Following a recent change in leadership, GVC is rebranding as Entain and announcing a withdrawal from all unregulated markets. The move would cost it £40 million in earnings in the short-term, but boost long-term results, says CEO Shay Segev.
GVC Finds New Identity as Entain and Quits Unregulated Gambling Markets
The parent company of Ladbrokes Coral, GVC, is rebranding as Entain starting today, Thursday, November 12, and suspending all operations in unregulated markets. The move is part of the company’s restructuring bid and recent change in leadership.
With a new man at the reins, CEO Shay Segev intends to change the company’s current policy, and focus entirely on regulated and legal markets. Speaking to the Financial Times, Segev confirmed that GVC will be quitting markets where gambling is not quite legal just yet.
Instead, GVC will focus on launching in between 50 and 60 regulated markets, including countries in central Europe, Africa, and Mexico, as well as expand into other “types of interactive entertainment.”
The restructuring is not an attempt to boost short-term results, Segev has cautioned, but rather a sustainable long-term model that would allow it to avoid legal complications further down the road.
Putting Unregulated Markets in the Past
At a time when many brands have played fast-and-loose with unregulated markets, such as the Netherlands for example, GVC is one of the first to lead the way and make the necessary concessions in order to embrace the future of a regulated gambling industry.
“We are not looking to maximize our profitability in the short term but build a proper industry in the long term and that means making some sacrifices.”-GVC/Entain CEO Shay Segev
Commenting on these developments, Segev said that there was no doubt that moving forward, gambling worldwide would focus on the regulated market, and the company believes it can be an early adopter.
GVC is facing a few troubles of its own, following the departure of former CEO Kenny Alexander, with UK tax authorities a review into “potential corporate offending” connected to operations in Turkey.
Segev said that the company’s decision to move away from unregulated markets was motivated by strategic decisions rather than as a response to the ongoing investigation. Entain, as the company is known from here on in, generated 96% of its revenue from regulated markets, and it has been investing heavily in technology that allows it to prevent problem gambling.
Starting from today through 2023, Entain will be pulling out of unregulated market, which should have reduced earnings by £40 million next year the company said cited by the Financial Times. However, the pandemic has boosted earnings by an estimated £50 million for 2021, with the pandemic driving online traffic up.
Focusing on the US Legal Market
As one of the company’s priorities now shift on legal markets, Segev wants to benefit from the legalization of the US market. Entain is already live in nine states, but the company intends to increase this number to 20 in 2021.
To secure its position in the United States, Entain has joined hands with MGM Resorts and launched a joint-venture known as BetMGM. The company’s efforts in the market are doubly important as it expects sports betting to hit $20 billion in revenues by 2025, up from $1.4 billion in 2020.
However, Entain will be carving up the legal sports betting market with the likes of Flutter Entertainment, which owns the most American-friendly sports betting and fantasy platform, FanDuel, and its main rival, DrafKings.
The Financial Platforms reached out to Bixteth Partners partner Simon French who had this to say about the upcoming competition in the market: “It’s a crowded marketplace with cheap money to lure customers in and I don’t understand what BetMGM’s point of differentiation is.”
However, Segev, a computer scientist himself, feels confident about BetMGM’s success trajectory, as the company already has a player base of 34 million customers through the MGM’s loyalty program.
Segev also expects esports betting to prove a massive and exciting new market, something that his predecessor didn’t quite bet on.