Entain vows to bounce back in Germany despite short-term gaming hit

Entain admits it could take three years to return to the top of the German online gaming market having been hit by transitional restrictions ahead of the country’s new Interstate Treaty (IST). Entain’s key territories performed well in Q4 by producing double-digit online net gaming revenue (NGR) growth, including Italy, Australia and the UK. Germany, however, was negative and the only exception after operators in the territory were made to comply with strict deposit and stake limits for the last three months of 2020. At the time, Entain said full-year 2021 EBITDA could be negatively impacted by as much as £70m. CFO Rob Wood has now suggested a three-year timeline for Entain to reach pre-tolerance policy revenue levels. He told analysts: “Typically, regulation and new impacts dictated by regulation are negative in the short term but there are long-term positives if you’re one of the more established operators with the strongest brands and the strongest product. “Will we get back? Absolutely. It might take three years but in three years we’ll get back to where we were, and our market share will be stronger as a result,” he added. Despite the disruption, Wood confirmed Entain would continue to invest in the bwin brand, which is a sports betting market leader in Germany. “It’s a fantastic brand and we would be crazy to pull back from that,” he said.

The CFO – who was last week promoted to the position of deputy CEO – said Germany contributed £200m in NGR before the transitional regulations came into force. Wood admitted that figure would now be closer to £100m. He said: “If you’re losing half, you’re still at around £100m and because it’s leveraging our group’s technology, you’re talking about a £100m EBITDA business give or take.” Wood revealed the impact on online gaming had been worse than originally feared because competitors had failed to comply with the restrictions as listed in the transitional period. “The surprise on the gaming side is that we would have expected more operators to have adhered to the tolerance policy than is the case, and that includes operators that you would ordinarily expect to comply with these kinds of regulations. “Some are now catching up, and perhaps it’s just technology developments that have taken a while, but many you would expect will have a difficult time getting licences when the new regime comes into play,” he added.