GVC: Second Lockdown Will Have £34M Impact on Business

Sports betting and online gaming companies in the UK are bracing for a second impact from the national restrictions seeking to flatten the curve of new daily coronavirus cases.

GVC Holdings, the owner of Ladbrokes high-street betting shops estimates the impact on the business from the second lockdown in England to be around £34million, in case the rest of the UK enforces similar measures.

Second Lockdown Begins This Week

Prime Minister Boris Johnson announced Saturday a national lockdown starting November 5 and effective at least until December 2, with the distinct possibility of further extensions, and under the new restrictions bookmakers will be required to close all retail shops throughout the period.

Currently, GVC’s betting shops in Scotland and Northern Ireland are still open, but the ones in Wales are shut until November 9. The operator noted that the total cost its business will incur due to the new restrictions will be £27million, after taking into account the offsetting effect from the Coronavirus Job Retention Scheme.

The government scheme to support jobs during the pandemic which contributes 80% of workers’ salaries was supposed to end by the end of October, but due to the new spike in daily virus cases and the upcoming second lockdown, the Chancellor of the Exchequer Rishi Sunak extended the program throughout November.

European Operations Already Affected

Another £10million loss for GVC will come from its European outlets, represented by betting shops in Ireland, Italy and Belgium, as all three are set to remain shut for different periods of time. In Italy, the retail business will remain closed for another 3 weeks, while in Belgium land-based gaming facilities are not allowed to open before December 13. In Ireland, all stores of the operator are already closed and the forecast is they will remain so until December 2.

GVC Holdings’ release came a fortnight after a similar one from sports betting operator William Hill, which warned a second lockdown on the business will cause its core earnings to deteriorate. The sports book company which is subject of a £2.9 billion takeover bid from US casino giant Caesars Entertainment noted it could lose up to £2 million from the new restrictions.

Early in October, GVC reported solid results for the third quarter, mainly due to more customers switching to online gaming, as well as a strong performance in Australia where sales jumped with nearly 67%. In the US, the operator entered into strategic partnership deals with sports franchises from the National Football League (NFL) such as The Detroit Lions, as well as sports tournaments like The PGA Tour and NASCAR

GVC CEO Shay Segev remains cautiously optimistic, though, despite outlining the company is primed for further growth, especially in the US where the sports betting industry is gathering speed. The CEO noted that the long-term perspectives were still encouraging, but the increasing risk of further coronavirus restrictions was the reason for a more cautious short-term outlook.