Entain H1 group NGR reached £3.1 billion including its BetMGM US assets, marking an increase of 7% year-on-year (10% cc).
Reporting its H1 results on Tuesday, this is the first time the London-listed operator provided a breakdown of topline earnings excluding US operations. In this case, group NGR (not counting BetMGM) was up 3% (6% cc) to £2.6 billion.
Online NGR grew 14% including US and 8% excluding US, while retail NGR remained flat.
While growth slowed in some online markets like Australia (-7% YoY) and Poland (+2%), group revenue was buoyed by a surprising performance in Spain (+39%), thanks to an effort Entain CEO Stella David described as “awakening a sleeping giant”.
This, David said, was down to an executive team reshuffle in Spain last year and a reviving of the Bwin brand in the market through a targeted marketing campaign. David said she was confident Bwin could return to a podium position in Spain.
Mikel López de Torre, former JDigital chairman and digital director for Entain’s Spanish JV Sportium, joined Entain as head of Iberia in June 2024 to lead the Bwin and Party brands across Spain.
Meanwhile, Entain’s core UK and Ireland (UK&I) segment “outperformed the market”, the operator said, as revenue grew 21% in the six-month period.
David put this down to growth across volume of players and increased player value. She told analysts once again that product improvements like increased app speeds and a new bet builder offering had positively impacted its performance in the UK.
Retail remains sluggish, UKGC reviewing AGCs’ impact on operators
Meanwhile, the UK&I retail business remained flat as revenue decreased 2% compared to last year.
Despite continued revenue decline across UK retail, CFO Rob Wood told analysts during the earnings call he was happy with the segment’s performance and it had improved slightly in Q2 compared to the first quarter.
He said there was a continued uptick since “sluggish numbers in Q3 last year” that had coincided with an acceleration in online revenue.
Wood previously blamed Adult Gaming Centres (AGCs) for stealing market share from retail gaming operations in Q1, but he said on Tuesday the Gambling Commission was taking “a much closer look” at these AGCs.
Despite slowed revenue growth, he said retail was still positively contributing to online growth. “It’s a pleasurable business for us to run and a really valuable asset,” Wood said.
“UK retail [employee engagement] scores have never been better and turnover has never been lower.”
Poland woes down to increased competition on iGaming hopes
Turning back to online, Entain H1 8% CEE growth was powered by a 14% uptick for NGR in Croatia, but was impacted by flat revenue in Poland.
When asked what had set Entain back in Poland, David said the market had become increasingly competitive as the sector prepared for potential iGaming regulation. She said heavy bonusing and a tax on winnings had resulted in a challenging period. This was further exacerbated by the prospects of legal iGaming disappearing for now.
David said the operator would not run a race to the bottom by competing aggressively in the short term. “Poland is a long-term attractive market,” she added.
Wood said although revenue here dipped, EBITDA in Poland had increased. “Sometimes you have to decide between topline and EBITDA and we’re actually growing EBITDA year-on-year.” He said only two operators were profitable in the market and Entain was number one on the list.
Entain H1: Brazil ‘on track’ for full-year expectations
Entain’s Brazil business marked its first six months of operation with a 21% year-on-year uptick in NGR. David said that, while the business launched on day one of the market (1 January), the journey had “not always been plain sailing”.
Compliance efforts had proved a mammoth task as players of the Sportingbet brand had to be re-registered to meet regulatory requirements. David said the operator had seen strong results from the Club World Cup tournament with record player activity and turnover reported.
While the market is highly competitive, Wood said it was on track to meet expectations for the full year.
AUSTRAC mediation under way
Prior to questions from analysts commencing during the call, David addressed the elephant in the room – Entain’s ongoing legal proceedings with Australia’s AUSTRAC.
Proceedings were initiated in December over “serious and systematic” non-compliance with anti-money laundering (AML) and counter-terrorism financing (CTF) laws at Entain.
David dismissed speculation that a £50 million provision on Entain’s balance sheet was being allocated as a possible penalty fee in the AUSTRAC case.
“The provision is purely accounting driven,” she said. Mediation between the two parties commenced in July and is still in motion, David noted.
There will be no update on the proceedings until discussions have concluded, she added.
AUSTRAC documents filed in April said the two parties were required to attend a mediation before 4 August and, if the matter is not resolved by then, Entain would need to file its defence by 12 September.
How much cash will Entain receive from BetMGM this year?
Cash flow was a hot topic during the Entain H1 analyst call, as Wood noted BetMGM’s plans to return cash to its parents this year, upon reaching a positive EBITDA of $150 million.
As of the end of H1, adjusted cash flow for Entain sat at £80 million, compared to a deficit of £35 million last year. This is expected to be “broadly flat” for the year.
When pressed on what the returns from BetMGM could look like in 2025, Wood said nothing had yet been agreed with the JV, but he hinted the amount could easily be calculated by taking BetMGM’s EBITDA guidance for 2025 and deducting its capex, then dividing by two and converting to GBP.
“To give a feel for it, we came into the year with a good amount of cash on the balance sheet. We’ll probably want to leave a reasonable amount for year-end as well in order to allow for working capital cycles and so on,” Wood said of Entain’s cash flow plans for the year.
Underlying EBITDA across the group hit £583 million in H1, up 11% from last year. Meanwhile, gross profit rose 3% to £1.6 billion.
Entain CEO Stella David dismissed suggestions that £50 million had been allocated on the balance sheet to paying off an AUSTRAC penalty.