain continues to beef up protections for punters, such as stricter affordability checks in the U.K. (where recent political turmoil has clouded the outlook for possible gambling reforms), and that the company is facing more competition in Brazil.
Still, the Entain CEO said they see the long-term prospects of the company as strong. Even as customer spending started to dip in April, there was a record level of active players in the second quarter, up 60% compared to the same span of 2019, Entain said.
“In spite of the gloomy economic headlines and backdrop, our strong actives show that our customers are still playing with us,” said Entain’s chief financial officer, Rob Wood. “They're just spending around 95% of what we had expected them to.”
Betting on BetMGM
Another promising avenue for the company is via its 50% stake in BetMGM (the other half is owned by MGM Resorts), which is planning “further enhancements” to its sports-betting product, Nygaard-Andersen noted.
Excluding New York — where the operator has reduced its spending to acquire customers due to the state’s relatively high tax rate — Entain said BetMGM is second in market share where it operates, earning 24% of revenue in those jurisdictions.
BetMGM also recently announced a partnership with Carnival Corp. to take bets on board cruise ships. Furthermore, the operator is still expected to achieve positive adjusted earnings during 2023.
Overall, Entain reported that net revenue from its entire gaming business (including online casino gambling) was up by 8% in the second quarter, as the company's retail betting business delivered NGR growth of 79%.
Entain operates brick-and-mortar books in the U.K., Italy, Belgium, and Ireland, with an average of 4,300 shops open during the quarter. Although sports betting is increasingly conducted over the internet, Entain reported that retail sports wagers were up 101% for the second quarter.
The company continues to expand via mergers and acquisitions as well. In June, Entain said it had struck a deal to acquire Dutch gaming operator BetCity.
BetMGM is also a relatively recent newcomer in Canada, where it provides online casino gambling and sports betting in Ontario. Wood said the bookmaker recorded over 80 million transactions in the province during June.
“We have a diversified business across both geographies and product, providing relative resilience and also long-term growth,” Nygaard-Andersen said. “Our track record on M&A is strong, and we continue to grow through acquisition.”
