Global gaming giant Entain has made headlines with its latest financial update, which heralds an overall revenue increase of 3% in the first quarter of the year, including the figures from its 50% ownership in the BetMGM joint venture. When measured on a constant currency basis, this boost ascends to 6%. Despite positive initial appearances, a proforma assessment—which assumes all 2023 acquisitions as part of Entain from the year’s onset—and at constant currency, paints a slightly less rosy picture with a 3% dip in revenue.
Drilling down into regional performance, the company’s advance is particularly marked in Central and Eastern Europe (CEE), where acquisitions like Poland’s STS and Croatian powerhouse SuperSport, both integrated in 2023, propelled reported revenue to leap by 124%. SuperSport’s Q1 effectiveness stood out as a considerable factor in the uplift. The online sector experienced a 128% revenue surge, while retail mirrored this positive trend with a 111% rise.
On a proforma and constant currency foundation, revenues ascended by 11%, with gaming’s net gaming revenue (NGR) inflating by 30%, and sports NGR and wagering edging up by 6% and 7%, respectively.
Looking abroad, Entain’s territories excluding CEE, the UK, Ireland, and the US, signaled a reported 4% revenue elevation, thanks to both the online and retail segments ticking up by an equal percentage. In contrast, proforma constant currency analysis suggests a minor 2% decline in total international revenue.
Key to international expansion has been gaming, exhibiting a 1% NGR growth in proforma and constant currency terms. On the flip side, sports NGR and wagering waned by 5% and 3%, respectively. Despite overall progress, challenges in markets such as Australia, the Netherlands, and Germany, have tempered earnings. Yet, Brazil presents a success story, showcasing substantial growth following operational refinements. Italy’s scenario, however, contradicts this narrative due to unfavorable sports margins despite significant volume growth.
The UK and Ireland segment has not fared so well, feeling the brunt of new regulatory measures. Here, reported revenue took a 7% hit, with online and retail falling by 9% and 6%, respectively. The future, however, does have a silver lining, with Entain being optimistic about its endeavors in these regions, citing operational improvements and a stabilizing regulatory framework conducive to growth leading into 2025.
Across the Atlantic, the BetMGM joint venture with MGM Resorts International continues to flourish in the US, boasting a 2% rise in NGR and grasping a 14% market share across both sports betting and iGaming platforms. Despite this success, customer-friendly win margins in online and retail sportsbooks partially offset igaming growth. Nonetheless, robust customer acquisition and impressive Super Bowl and March Madness campaigns spelled strong growth for BetMGM. An enhanced user experience poises the brand to further invest in and capture market growth.
Entain’s interim CEO Stella David, succeeding Jette Nygaard-Andersen and soon to replace Barry Gibson as chair, reflected positivity regarding the company’s Q1 trajectory. She emphasized strong market performances and recognized the hurdles faced in certain geographies. Strides in both Brazil and the US underline the company’s trajectory, and while acknowledging the road ahead, David remains steadfast in the strategic focus on organic revenue growth, margin expansion, and carving out a win in the US market.
Amidst these developments, whispers of potential asset sales within the Entain portfolio have surfaced. Reports involving the hire of Wall Street advisory firm Moelis to counsel on sale strategies indicate a prioritization of assets that do not integrate directly into the company’s platform—a segment contributing roughly a third of last year’s net gaming revenues.
These rumored divestitures come on the heels of significant acquisitions and a heavy financial year for Entain, particularly marked by a £936.5 million net loss, a stark outcome largely a result of a hefty HMRC settlement concerning historical operations in Turkey. Yet despite these expenses, revenues experienced an uptick across core businesses—net gaming revenue rising by 11.1% and group revenue by 11.0%, with EBITDA modestly increasing by 1.5%.
Entain’s initial 2023 phase showcases a complex image of strategic triumphs, market-specific setbacks, and proactive adaptation, as the global titan marches onward in an industry as dynamic as it is competitive.
