Affordability checks hit Entain revenues by £100 million as annual results released

Affordability checks have already had a £100 million impact on revenues at Entain, the parent company of Ladbrokes and Coral revealed on Thursday.

As the gambling industry giant unveiled its annual results for last year, chief financial officer Rob Wood described 2022 as "a good year on all fronts" but it was tempered by the effect of the controversial checks.

More detail about the measures, which involve operators requesting personal financial information such as payslips and bank statements from customers, are expected to be laid out in the government's long-delayed gambling review white paper. However, operators are already carrying them out despite denials from the Gambling Commission that the regulator has pre-empted the review and mandated them.

In her review of the year, Entain chief executive Jette Nygaard-Andersen said the group was "facing some headwinds", and noted the group had absorbed responsible gambling initiatives and impacts from changes in regulation. She added: "This has been particularly evident in the UK with the implementation of regulator-enforced affordability checks, which created a headwind of approximately ten per cent on UK online revenues in 2022, with ongoing impacts expected in 2023."

Wood told the Racing Post that online revenues were down in the UK in the second half of the year when ordinarily the market would produce "mid to high single-digit growth".

Of the effect of revenues from affordability checks he said: "You are not far off £100m of revenue impact so it is a significant number for sure. It is really important to point out to Westminster the damage that is being done here because of course these customers are not stopping betting and it's ludicrous to think they are."

Entain chief executive Jette Nygaard-Andersen: group is "facing some headwinds"

Wood did say that active customers in the UK were up by 13 per cent and that the year ended well with the men's football World Cup in Qatar. He added: "We have got far more customers than we've ever had on our platform and that's only a good thing in the long run."

Entain's overall revenue for 2022 was up 12 per cent to close to £4.3 billion, while group underlying earnings rose by 13 per cent to £993m, towards the top of the guidance range. Overall online revenue was down by two per cent but there was good news in retail where net gaming revenue was up 66 per cent as the recovery from the impact of Covid-19 continued.

Wood said the company was "absolutely delighted" with the retail division, adding: "We are lowering the age demographic and that's because the mix of revenue from the gaming machines and the self-service betting terminals [SSBTs] just keeps going up and up."

Wood said revenues from racing on SSBTs were growing but the flipside was that over-the-counter business, dominated by horse and greyhound racing, was in decline. He added: "That's not going to change but rather than try to stem the decline over-the-counter, what we are trying to focus on is giving new experiences and new ways of engaging with racing using digital touchpoints and hope that we therefore get a younger audience for racing in shops that way."

Entain's US joint venture BetMGM was said to be on track to become profitable in the second half of this year having produced NGR of $1.44bn (approx £1.2bn/€1.36bn) – up 71 per cent year-on-year – in 2022, a figure ahead of expectations.

Entain predicted BetMGM would produce net revenue in the range of $1.8bn-$2bn this year. Nygaard-Andersen said of Entain's overall performance: "We made excellent financial, operational and strategic progress during 2022, and took significant strides towards our goal of being the global leader in betting, gaming and interactive entertainment."

She added: "We have a business model that is truly diversified across more than 40 territories, a platform that gives us demonstrable competitive advantages, and a total commitment to providing our ever-broadening customer base with a safe environment in which to enjoy our products and services. These factors, combined with the strong underlying momentum across our business, mean we continue to look to the future with confidence."

Entain's share price was down 4.38 per cent at 1,331p on Thursday afternoon.

Read these next:

Betting ring the beneficiary as affordability checks and restrictions send punters back to the track 

Call for new gambling minister to listen to concerns over affordability checks 

Key takeouts as Flutter is first out of the blocks with results for 2022 

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