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Entain has posted a Q4 2022 trading update, including record online NGR as the World Cup helped to offset disruptions elsewhere.

Below, we break down the newsworthy numbers for you:

Topline numbers

Total NGR climbed by 11% year-on-year in Q4 as its retail segment grew by 10% and online by 12%.

For full-year 2022, those figures gave Entain overall NGR growth of 12%. Including the firm’s 50% share of its BetMGM joint venture in the US, full-year NGR growth was 15% (in constant currency).

Full-year EBITDA is expected to come in between £985m and £995m at a year-on-year growth rate of around 12%, ahead of previous expectations.

News nugget

Q4 2022 was a record quarter for Entain in terms of online NGR, which grew by 12% year-on-year.

That growth reflected a successful World Cup, which was partly offset by weather disruptions to other sporting fixtures, the operator said.

It was also a record quarter in terms of the number of active customers, the firm added, which also grew by 14%.

For full-year 2022, however, online NGR was down by 1%, which Entain said reflected a strong comparative period as a result of the Covid-19 pandemic and the absorption of regulatory changes, particularly in the UK and Germany.

Best quote

The UK is the exception according to Entain CFO Rob Wood – and not in a good way: “Other than the UK, we’ll be shooting for growth in all our major territories.”

Adhering to stricter regulations under guidance from the Gambling Commission has put a financial drag on all UK licensees over the last 12 to 18 months.

CEO Jette Nygaard-Andersen said the gambling white paper might not be as bad as first feared, however, with recent noises from parliament pointing to a more optimistic outlook.

“What we’ve heard in the last couple of weeks from the government is somewhat more pro industry and advocating freedom of choice,” she told analysts.

“They also want to talk about frictionless checks, instead of affordability checks, which is all positive.”

The white paper should be published by the end of Q1, if not the end of February.

Best question

Two weeks ago, Entain said it would withdraw from all unregulated markets by the end of January. Most analysts on the earnings call wanted further clarity on this pledge.

The regulation of online gambling in Brazil has been thrown into disarray due to political upheaval and a new president, but the country is a major top-six market for Entain by NGR.

Entain is still counting Brazil as a regulating territory – despite the lack of a timeline for regulating sports betting – and will not be withdrawing from the country anytime soon.

“We still expect regulated sports betting in Brazil in 2023 with the new legislation,” said Nygaard-Andersen. “We are waiting for the new administration to pick up the letter and provide more detail in Q1.

“Sports betting might be regulated in 2023, or slip into 2024, then probably online casino at the beginning of 2024, but that doesn’t change our excitement about the market,” she added.

Entain CEO Jette Nygaard-Andersen: “Sports betting might be regulated in 2023, or slip into 2024, then probably online casino at the beginning of 2024, but that doesn’t change our excitement about the market.”

Entain said that 93% of revenue is currently derived from fully regulated markets, with Brazil likely to make up a fairly sizeable chunk of the remaining 7% via Entain’s Sportingbet brand.

In H1 2022, Entain grew Brazilian NGR by 38% year-on-year amid a 44% annual climb in active customers.

However, that growth was lower than anticipated due to “greater than expected competition” from rival operators – some of which may not be seeking a licence even when the country does decide to regulate.

When pushed for an update on Brazil’s competitive landscape, Nygaard-Andersen added: “There is a lot of noise in the market, mostly coming from smaller operators. It shouldn’t have a longer-term impact, but there will continue to be some noise until we get regulation.”

Current trading and outlook

Entain continues to expand its geographical footprint having recently completed the acquisitions of SuperSport in Croatia and BetCity in the Netherlands.

US-facing BetMGM is expected to become EBITDA positive in the second half of 2023, as reported recently.

The brand continues to perform strongly in the US, with NGR of $1.44bn in full-year 2022, up 71% year-on-year and ahead of expectations.

BetMGM boasts a 19% market share for sports betting and iGaming in the states where it operates, while its iGaming-only market share is higher still at 30%.

Finally, Entain has also launched its Unikrn esports betting operations in Brazil and Canada and has further launches planned for the remainder of 2023, it said.

Commenting on the results, London-based brokerage Peel Hunt said: “There is much to like about Entain: it has a diversified international footprint, has eliminated its grey market revenue, and has upside from optimising relatively recent acquisitions.

“BetMGM is a jewel in the crown, and we believe it likely that MGM will pay up to buy out Entain, or to acquire Entain in its entirety.”