iGaming Daily

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Yesterday, Entain posted a positive Q3 trading statement in which the FTSE 100 gambling group had cited confidence in achieving the year one objectives of its corporate reorganisation. New CEO Gavin Isaacs reaffirmed the view that Entain should be viewed as a highly attractive business with its brand in leading positions across key growth markets. Confidence was bolstered by Entain returning to online growth in its home market of the UK and Ireland. and registering 48% NGR growth in Brazil ahead of the market's launch in 2025. Meanwhile, in the US, the BetMGM joint venture has stabilized its market share in iGaming at 22% and sports betting at 8% ahead of key product upgrades. Under a new leadership and corporate strategy, Hasaintain finally turned the corner on its former headwinds returning the PLC back to profits and shareholder value. I'm Martin Elliott and welcome to today's edition of iGaming Daily, brought to you in partnership with OptiMove, the number one CRM marketing solution for the iGaming industry. Our friends at OptiMove have announced some exciting news this week. They've signed a deal with Vycouse, Finland's national lottery operator, which adds to an enviable client list that already includes the likes of Bet365, Kindred, Lotomatica and Entain. That's the very same Entain that I'm going to be discussing with Ted Menmieu, SBC's contact director or even content director, and Connor Porter, senior journalist for Casino Beats. Hi Ted, how are you doing? Good, good Martin, very well. Looking forward to the weekend, but closing out on Entain's Q3 update. So... Looking forward to this discussion. Yeah. Excellent. And, uh, hi, Conor. How are you? Can say I'm making that sound like I haven't seen you for ages, but, uh, it's been, uh, well, all of, uh, all of about 12 hours. Yeah. I'm doing good, Martin. Uh, happy to be part of the, uh, the big Monday news team again on the Friday. So yeah, let's go big Monday news team on a Friday. The rebooted big Monday news team. Um, okay. Great. Um, it's, I think we've probably talked about Entain more than anything else since we started iGaming daily. We've talked about, um, fines, shareholder revolts, Entain leaving the Vatican City market. We've done all sorts of things on this. This is one of the first times we've had maybe something positive to say though. Connor, can you perhaps give a bit of a recap on this positive statement, which we've had in from Entainer? How did Q3 actually go for them? Yeah, it went really well for Entain, according to their published results. Ahead of expectations overall in Q3 is what they said with the online gaming revenue, NGR rising by up to 10% year over year. So, good on that aspect online. A total group NGR including its 50% of betMGM in the US, up by 8% in comparison to previous year, 10% in constant currency and 7% in... constant currency on pro forma basis. So really good in that aspect, back in the positives for them, it'll be good for them as well with Gavin Isaacs now in the CEO role from the beginning of September, moving forward throughout the rest of the year now and approaching 2025, there's a bit more solid footing for Entain, shall we say, going forward. They expressed as well that they've had a good key growth in their core markets of the UK, US. and in Brazil as well. And overall, it's looking really positive for them. Gaming NGR is up for them by 6% year over year on a performer basis, as well as sports NGR by 5%, wages in sports up by 3%. Online-wise, it's the same kind of results. Gaming up by 9% NGR, sports NGR up by 8%. So there's a lot of positive trajectory. going forward for them. Gavin said within the call itself that they're delivering on their strategic priorities. Already mentioned about their improvement performance and their essential, what they've quoted as, must-win markets of the US, UK, and Brazil. Product and technology is good for them. On the roadmap remains on track. So yeah, overall, It looks as though they've got a lot of optimism going forward into Q4 and the new year, but we'll be discussing that in more detail on this podcast today. Sure. You used the word up quite a lot there, which I think investors and analysts always like to see from these statements. It always goes well with investors when you use the term up in your results. Everything's improving, everything's increasing. Yeah, that's right. I mean, one of the standouts... results really is in the UK and Ireland where they've managed to grow the business a little bit. How have they managed to achieve that, Ted? Okay. So in this area, you really have to tune into the investors' calls. And this was kind of underlined by CFO Rob Wood, who kind of detailed and changed passage back to revenue growth in the UK and