EGR Power 50 2022: 2. Entain
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2. Entain
Financials : Online NGR for H1 2022 slid 7% in cc to £1.5bn, which was blamed on tough Covid comparatives. EBITDA for the six months to 30 June rose 17% YoY to £471m
Strategy & impact: A blend of international and local brands. Recent relaunch of esports betting outfit Unikrn (acquired in 2021) with its skill-based wagering offering hints at diversification plans
Geographic reach: Operates in over 40 regulating or regulated territories. Geographic spread is such that no individual market accounted for more than 29% of online NGR in H1
Influence & leadership : Unrivalled when it comes to the sheer number of betting and gaming brands. Company is a champion of sustainability, safer gambling and D&I
The past year has been a period of readjustment for Entain after that machine-like 23 consecutive quarters of double-digit net gaming revenue (NGR) growth finally ended in Q4 2021. It couldn’t last forever, right? With sustainability a core pillar, the FTSE 100 firm claims to have the most diversified regulated revenue in the industry, led by the UK (29% of H1 online NGR) and followed by Australia (14%). What’s more, 90% of its UK player base are classed as ‘recreational’ as the focus for flagship brands like Ladbrokes and Coral switches to active, low-spending users.
On continental Europe, omni-channel gains continue in Italy spearheaded by online and retail operator Eurobet. In Germany, Entain was recently awarded licences to offer igaming (Ladbrokes, bwin and Sportingbet) and online poker (bwin and Ladbrokes) to complement its sports betting licences. While the Netherlands remains off limits as the group awaits regulatory approval for its bwin and Party brands, homegrown Dutch operator BetCity was acquired in June in a deal worth up to €850m as Entain deployed its tried-and-tested M&A strategy of cherry-picking bolt-on acquisitions.
Then, in August, Entain CEE (75% owned by Entain and 25% by EMMA Capital) was formed to propel expansion into Central and Eastern Europe, with the entity snapping up leading Croatian operator SuperSport for an initial consideration of €800m (€600m paid by Entain). In fact, Entain has swooped for nine companies in the past 18 months, including five in 2022 alone, swelling its portfolio to well over 20 B2C names. Logically, rising interest rates should supress future appetite for M&A but then again publicly listed targets have seen their market caps shrink this year. “While interest rates are not helpful, it doesn’t prohibit us to continue M&A here,” CEO Jette Nygaard-Andersen told investors in October.
Arguably the shrewdest piece of business to date is the 50/50 JV inked with MGM Resorts International in 2018 to create BetMGM. Entain says BetMGM is the number two operator (excluding New York) with a 25% market share, rising to a market-leading 31% for purely igaming. NGR was ~$1bn for the first nine months of 2022, and the business is on track to comfortably hit its $1.3bn NGR target for full-year 2022. With BetMGM expected to break even next year, a future IPO is a distinct possibility. Or MGM Resorts tables another bid for Entain?