In a significant financial development, Betfred has reported doubling its online revenue for the 2022-23 fiscal year, largely driven by its strategic acquisition of South African operator LottoStar in 2022. The deal, worth £184 million, has proven instrumental in bolstering Betfred’s financial performance, contributing £134 million in revenue and £41 million in net profit for the year.
According to Betfred’s annual returns filed at Companies House, the UK-headquartered operator saw its retail business grow by 3.5% during the period, reaching £577 million. The overall turnover for Betfred came in at an impressive £908 million, marking a 26% increase year-on-year. The company’s EBITDA before exceptional charges rose significantly, climbing from £67.8 million in the previous period to £117 million.
A note from Regulus Partners commended Betfred for its remarkable transformation from a traditional UK landbased betting company into a successful omnichannel business. The firm now generates over 20% of its revenue from outside the UK, with the majority coming from South Africa. “UK landbased cash flow has also been used to make big bets on proprietary technology capability, South Africa, and the US,” the Regulus note added.
Despite the strong financial performance, Betfred reported a significant loss of £71.7 million for 2023. This loss is partly attributed to various impairments in its US business, including a precautionary £40 million provision for overseas businesses that have not been as profitable as expected. The future profitability of these ventures remains uncertain.
The operator has acknowledged challenges within its US operations, noting that “unsurprisingly the USA has been less successful.” This segment of Betfred’s business was the subject of £60 million in charges, listed under exceptional items. “So far, only one of Betfred’s big bets has failed, but the company is in good company for trying,” wrote Regulus Partners.
Additional financial strains included an £11 million lease provision related to loss-making outlets within Betfred’s shop portfolio. During the year, Betfred launched operations in four new US states, although it had to shutter its Maryland operations in June 2023 due to a lack of traction in that market.
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Betfred made a significant leadership shift in September 2023 by appointing Kresimir Spajic, ex-Hard Rock Digital SVP, as the new CEO of its US operations. Betfred founder Fred Done expressed his confidence in Spajic, stating, “It’s an important and exciting time for our US business, and Kresimir is the ideal person to further push and expand the Betfred brand in America.”
The total exceptional charges for the year amounted to £60.9 million. Additionally, Betfred incurred £337,000 in expenses to close a foreign subsidiary during this period. Platform development costs were also up, totaling £65.4 million compared to £47.9 million in 2022.
Despite these challenges, Betfred’s net assets saw a decrease from £305 million to £164 million. Reflecting on this, the board of directors opted not to pay a final dividend for 2023, and no interim dividend was disbursed during the reported timeframe. This contrasts with the previous year when the firm paid out £50.8 million in dividends.
Furthermore, Betfred closed 77 betting shops during the period, as part of its ongoing strategy to review and shutter loss-making venues. The company has indicated that these reviews are a regular component of their operational strategy.
A noteworthy detail in the report is Betfred’s agreement for a loan facility of £4.3 million with Palsar Capital Holdings, a company in which Betfred founder Fred Done or a close family member has a beneficial interest.
In another strategic move, Betfred also changed its name in 2023 from Betfred Group to Betfred Group Holdings to “better align its branding,” according to the company report.
The year 2023 has been a transformational period for Betfred, marked by significant financial gains, strategic shifts, and some notable challenges. The acquisition of LottoStar has undeniably been a boon for the company’s online revenue, while its efforts to diversify and expand, especially into the US market, present both opportunities and obstacles for the future.
