Entain raises full-year earnings guidance amid bumper World Cup trade

Entain has hiked profit expectations after the FIFA World Cup helped it achieve record online trade and active customers numbers in the fourth quarter.

The Ladbrokes and PartyPoker owner expects core earnings for the last year of £985million to £995million, representing a 12 per cent increase on 2021 and an upgrade on previous guidance of between £925million and £975million.

Having struggled to continue boosting digital net gaming revenues (NGR) as Covid-related restrictions were relaxed, the FTSE 100 firm saw them rise by 8 per cent at constant currency levels from October to December.

Retail sales expanded at a slightly faster pace, buoyed by high numbers of British customers using gambling terminals and the prior winter’s trade being impacted by Covid-19.

But much of the company’s growth was provided by the FIFA World Cup in Qatar, which helped enlarge its active customer base by 14 per cent to record volumes.

The bump resulting from the tournament offset a drop in trade stemming from poor weather disrupting other sporting fixtures in December, including horse racing and lower-league football in Britain. 

Full-year online NGR still fell modestly, partly due to tighter regulations in Germany and the UK, yet total NGR climbed by 10 per cent across retail stores as loosening Covid rules led to a substantial recovery in footfall. 

Entain shares were 2.6 per cent higher at £15.27 on Wednesday morning, meaning their value has increased by around a fifth in the past two years.  

Entain’s chief executive, Jette Nygaard-Andersen, said: ‘2022 has been another year of strong financial, operational and strategic progress for Entain.

‘We have continued to grow our revenues in a sustainable and diversified way by expanding our global footprint, broadening our customer appeal, entering new areas of entertainment, and providing a safe environment for our customers.’ 

In recent years, the firm has focused on capturing the North American market through its joint venture BetMGM, which it set up following the overturning of a US federal ban on sports betting.

BetMGM revealed last Thursday that its annual NGR soared by 71 per cent to $1.44billion on the back of launching across multiple new US states, such as Maryland, New York and Louisiana, and higher gross gaming margins.

Though the Las Vegas-based betting operator posted an estimated $440million core earnings loss, it does anticipate achieving positive core earnings from the second half of 2023.

Matt Britzman, an equity analyst at Hargreaves Lansdown, said that the joint venture is a ‘shining star’ for Entain but added that it ‘seems unlikely both parties will want to continue their US gambling exposure in its current form indefinitely’. 

The Mail on Sunday reported on 22 January that MGM Resorts was considering a takeover of Entain, having had an £8.1billion offer for the Gala Bingo owner rejected two years ago. 

Whether such a transaction will go ahead will significantly depend on what the UK Gambling Commission publishes in its long-awaited white paper, but the report is expected to recommend stronger regulations on the betting industry. 

‘If we had to put money on it, a bid from MGM to take full control looks the most likely outcome – time will tell,’ Britzman said.