In a transformative leap for lottery operator Allwyn, the company’s third-quarter revenue soared by an astonishing 98% to €368.4 million, a figure nearly twice that of the same period last year. This surge is attributed to the strategic acquisition of Camelot UK, the incumbent operator of the UK’s National Lottery, in February. The timing is pivotal as Allwyn is set to assume control of the National Lottery in February 2024 under the auspices of the fourth National Lottery licence.
In a parallel strategic move earlier in 2023, Allwyn also took over Camelot Lottery Solutions (Camelot LS), effectively expanding its footprint into the United States. Post-acquisition, the business was aptly rebranded as Allwyn North America to embrace its new ownership.
Allwyn’s Chief Executive Officer, Robert Chvatal, expressed satisfaction with the group’s performance, highlighting their robust financial results and strategic advancements despite industry-wide challenges such as sports betting volatility and less predictable jackpot cycles.
The company’s Q3 earnings reflected solid margins and a boost in adjusted free cash flow, which saw a 10% increase to €336.6 million. Chvatal underscored the fortitude of Allwyn’s business model, which demonstrated resilience against inflation and continued emphasis on cost optimization and capital efficiency.
While full figures were not disclosed, Allwyn provided insights into its Q3 revenues. The report indicated a consolidated gross gaming revenue increase of 98% at €1.92 billion after including Camelot UK and Camelot LS operations. Net revenue also climbed by 38% to €883.3 million, after accounting for gaming taxes and contributions to good causes.
However, excluding the impact of the dual Camelot acquisitions, Allwyn’s total revenue dipped by 1% to €1.01 billion for the quarter, with gross gaming revenue holding steady at €965.2 million and net revenue experiencing a slight 1% drop to €636.1 million.
The company pointed out that its growth, when setting aside the acquisitions, had been curtailed by sports results that favored bettors—echoing trends seen across the industry—as well as jackpot cycles that did not swell to levels that attract intermittent players. For instance, the EuroMillions jackpot did not reach the record heights it had scaled in Q3 of the previous year.
A geographical breakdown of Allwyn’s performance reveals the UK as its major market. Despite this, total UK revenue for Q3 decreased by 12% to €956.5 million due to the waning performance of numerical lotteries and diminished EuroMillions jackpot cycles.
Looking further afield, revenue experienced a slight decline of 4% in the Greece and Cyprus market, settling at €503.4 million. The decrement was ascribed to unfavorable jackpot rollovers, more customer-friendly sports outcomes, and adverse events such as wildfires, which affected the availability of certain Points of Sale (POS). Notwithstanding these setbacks, Allwyn experienced growth within its online channels in the region, buoyed by a robust iGaming performance and the introduction of new games.
In contrast, positive developments were observed in Italy, with total revenue experiencing an 8% year-on-year increase, reaching €554.0 million. Austria also reported growth, driven by strong instant lottery sales, iGaming, and video lottery terminals and casinos, contributing to a 2% rise in revenue to €379.9 million.
The growth narrative continued in the Czech Republic, with Allwyn posting a 6% increase in total revenue to €123.1 million, thanks to organic growth across all major product lines, particularly instant lotteries and iGaming. Additionally, Allwyn LS Group business in the US reported a total revenue of €46.5 million in Q3, a 12% increase—principally propelled by the robust performance of the Illinois Lottery that the business operates.
Looking at the nine-month performance up to September 30, Allwyn has raked in a total revenue of €5.70 billion, marking a significant 98% increase from the previous year’s €2.88 billion. Gross gaming revenue climbed by 99% to €5.47 billion, and net revenue grew by 43% to €2.60 billion. Adjusted EBITDA went up by 26% to €1.10 billion, and adjusted free cash flow rose by 23% to €1.02 billion.
Even when the dual Camelot acquisitions are excluded, Allwyn still reported a favorable 7% increase in total revenue, totaling €3.09 billion. Gross gaming revenue advanced by 8% to €2.97 billion, and net revenue saw an 8% hike to €1.97 billion. Adjusted EBITDA and adjusted free cash flow also increased by 11% to €968.5 million and 8% to €901.2 million, respectively.
Chvatal concluded with an optimistic outlook despite the quarter’s challenges, stating his confidence in Allwyn’s trajectory to conclude 2023 on a high note and continue its growth narrative in the forthcoming periods.
