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Entain warns of decline in online gaming revenues

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British gambling giant Entain has warned about a decline in online gaming revenues, citing the ongoing fallout of safer gambling reforms in the UK and recent unfavourable sports results.

The Ladbrokes owner said on Monday it expected online net gaming revenue growth in the third quarter to be down by a “high single digit per cent” on a pro forma basis, contributing to a “low single digit per cent” fall in pro forma online gaming revenues for the full year.

Entain blamed the gloomier outlook on a combination of “adverse sporting results” hurting margins in September, “ongoing regulatory headwinds” from government reforms in key markets such as the UK “persisting longer than expected” and “slower growth than expected” in its Australian and Italian businesses.

Shares in the London-listed group fell 4.6 per cent to just above £10 in early morning trading as investors reacted to the weaker than expected revenue growth figures. Entain’s shares are the biggest fallers on the FTSE 100 and are at their lowest level since 2020.

In the UK, Entain’s biggest market, ministers this year announced a suite of reforms to reduce problem gambling, including financial affordability checks on certain bettors and stake limits on online slots. The UK government is overseeing a round of consultations on how to implement the changes.

When the group released half-year results in August, Entain had forecast “low to mid single digit pro forma” full-year online revenue growth.

Despite the downgrade, Entain, which also owns Coral and Bwin, said its projected earnings before interest, tax, depreciation and amortisation remained in line with expectations of £1bn-£1.05bn for the full year, “supported by robust operational controls”.

Ivor Jones, an analyst at Peel Hunt, said Entain had warned over revenues but maintained its earnings guidance, showing the gambling group must have “compensated” for weak online revenues with strong growth from its retail operation and discipline on costs.

Jette Nygaard-Andersen, Entain’s chief executive, stressed that the gambling operator “[continued] to see good underlying growth in our online business” as well as strong full-year earnings “despite softer than expected revenue growth in Q3 and the ongoing roll-out of industry-leading safer gambling measures”.

Analysts at Goodbody forecast a 1 per cent decline in full-year earnings off the back of Entain’s trading update.

“Online trends in several key markets are disappointing,” they noted, adding that they took “some encouragement” from the strong performance of Entain’s US joint venture BetMGM. “It appears a lot of the weakness is driven by sporting results, which should normalise over time.”

Summarize this content to 100 words Receive free Entain PLC updatesWe’ll send you a myFT Daily Digest email rounding up the latest Entain PLC news every morning.British gambling giant Entain has warned about a decline in online gaming revenues, citing the ongoing fallout of safer gambling reforms in the UK and recent unfavourable sports results.The Ladbrokes owner said on Monday it expected online net gaming revenue growth in the third quarter to be down by a “high single digit per cent” on a pro forma basis, contributing to a “low single digit per cent” fall in pro forma online gaming revenues for the full year.Entain blamed the gloomier outlook on a combination of “adverse sporting results” hurting margins in September, “ongoing regulatory headwinds” from government reforms in key markets such as the UK “persisting longer than expected” and “slower growth than expected” in its Australian and Italian businesses.Shares in the London-listed group fell 4.6 per cent to just above £10 in early morning trading as investors reacted to the weaker than expected revenue growth figures. Entain’s shares are the biggest fallers on the FTSE 100 and are at their lowest level since 2020.In the UK, Entain’s biggest market, ministers this year announced a suite of reforms to reduce problem gambling, including financial affordability checks on certain bettors and stake limits on online slots. The UK government is overseeing a round of consultations on how to implement the changes.When the group released half-year results in August, Entain had forecast “low to mid single digit pro forma” full-year online revenue growth.Despite the downgrade, Entain, which also owns Coral and Bwin, said its projected earnings before interest, tax, depreciation and amortisation remained in line with expectations of £1bn-£1.05bn for the full year, “supported by robust operational controls”.RecommendedIvor Jones, an analyst at Peel Hunt, said Entain had warned over revenues but maintained its earnings guidance, showing the gambling group must have “compensated” for weak online revenues with strong growth from its retail operation and discipline on costs.Jette Nygaard-Andersen, Entain’s chief executive, stressed that the gambling operator “[continued] to see good underlying growth in our online business” as well as strong full-year earnings “despite softer than expected revenue growth in Q3 and the ongoing roll-out of industry-leading safer gambling measures”.Analysts at Goodbody forecast a 1 per cent decline in full-year earnings off the back of Entain’s trading update.“Online trends in several key markets are disappointing,” they noted, adding that they took “some encouragement” from the strong performance of Entain’s US joint venture BetMGM. “It appears a lot of the weakness is driven by sporting results, which should normalise over time.”
https://www.ft.com/content/a0b32ffe-b602-4f84-b787-cecadb204bab Entain warns of decline in online gaming revenues

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