Entain, the parent company of Ladbrokes and Coral, has reported a six percent increase in net gaming revenue for the third quarter, reflecting resilience amid ongoing challenges and sector uncertainties. The growth was buoyed by robust performance in online gaming, which rose by 15 percent, and a particularly strong showing from its U.S. joint venture, BetMGM, whose revenue surged by 23 percent to $667 million. According to the company’s latest trading update, BetMGM is expected to return at least $200 million to its parent companies by 2025, highlighting its increasing contribution to Entain’s overall financial health.

The UK and Ireland markets performed well, with an eight percent increase in net gaming revenue, aligning with the group's expectations. Despite these gains, fluctuations in international markets tempered overall growth, with Brazil and Australia experiencing declines of 11 percent and six percent, respectively, largely due to favourable sports outcomes favouring punters.

Entain’s CEO, Stella David, who took on the permanent role earlier this year after serving as interim CEO, addressed the significant concerns looming over the industry—particularly the proposed tax increases under consideration by the UK government and other jurisdictions like Australia. David emphasised that past tax hikes have consistently driven players towards unregulated black market sites, which undermines both government tax revenue and consumer protections. “It’s crucial that we engage actively with the government,” she stated, “as every tax increase has previously contributed to the growth of the black market.”

David’s concerns are underscored by industry data indicating the existence of over 500 unregulated gambling websites, with some markets, such as the Netherlands, seeing more than half their activity shift away from regulated operators due to heavy taxation. This shift to black market operators poses risks to consumers, including lack of oversight and increased exposure to fraudulent activity.

To mitigate the financial pressures brought on by potential tax hikes, Entain has signalled it may need to curtail marketing spend, reduce the generosity of customer bonuses and odds, and critically, consider the closure of retail betting shops. The latter is particularly significant, as these physical outlets contribute roughly sixty percent of Entain’s payments to the racing levy, which supports the broader horse racing industry. Closing shops could therefore have a ripple effect beyond the gambling sector, impacting racing finances and related jobs.

Despite these pressures, David expressed optimism about Entain’s strategic direction and ongoing transformation. She highlighted the company’s focus on diversifying its operations and strengthening its digital footprint as key drivers of future growth. Industry analysts have echoed this sentiment; market experts like David Brohan from Goodbody have described Entain’s recent performance as solid, suggesting that the broader sector momentum remains positive even amidst external uncertainties.

The company reaffirmed its annual core profit forecast, maintaining expectations of between £1.10 billion and £1.15 billion, and projected that online gaming revenue will increase by approximately seven percent on a constant currency basis by year-end. David also forecasted Entain generating over £500 million in annual cash flow by 2028, signalling confidence in the firm’s long-term financial sustainability.

As governments contemplate budget decisions that could reshape gambling taxation, the industry will closely watch how these changes impact established operators like Entain. The balance between protecting legitimate businesses, ensuring consumer safety, and tackling the black market remains a critical and delicate challenge.

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Source: Noah Wire Services