For the first time since 2021, Entain has seen growth in their revenue figures. Will they be able to continue the trend as stricter regulation comes into place in the UK?

Their full year 2023 results had seen a decline in revenue figures for the core markets in which the gambling company trades. It was important therefore that last year reversed that worrying situation.

That is just what happened, mainly due to a 13% growth in revenue in Q4. That was not the only good piece of news in their financial results. Organic growth was seen across their group with a 7% year-on-year increase in revenue. This saw a rise to £5.16 million and their EBITDA also rose 5% to £1.09 billion.

Their interim CEO is Stella David and last year she had warned that the company had “brutal truths” to face. There was a need “to focus on delivery operationally” and doing so has seen the improvement in results.

This has included enhancing user experience, their interface features, introducing a new betbuilder product and in-game coin economies. According to OffersBet, an online casino and bookies promos comparison site, Online revenue figures for the UK and Ireland climbed by 2.1% to £984.6 million and their number of active customers has risen by 11% when compared to the previous year. Q4 also saw the spend per head increase in both online sports betting and iGaming. That had not happened since Q1 in 2021.

While their online revenue has been increasing, the same has not been so for their retail businesses. Their revenue fell 1.3% to £1.07 billion, though there had been an improvement in H2. The introduction of new Kascada cabinets and strong sports margins helped the situation. Improvement in the retail gaming market is still required though.

An overall Net Gaming Revenue (NGR) of £2.05 billion was recorded for their UK and Ireland businesses. That was 0.2% higher than 12 months ago.. 

Rob Wood is their CFO and he believes that the company is “already on track to deliver our targets of market growth in 2025.”

2023 saw stricter regulations in the UK gambling industry but the CFO says that their return to growth has happened sooner than has been expected. However, there are challenges to be faced in the coming months.

There has long been concern about how addictive online slot games can be for players. As a result of this, the coming months will see new reduced maximum stakes for online slot games. For those aged between 18 and 24 the maximum stake per spin will be reduced to £2 and £5 for those aged 25 and over.

The slots section of an online gambling site is so important for their revenue figures. Similar moves taken against the fixed odds machines seen in retail shops led to reduced revenue and redundancies, so how will the upcoming measures affect the UK gambling industry?

The Entain interim chief executive is of the opinion that the changes will affect those who operate in tiers two and three of the industry. Her view is therefore that the new measures will not cause Entain problems and actually help them to increase their UK market share.

During an earnings call, David commented that those who want to enjoy a better player experience will log into their sites and the changes will be “a gentle tailwind for ourselves.”

There are other measures being introduced in the UK that may affect Entain more. A compulsory levy is on its way and the amount to be paid will be between 0.1% and 1.1% of Gross Gambling Yield.

Stricter affordability checks are also likely to be introduced. That is not a move gamblers appreciate and could lead them to move to the unlicensed and unregulated black market. If that happens, it would affect Entain’s revenue figures.

Entain is a business that operates on a global basis. They have also been recording improved revenue figures in other areas. Their international NRG rose by 10% using a constant currency basis.

Particular success was achieved in Brazil where there was revenue growth of 41%. A reason for this was the fact the number of active players went up by 42%. Entain were quick to gain licences to operate in the South American country and that has worked to their advantage.The introduction of instant payment withdrawals has also benefited them.

In Australia, the NRG growth was only 1%.but there was good success in the USA. Entain has a joint venture with MGM and runs the BetMGM online gambling site. This produced revenue of $2.1 billion which was 7% higher than in the previous year.

It will be interesting to see if Entain’s views on how the stricter UK regulation will affect them is a correct one.