Ireland, which I think attracted about 6% to 8%. He reflected that it had been a tough adjustment for Intain's UK portfolio since Q3 2023, in which its brands have taken significant regulatory adjustments. The UK unit has returned to pro-forma growth since Q2 trading, in which Wood believes that regulatory drags are now behind its brand and its portfolio and that it's kind of capital of UK. UK brands can now return to overdue growth. Also, what it's witnessed is Protestant enhancements across the portfolio, which will have a direct impact on NGR results moving forward. Again, one of the outstanding issues is retail that reminds 2% behind on NGR, but its outlook is improved by new efficiencies and install upgrades that are expected to come into far play from Q4 onwards, overall kind of intends painting a much brighter picture on its UK prospect. But it underlines that the UK is a market in which it must return to the top table. It'd be interesting to see how it does that. Sure. And one thing which has been looming over the UK gambling industry this week is the threat of a huge tax rise. I believe that was addressed on the investor call, Conor. Yes, that was. Gavin Isaacs made a comment about the reports of a potential tax increase for the UK gambler market. And he said that, I quote, until the budget is announced, it's all conjecture. We continue to highlight to the Treasury that a punitive tax increase would have a materially detrimental impact on the economic contribution of the wider industry. putting at risk thousands of jobs, funding for sports and racing, as well as benefiting the black market. So yeah, we'll all be waiting for when the budget is announced at the end of this month to see what is the direction of travel for the UK gambling industry. But for now, it very much is Gavin Isaac saying that we'll be waiting patiently to see what the government has planned for UK gambling. in the new year and beyond? Yeah. I know in parliament yesterday, the Culture Secretary, Lisa Nandy, was taking questions on this very issue. One of her responses was that we shouldn't believe everything we read in the papers, which gives us a problem because the Financial Times says this gambling tax increase is not under consideration and the Guardian says it's very much under consideration. It's true. We can't believe everything we read in the papers, only some of it. But we'll, we'll see how that pans out in, I think we've just got two weeks to wait now for that, the autumn statement to come around. Um, so sticking with you, Connor, just, um, let's look a bit further afield and across the Atlantic, um, but MGM is sort of entering a critical period really with its, uh, upgrade and projects there. So could you update us a little bit on how that joint venture is doing and what its new direction is under the new leadership team at Entain. Yeah, similar to what Ted said about the UK, this was one where you sometimes had to delve into the InvestiCorps to get a few more insights as to what's going on with BGM, their joint venture with MGM Resorts International in the US. They said they've seen encourage and start to the H2, the second half of 2024. after achieving Q3 NGR growth of 18% in constant currency. But as it has been throughout the year for BetMGM in the US, it's still as an investment year in 2024 for the operations there, looking to improve their marketing and improve their player experience as well. And in essence, that has shown its impact. The market share stabilization for it is around 15%. iGame and Stanton at 22%, Sportsbetting at 8%, but at the same time, Rob Wood emphasized that it's still very much early days, but they are seeing the benefits from the angstrom capabilities to help drive Parlay better mix and gross gaming revenue hold across the sports of major league baseball, basketball, the NFL and college football as well. So even now with the NFL and college football seasons only just kicking off with. you know, the Major League Baseball approaching their post season before the end of Q3, with basketball looking to begin their season in the next few weeks. You know, we'll more than likely get to see the full impact of what these angstrom capabilities are once they publish the Q4 results later this year. But on top of that as well, they mentioned that iGaming revenues for BetMGM We're at a record high in Q3, first time deposits up 70% strong online sports to gaming cross-sell in the NFL season to date, encouraging trends from their single account, single wallet integration in Nevada as well with strong, uh, first time deposit growth and prior engagement continuing upon return to, uh, home state there. So it's, it's looking like a good positive direction for, for the MGM and what we kind of like emphasized already at the beginning with. the free core markets, you