Every week, CasinoBeats breaks down the numbers behind some of the industry’s most fascinating stories. Plenty of financials were released including Entain and Flutter, while PENN Entertainment made a significant move in the US sports betting industry.
Entain CEO Jette Nygaard-Andersen stated that the group is on track to achieve strategic targets after net gaming revenue increased 14 per cent to £2.4bn (2022: £2.1bn), gross profit rose by 10 per cent to £1.5bn (2022: £1.3bn) and underlying EBITDA improved by 6 per cent to £499m (2022: £471m).
The group’s profit after tax did fall substantially, however, dipping from £28m to a loss of £502m year-on-year and net debt standing at £2.6bn.
Included in this loss is a £585m provision for a settlement with HMRC, which is currently investigating Entain’s now divested Turkish business, sold back in 2017.
Entain cited that its deferred prosecution agreement negotiations were progressing and the company anticipates judicial approval for the settlement during Q4 2023.
PENN Entertainment rebranded its sportsbook offerings from Barstool Sportsbook to ESPN Bet, securing an exclusive right to the ESPN Bet trademark in the US for an initial 10-year term, which may also be extended for an additional decade upon mutual agreement.
In exchange, ESPN will receive $1.5bn in cash payments during the initial term, with the group also granted $500m of warrants to purchase approximately 31.8 million PENN common shares.
If performance thresholds are met, such as a 20 per cent market share, ESPN could receive bonus warrants to purchase up to an additional approximately 6.4 million PENN common shares.
The deal is expected to deliver an estimated $500m to $1bn of annual long-term adjusted EBITDA to PENN’s interactive segment.
Flutter Entertainment reported that its US business has reached a profitability inflection point after FanDuel generated $100m (£79m) in adjusted EBITDA.
Publishing its 2023 interim results, Flutter declared group revenue of £4.8bn, a 38 per cent uptick (24 per cent pro forma) in comparison to the previous year (H1 2022: £3.4bn) which the company attributed to a strong US performance and momentum in UK & Ireland and International, along with the addition of Sisal in August 2022.
Sports betting revenue improved by 39 per cent to £3bn (2022: £2.1bn) while gaming rose by 37 per cent to £1.8bn (2022: £1.3bn).
Average monthly players rose during the period as well by 28 per cent year-over-year to over 12 billion (2022: 9.6 billion).
Flutter noted that the group is at an “earnings transformation point” after adjusted EBITDA rose by 72 per cent (37 per cent pro forma) to £823m with a significant improvement coming from US operations, improving to £49m in comparison to a £132m loss in H1 2022.
Group ex-US adjusted EBITDA increased by 24 per cent (4 per cent pro forma) following “strong top-line momentum and the addition of Sisal”, which performed well in H1, partly offset by tax changes in Australia.
Flutter’s profit after tax came in at £128m, an increase on the loss of £112m the previous year after a £314m charge for amortisation of acquired intangibles. As of June 30 2023, net debt currently stands at £4.6bn and a pro forma leverage ratio of 3.3 times.
Apollo Entertainment was served a notice of monetary penalty totalling C$100,000 by the registrar of the Alcohol and Gaming Commission of Ontario for alleged responsible gambling failures.
According to the AGCO, Apollo allegedly violated multiple responsible gambling provisions of the Registrar’s Standards for Internet Gaming – 2.01, 2.11, 2.12, 2.14 and 2.23.
Alleged violations of the standards include, but are not limited to:
- Failing to conduct required interventions with players who may be experiencing gambling-related harms. One player experienced over $2m in losses in under four months without receiving interventions from the operator during that period.
- Failing to implement an adequate voluntary self-exclusion programme and provide insufficient tools for players to set financial and time-based gambling limits.
- Failing to ensure employees understood responsible gambling importance, including assisting players who may be experiencing gambling-related harms.
The AGCO added that Apollo has been responsive to the regulatory findings, noting that it has “already taken significant steps to strengthen the control environment on its sites to address the shortcomings identified by the AGCO”.
Records continue to tumble for Bragg Gaming after the company reported a revenue high of €24.7m in the second quarter of 2023.
Commenting on the results, CEO Yaniv Sherman noted that the performance reflects a “continued shift towards a revenue mix of higher-margin products” for the igaming provider, which has also tightened its 2023 revenue and adjusted EBITDA guidance range.
Publishing its Q2 results, Bragg declared revenue of €24.7m, up 18.9 per cent year-over-year (Q2 2022: €20.8m) and an improvement on Q1’s €22.9m. Gross profit also improved by 18.9 per cent in comparison to the previous year to €13.8m (2022: €11.6m).
Meanwhile, the provider’s adjusted EBITDA rose by 51.3 per cent in Q2 to €4.7m (2022: €3.1m) with a new quarterly high AEBITDA margin of 19.2 per cent, up 410-basis points YoY (2022: 15.1 per cent).
By the end of Q2, cash flow from operations stood at €5.2m (2022: €7.6m) while cash and cash equivalents came in at €10.7m and net working capital, excluding deferred consideration, was €8.3m.
Sherman noted that the gains seen by Bragg in Q2 can be attributed to “initiatives to focus the business to be a leading content-driven igaming B2B provider combined with disciplined expense management”.
The CEO also stated the results benefited from a “continued shift towards a revenue mix of higher-margin products including in-house created proprietary and exclusive third-party content, turn-key Player Account Management and managed services partnerships,” which helped to drive the quarterly record for AEBITDA margin.
Light & Wonder finally secured an approximately $500m definitive agreement to acquire the remaining 17 per cent interest in SciPlay that it does not currently own, bringing the developer and publisher under its full ownership.
This purchase price of $22.95 per share in an all-cash transaction represents an increase from May’s $20 per share offer, which accounted for an enterprise value of $2.1bn.
As a result, SciPlay will cease to be publicly traded and will become a wholly-owned subsidiary of L&W.
The online gaming group has cited an array of plus points that it believes will increase shareholder value following completion, with seamless collaboration highlighted as one of these.
In addition, adding further momentum to the company’s cross-platform strategy, flexibility for the use of SciPlay cash flows for investments, and the facilitation of long-term margin enhancement opportunities via synergies are also recognised as major benefits of the deal.