§GVC Holdings, one of the world’s largest gaming business groups, and owner of Ladbrokes Coral, one of the UK’s most well-known betting names, have had an up and down year, but have so far managed to stay ahead.
This news should come as no particular surprise to those who follow the gaming industry.
With regulators continuing to roll out initiatives to drive down problem gambling and money laundering activities, it has caused headaches for many gaming companies in the UK.
The betting shops bad news
One of the main initiatives that has hurt betting shop revenues since last year is the introduction of new stake limits on fixed-odds betting terminals (FOBT). The new law sees the maximum stake that a punter can bet going from £100 to just £2. This move has already seen rival William Hill make plans to close 700 betting shops, and with it take out around 4500 jobs.
For GVC, it has meant a 10% drop in betting shop revenues over the period from June 2017 to June 2018. This significant drop has prompted GVC to informally announce that they too would be shutting up to 1000 betting shops. Taking out this large revenue stream has been a kick to many in the industry, and in particular hurts independent betting shops.
Online growth remains strong
If you bet on online gaming growth last year, then you would have been right. The online gaming and sports betting market remains a winner for GVC and other providers. GVC posted back in July that their revenues from online were up 18% over the same period, June 2017 to June 2018.
GVC aren’t only operational in the UK either. Other regional online markets they have entered have played strongly across the year, with notably both Brazil and Australia experiencing 38% revenue growth, and greater than 10% online revenue growth across all of the business’s key markets. The company itself has licenses to operate in over 20 different jurisdictions around the world.
The online component of GVC is now the most impressive part of the business as far as stockholders should be concerned, as the industry switches over from a betting shops and pubs model to a mobile-first betting strategy that goes wherever punters go. Investing in technology in gaming will take betting companies far.
I spy the USD
Since May 2018, there has been plenty of movement in US sports betting, as the practice was made legal at the federal level – allowing States to create new legislation surrounding the legality (or illegality) of sports betting within their borders. States such as New Jersey, Rhode Island and Pennsylvania have already regulated their sports betting markets.
As a heavyweight of the European betting scene, it makes sense that GVC are testing their toes in the new US sportsbook market, too. Back in June 2018, GVC announced the joint venture, Roar Digital, in a deal with MGM Resorts International to provide sports betting and online gaming services.
It is considered that this is only the start of sports betting in the US, since we are only a year on from the landmark decision, and many states still have legislation in the works. In the near future, GVC can look forward to many more states regulating and the prospect of taking hundreds of thousands of players away from offshore US operators.
What’s ahead for GVC?
If we look to the past to determine the future for GVC, then we can see that their strategic moves have played out well so far. The joint venture with MGM and acquisition of Ladbrokes Coral both in 2018 shows moxie on the world stage, and continuing online growth is encouraging for the future of the company. If GVC continues to make clever decisions in the online market, including with any acquisitions or mergers, then we can expect business to grow, particularly if their US initiative is nurtured well.
YTD trading for GVC shows interesting swings
It is important for those interested in the business to keep tabs on all related legislation across the different markets to ascertain how it may affect share prices, for instance, the possibility of a regulated German market happening later this year. Changing legislations make the industry somewhat volatile, however, the company’s diversification across different markets will help keep earning stable.