know, US being one of those markets is looking very strong for them. We'll get a better indication, I think, once MGM Resorts releases their Q3 results on the 30th of October. So we should get some more information about MGM then. But overall, Rob Wood said that MGM is gaining momentum in US markets and some of the results that they've managed to achieve is an indication of just that. transform the player acquisition campaign, which seems to be going still pretty well. Market share is good. Can they convert that into a long-term profitable business out in the US where it's extremely difficult for bookmakers to actually make money? On a similar sort of scenario, I think. five years ago, the excitement was all around the US. Now it's all around Brazil. What can we expect from Entain in Brazil, do you think, Ted? Once the federal launch of the bets market goes live next year, why do you think they've managed to get such a positive run up to that big change in Brazil? They're trying to find out why Entain has such a positive view of the Brazilian market at such an early stage. I think Citigroup asked it to call out its wins in the market, which Rob Wood said revealed it was, he marked 2024 as a year of kind of multi-million pound investment in Brazil in which Entain is building towards providing the best kind of localized platforms in terms of deposits, withdrawals. Games that attract Brazilian audiences such as Aviator and improved market pricing over Brazilian sports. The other thing is that in the past six months, it's overhauled its leadership team out in Brazil. So it's got a very good talent on the ground making these decisions. The other thing that is factoring in Brazil is that last year or I think in 2022, the Entain acquired its first media acquisition of 365 scores. And that's now come into the fold. So Rob would describe that circa 30% of acquisitions of Brazilian players are being directed via 365 cores media platform. So it's getting a much better kind of return on investment on its advertising and marketing. And he definitely thinks that is a weapon to go to market with. Ahead of Betsy's launch in 2025, I think that leadership believes that it has the fastest route to ROI in Brazil, regardless of how many operators are in the market. And overall to its corporate strategy, I think that it's laid the groundwork in Brazil to make its very much in year one. the first statement to market saying, look, we're in the podium place and we've got the best strategy to scale Brazilian sports and Brazilian complexities. I think the new leadership views not only Brazil as a market to grow in, but a market to really make a statement as an antenna on the comeback. with the benefit of a little bit of hindsight, not too much yet. The acquisition of that scores media platform, the live scores business they've got down there is a really smart ploy in that market. I think what we're seeing in Brazil now, and especially with the M&A plays, is it's not so much just acquiring customers, we're acquiring assets. I think that the play for the operators are what is going to make your product effective, but what is also... I think the makeup of the Brazilian players will be fundamentally different to Western Europe and to the US. I think there's going to be a big emphasis on ROI and who's quickest to return to market, whose strategy works the best out there. Sure. So let's sort of stick with M&A at the moment, but travel a few thousand miles north to maintain CE operation. previously as part of this sort of recovery plan, you might call it, had recommended the sale of Crystal Bet, but it now appears they've decided against going through with that. Do we know much about why that is, Connor? So through their evaluation, published in the Q3 report, as you mentioned, the Capital Allocation Committee took a strategic review of Crystal Bet, but they came to a conclusion to not pursue the sale. as they determined that there was still strong growth and cash generation from the brand, from the sports betting and gaming brand in Georgia. And also the third party interests did not exceed its valuation to Entain as an attractive part of its global portfolio. So they've decided to keep Crystal Bet within its portfolio. They've determined it's more valuable within the group, but they still did mention that they are continuing to assess all assets going forward. And so for now, Crystal Bet will remain part of the Entain portfolio. But across the CEE operations, they mentioned that NGR rose by 11% pro forma, CC online and retail both rising by 13 and 2% respectively. Croatia with their Super Sport, they've mentioned that that's performing particularly strongly as well. So. It's another good market for Entain performing well in their CEE operations there, Martin. Sure. So Ted, they've bought a lot. They've