The gaming giant Entain reported a robust revenue growth for the year 2023, with net gaming revenue soaring to £4.83 billion and group revenue rising by 11% to £4.77 billion. Despite the upward trajectory in revenue, the company faced a daunting net loss of £936.5 million for the year, primarily driven by an expensive settlement with the UK’s HMRC and Crown Prosecution Service (CPS) over historical activities in Turkey.
The settlement, which came to light in November and concluded in December, demanded Entain pay a hefty sum of £585.0 million. Additionally, the company agreed to contribute a £20.0 million charitable donation and pay £10.0 million towards CPS and HMRC costs. These extraordinary expenses were tagged in their 2023 financials, along with other predominant costs afflicting the business.
Entain’s financial health in 2023 was also adversely affected by increased impairment expenses, amortisation of acquired intangible assets, and higher spending on restructuring. When combined, these costs propelled Entain to the edge of a £1.00 billion net loss.
Chairman Barry Gibson, however, maintains an optimistic stance on the long-term growth outlook for the company. He reflected on 2023 as a “necessary, but ultimately positive, transition” for Entain, highlighting the strengthening of the company’s revenue base, improvement in the board’s structure, and resolution of a significant regulatory issue from the past.
Gibson also announced that Entain’s newly established capital allocation committee is reviewing the firm’s markets, brands, and verticals to focus the organisation better, enhance competitive stances, and maximise shareholder value.
Interim CEO Stella David, who took the helm after Jette Nygaard-Andersen’s resignation in December, similarly acknowledged the tribulations faced over the past year and expressed pride in how the global team cohesively navigated through tumultuous times. David is tasked with steering the company till a permanent CEO is appointed and is actively working to implement an operational strategy to prioritize organic growth, expand margins, and particularly bolster Entain’s market presence in the US.
Gibson provided a brief on the ongoing search for a new permanent CEO indicating positive developments. Meanwhile, he reassured stakeholders that interim CEO David is effectively leading the company towards better performance in the long run.
Breaking down Entain’s financial performance for 2023, the company has met expectations across different regions and sectors. The UK stood as its primary market, generating £1.95 billion in revenue; Italy followed with £517.4 million, and Australia and New Zealand brought in £515.1 million collectively. Revenue from the rest of Europe amounted to £1.44 billion, and the rest of the world contributed £339.9 million.
The online sector experienced a 12.3% increase in net gaming revenue at £3.43 billion, with gaming climbing by 16.6% to £1.84 billion, and sports betting revenue up by 6.0% to £1.53 billion. Additionally, B2B net gaming revenue nearly doubled to £57.9 million. Despite regulatory challenges in the UK and Germany and slower trading in Australia and Brazil, the online segment displayed substantive momentum in various key markets. Entain also spotlighted success in Georgia with its CrystalBet brand and expansion endeavors in the Baltics, and hailed the integration of acquisitions like STS in Poland and Croatia’s SuperSport in strengthening its Central and Eastern Europe (CEE) operations. Growth was further bolstered by the inclusion of its newly acquired New Zealand business and the partnership with Tab NZ.
The retail division also showed positive trends, with net gaming revenue up by 8.5% to £1.39 billion, sports betting revenue rising by 15.3% to £813.0 million, and machine revenue seeing a modest gain of 0.2% to £573.7 million. Growth in this sector was evident in multiple key markets, including the UK, Italy, Croatia, Belgium, and Ireland.
Entain summed up with comments on BetMGM, its joint venture with MGM Resorts International. BetMGM nearly reached $2.00 billion in revenue in 2023, securing a 14% market share in sports betting and igaming in relevant markets and achieving positive EBITDA in the latter half of the year. However, MGM’s move to launch BetMGM in the UK without Entain, opting instead for a partnership with LeoVegas, marked a slight setback.
Looking at the overall costs for 2023, operating and marketing expenses increased by 12% to £1.27 billion in total. The company also faced an elevated depreciation and amortisation cost of £301.5 million. The financial statement was heavily burdened by the separately listed £585.0 million HMRC settlement fee, a £289.0 million impairment cost, £254.6 million for amortisation of acquired intangibles, £49.7 million in restructuring charges, and a £71.8 million shift in fair value of contingent consideration.
Following a pre-tax loss and tax payments, the group’s loss after discontinued operations was noted at £936.5 million, a stark contrast to the profit of £19.5 million from the previous year. Nevertheless, group EBITDA experienced a minor increase of 1.5% to £1.01 billion.
Despite the financial blow, interim CEO David emphasized an unwavering focus on operational excellence and anticipated delivering future growth based on consistent and focused execution, expressing confidence in the company’s growth trajectory into 2025 and beyond.
