‘Entain’s Q1 Results Show 13% Drop in Net Revenues But 33% Online Increase!’ (Image by PublicDomainPictures from Pixabay)
From the outside in, Entain’s Q1 2021 financial results might look a bit of a mixed bag. This is due to the firm’s multiple verticals within the global online gambling industry, to which its overall performance relies on the success of all divisions!
Therefore, when you see a 13% reduction in ‘total gaming’ revenues for Q1 of 2021, the figures could easily be misconstrued as a reflection of poor financial performance. Yet, when you dig deeper, there are some major positives to highlight. Case and point, Entain’s Q1 ‘online gambling’ revenues rose by a staggering 33%, and to add more gloss, this means that for the 21st consecutive quarter, Entain’s internet-based betting and iGaming operations recorded double digits!
So where did the losses come from? Quite simply, like every other brick and mortar entertainment business across the globe, Q1 losses came from retail operations.
For Entain, the primary cause of the 13% drop in ‘total gaming’ revenue was due to forced ‘lockdown’ closures of its land-based operations, most notably its flagship UK betting brands, including Ladbrokes and Coral; both of which have historically relied on revenues coming from its brick-and-mortar high street betting shops. Moreover, retail betting stores in other locations such as the Republic of Ireland, Belgium, and Italy closed for long periods of time for the same reason.
In fact, pre-pandemic Entain already faced considerable financial losses via its UK retail betting operations as a direct result of newly enforced UKGC max betting limits on in-shop betting terminals; a regulation that also affected many other UK high street bookmakers that use the same automatic self-service betting kiosks technology to allow punters to place bets without going up to the counter. Although the new max bet rules had no effect on the current Q1 results, it builds a picture of the overall struggles Entain is dealing with on the land-based operations side of the business coming into 2021.
Fixed-odds betting terminals in the UK previously allowed a max bet of £100. New regulations meant that the maximum bet was reduced to just £2. Reduced revenues led to the closure of thousands of betting shops, and the loss of thousands of jobs!
Weakness Attracted the Vultures Looking to Diversify Their Gaming Investments
Noting all the above and looking to strengthen their position in the global iGaming market after continued success in the expanding US betting and iGaming markets, US betting firms began circling the UK gambling market looking for investment opportunities. The interest in British iGaming and betting brands resulted in Caesars Entertainment Inc taking over William Hill in a controversial move, while Entain was the target of an 8.1 billion takeover from US-run casino operator MGM Resorts.
Entain rejected MGM Resort’s bid, which consequently worked in the UK firm’s favour as it helped raise the company’s FTSE 100 share price by a staggering 26%!
Entain’s Q1 Results Suggest London-Listed Company About to Make the Best of Both Worlds!
You could argue that the pandemic has been a blessing in disguise for Entain – at least for its online sector! Despite an obvious downturn in total gaming revenues due to the closure of its established land-based venues, COVID-19 has allowed the company to continue its online growth at an accelerated pace. The reintroduction of sports, and continued closure of retail betting stores, has meant sports betting fans have signed up to online betting sites, many of which headed to brands under the arm of Entain’s conglomerate structure.
On top of this, with casino and gambling venue closures, card sharks and slot fanatics have directed their attention towards online casino and poker sites to which Entain operates established brands like CasinoClub, Party Poker, Party Casino, while its Ladbrokes and Coral sites, plus its many other online betting brands also have casino and poker options. Namely VistBet, Betboo, and Bwin!
Adding to this, only last month, we reported that Entain posted 3.6 billion sterling revenue for 2020. That figure was despite COVID-19 and the resulting lockdown restrictions. In fact, over half of that revenue for the year came in the last quarter when lockdown restrictions were at their worst. One of the key reason revenues took such a huge leap was because spectator sports, which had paused in order to avoid the spread of the coronavirus, restarted. Betting returned to major markets such as football, tennis, horse racing, cricket, and rugby, all of which were given the go-ahead, albeit with no crowds allowed. Entain’s online betting sites inevitably thrived during this period with betting shops closed, but their online bookies in full swing 24/7.
Interesting: Entain owns numerous online gaming brands including Ladbrokes & Coral, Bwin, BetMGM (who attempted a takeover bid), and Vistabet, while also has several game labels which are Foxy Bingo, Foxy Games, CasinoClub, Party Poker, Party Casino, and Cashcade!
Now, as lockdown restrictions ease in the UK, where high street bookmakers re-opened on April 12, in Europe, and across the rest of the world, Entain should see marked recovery from this sector. Net gaming revenues should increase, which alongside the continued growth of the company’s online revenues, should ensure a brighter future. In fact, we predict Entain will probably be in a stronger position post-pandemic than what it held pre-pandemic!
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