acquired a lot of businesses in the last few years, and it hasn't always pleased the investors in the business. Do you think there's still scope for some disposals? is everything looking positive in the markets they're in at the moment? It's definitely been a kind of change of tone in the meantime. One thing that we're kind of witnessing is that the kind of chips are falling in their favor. So one market that got highlighted was Australia, where Rob Wood noted that LabBrigs and Ned brands were outperforming the market rivals and maintaining growth ahead of the competition. It's been a tough kind of 18 months for the Australian markets, a kind of regulatory alignment across states. But Intain actually views the market as very soft in which it can take significant market share of retail incumbents. And by that, it means I think it's iron kind of tab out there and saying, well, we can definitely take considerable or quick market share from them. Again, it throws kind of another kind of variant into its 2025 strategy. about how hard it will push you out in Australia, but it's definitely an opportunity for them. And again, a market that all of a sudden will come into play for them. It's another kind of positive narrative for them. Okay. That's one to keep an eye on then. Definitely. That wasn't something I was particularly aware of. So interesting. Right. We've had 20 minutes during which we've had a whirlwind tour of the gambling world, in fact. So just to finish off then. with one quarter remaining. And this is quite a binary, binary question of the sort that analysts don't ask on those investables. 2024, good year or bad year for Entain, do you think, Connor? I'll speak about this. And I think it's been a bit of a mixture, I think, for Entain, you know, they've taken the time with their appointment of a permanent CEO, but they, you know, they finally named Gavin Isaacs and he's in the role now. And with Q3 operations looking to be heading in the right direction from Q3, it's looking relatively strong and it's looking like it could end up being a strong finish to the year for Entain. But I suppose the question that will be asked is how will this impact, how will they be impacted sorry, from market changes in 2025 going forward, particularly in Brazil? would be a big one for them. You know, they've shown that they've got optimism for the remainder of the year. So, you know, they've already mentioned that the group EBITDA is looking to be closer towards the top range of their guidance, close to 1.09 billion figure that they mentioned within the results. So it's, I would say it's a bit of a mixed. year in the end for Entainer. I know that's probably not the answer that you really want. You want either a good year or bad year, but I'm going to stick with my mixed answer. Okay. I think Ted is going to get off the fence and give me an answer one way or the other. I think it really boils down to the plays or how Q4 kind of pans out. What's clear is from the business calls is that the analysts in the cities, they're trying to come, they're trying to predict or they're trying to get... get a clearer picture of where Gavin Isaacs will take Entain to. I think refreshingly for Entain, what we've seen is that Isaacs is trying to change the narrative of Entain as a company. And also one of the things that he's very clear on was that he's not just prioritizing bit MGM above other brands. He wants Entain to kind of operate as a technology company. improve its kind of product synergies and leverage growth across all brands and all markets. It's very positive that they're getting a kind of return to UK growth, but overall, can Adbrookes and Coral match the capacity of its rivals and Flutter and Bet365 at the top of the table and really kind of bringing that NGR and the EBITDA into Interntain? keeps on doing these positive moves in Brazil ahead of its market opening, I think on the share price will go up. I believe, but fundamentally, with Entain, it always returns to, it's always a company kind of fighting kind of its nature. And I think one of the things is that Isaacs has to prove that Entain have moved on. and moved beyond its foundations of just being a company that was founded as an M&A vehicle. It's now a dynamic PLC that can compete in the disciplines that are valued by investors. It's going to be an interesting 2025 for them. Will Barron Okay, that's great. Nice start for Gavin Isaacson. We'll see what the next few months after Holtum, if we can keep this... positive story around Entangome. And I know that we'll be covering that in quite some depth on SPC news and casino beats in the coming months. Ted, Connor, thanks for joining me today and listeners, thanks for joining us as well and tune back in on Monday when there will be another episode of iGaming Daily. Thank you.