- Despite lower results, GVC upgrades EBITDA
- Online gambling revenue increases
- Lower results due to FIFA World Cup activity in 2018
Amid a tougher regulatory climate in the United Kingdom, GVC has been able to upgrade its EBITDA prospects following its Q3 2019 report.
UK Bookmakers Face Trouble, GVC Remains Strong
British gambling operators are pushing steadily into the United States’ market in a bid to make up for challenges at home. One of the latest companies to up its financial prospects has been GVC, an Isle of Man-based operator and owner of Ladbrokes.
Following a series of measures, including the reduction of high-speed slots known as fixed-odds betting terminals (FOBTs) at home – which saw the maximum stake reduced from £100 to £2 in April – bookmakers have been looking for a way out.
Similarly, the UKGC – the country’s watchdog for gaming and sports betting – has been toughening its regulatory stance. This has prompted many flagship brands, including William Hill, to seek a recluse across the Atlantic and in the United States.
GVC managed to establish a successful joint-venture with U.S. hotel and casino operator MGM Resorts International, giving rise to BetMGM and launching a mobile gaming app in September in New Jersey, one of the main states where online gambling is allowed.
The upshot has been steady financial results. Yet, the true challenge has been at home.
GVC Expects Decline in Q3 Revenue at Home
Following the FOBTs cut, the company has seen a 36-percent slump in net gaming revenue from machines. Ladbrokes had to close 41 shops, and a total of 198 so far. This is only the beginning, though, as up to 900 venues will be discontinued within the next two years.
The number of total shops as of September 30, 2019 fell to 3,233 in the Q3 update released on October 9, 2019. A small dip was registered in retail operations in Europe, with a 1% decline across the board. However, the lower results in the continent could be choked up to the previous year’s activity surrounding the FIFA World Cup.
Online Business Continues to Grow
With retail under fire, GVC has been successfully focusing on growing its online arm. Revenue went up by 12% in the quarter and sports betting operations jumped by 16%. Even though results were sluggish across the board, GVC said that it had upgraded its EBITDA to £680 million from £670 previously.
GVC CEO Kenneth Alexander had this to say commenting the future prospects of the company as well as the tougher year-over-year targets:
I am delighted that the group’s financial performance has allowed us to upgrade our full year EBITDA expectations again. Online momentum remains strong across all major territories, with net gaming revenue up 12% in the quarter despite the prior period containing part of the World Cup.
Responsible Gambling and Overseas Success
Commenting on the future operations of the company, Alexander noted that GVC remains committed to socially responsible gaming. GVC is equally focused on boosting its footprint in the United States and the entry into the market has been a key-milestone, the executive explained.
Focusing back at home, GVC pointed out that Germany’s State Treaty on Gambling would probably bring up new regulatory challenges. More likely than accepting the amendment was, GVC noted, for the country to take until 2021 – when a broader overhaul of sports betting and gambling activities was expected – to sign the proposed changes into law.