Gambling rule changes cost Entain £40m in lost earnings

Gambling rule changes cost Entain £40m in lost earnings

Entain, the gambling group known for brands such as Ladbrokes and Sportingbet, has disclosed a £40 million impact on its 2024 earnings due to regulatory challenges in Britain and the Netherlands.

Despite reporting robust overall revenue growth of 14% in 2023, including contributions from its American joint venture BetMGM, the company’s share price experienced a 4.5% decline following the announcement.

The regulatory headwinds include changes in British gambling rules and proposed tighter deposit limits in the Netherlands, both of which are expected to affect Entain’s short-term earnings. Stella David, Entain’s interim CEO, acknowledged the challenges faced by the company in the past year but expressed confidence in its ability to navigate through them and deliver future growth. Notably, positive developments in Brazil were highlighted as encouraging signs for the company’s growth prospects.

David outlined a clear plan to accelerate operational strategies, refocus the market portfolio, prioritize organic growth, and expand margins. She also commended the efforts of Entain’s global workforce in steering the business through a challenging period and emphasized the company’s commitment to driving organic growth into the future.

The departure of former CEO Jette Nygaard-Andersen in December followed pressure from activist shareholders concerned about Entain’s acquisition strategy. Ricky Sandler, founder of Eminence Capital and a prominent voice among investors, was appointed as a non-executive director in January, signaling a collaborative effort between the company and its shareholders to address concerns and drive value.

Entain, formerly GVC Holdings, operates globally with a diverse portfolio of sports betting and gaming brands. Despite challenges such as regulatory scrutiny and legal settlements, the company remains resilient, reporting underlying earnings slightly ahead of consensus forecasts for the full year.

Looking ahead, the appointment of a permanent CEO remains uncertain, with speculation revolving around potential candidates such as Andreas Meinrad and Rob Wood. As Entain continues to navigate regulatory challenges and optimize its business strategies, the focus remains on driving sustainable growth and delivering value to shareholders.