GVC to remain in Canada as NGR impact of new sustainability pledge plummets

GVC last week unveiled a new sustainability charter and promised to generate 100% of net gaming revenue (NGR) from regulated markets by the end of 2023. The FTSE 100 operator’s NGR mix from “regulated or regulating” markets currently stands at 96%, with that figure set to rise to 99% by the end of 2020. “These new actions and initiatives are unquestionably the right thing to do for the long term, but in the short term they will inevitably come at a cost,” said GVC, suggesting 2021 EBITDA would be reduced by £40m as a result of the pledge. However, EGR understands Ontario’s move to set up a gambling regulator for private operators under its Alcohol and Gaming Commission has seen GVC reclassify Canada as a regulating territory. GVC CFO Rob Wood suggested this development would roughly halve the 2021 EBITDA damage the operator originally guided to on 12 November. GVC’s stance on Canada has also significantly improved revenue outlook. Numis analyst Richard Stuber suggested the 99% pledge equated to around 3% of overall revenue, or close to £100m, but Wood said staying in Canada would see that number drop to around 1%, or approximately £25m of overall NGR. Wood said: “96% to 99% is 3%, but regarding a significant chunk of that, we have formed a view that Canada is now a regulating territory, hence that is now a market reclassification, so given market exits and lost NGR, it is now a much smaller percentage.” GVC has however committed to withdrawing from Norway. Chief governance officer Robert Hoskin said: “Norway runs a state monopoly licence regime, and the government there is looking to increase enforcement powers against offshore operators. “That is a market where we don’t see opportunity for private operators to get in on a licensed basis so that is a market we will withdraw from,” he confirmed. After rebranding to Entain, GVC said it would pull out of markets that are not demonstrating “a clear path to regulation”. When asked to expand on that definition, Hoskin said: “We’ve got a government monitoring process which is frequently reviewed by our regulatory affairs team. “We are looking at markets that are genuinely showing signs on a political level of looking at introducing licensing regimes. We would then look to take up those licences and enter on a regulated basis. “There are some markets through our review process which we don’t regard as regulating any time soon, or regulated in a way which would allow us to get a licence,” he added. Hoskin was promoted from group director of legal in October 2020 after 15 years at GVC. He said: “Some regulators may take longer than anticipated, but generally everyone has seen that over the last 10 years countries have caught up with the online gambling phenomenon and are keen to regulate it and collect taxes, which is ever more important as treasuries are under strain from events like Covid-19.”