Ladbrokes Coral owner Entain: business is resilient but not immune to a downturn

The gambling industry is not immune to the effects of the cost of living crisis but remains resilient, according to the owner of Ladbrokes and Coral.

However, Entain said its performance in the UK was being affected by the introduction of affordability checks on customers in preparation for the government's long-delayed gambling review white paper.

Revenue increased by 19 per cent to nearly £2.1 billion in the first half of the year, Entain said, with a strong performance in retail partially offset by a seven per cent fall in online net gaming revenue (NGR).

Group earnings were up 17 per cent at £471m, but group profit after tax of £28m was down 69 per cent.

Entain had warned in July that it expected online revenues to be flat this year. It put the seven per cent fall in NGR down to tough comparisons with 2021 which included Covid lockdowns and the Euro 2020 football tournament, as well as the temporary closure of its business in the Netherlands caused by a new regulatory regime.

However, in the UK online NGR was down 15 per cent, with Entain saying customers there and in parts of Europe were "responding to the changing macro environment and inflationary fears by moderating spend per head".

Chief financial officer Rob Wood told the Racing Post it was "unquestionable" the sector was resilient to economic downturns but added: "We do say that we are not immune as well.

"What we've seen so far is there are some territories, particularly in some parts of Europe, where inflation is running really high and we can see lower spend per head.

"But what's great to see is that the same customers are there, they are just spending a bit less. So in some of our territories we are seeing spend per head that's 90 per cent of where it would ordinarily be."

Wood said that the contribution to revenue in the UK from "recreational" customers rather than high spenders had increased to 90 per cent from 50 per cent, partly down to Entain's strategy but also because of affordability measures.

"In the UK there are different drivers in force and one of them is the tightening of restrictions, in particular around affordability," he said.

"That's the big one. Fundamentally, being required to ask customers to demonstrate their source of funds and their ability to afford their spending at lower levels does have an impact and that will persist."

Wood also said the issue of small field sizes in British racing was a concern. He added: "I am not aware it's having an impact already in our numbers, we probably need a longer period of time to assess that and obviously there are other things at play with the weather and so on. For me it's a watching brief at this stage."

Entain said its American joint venture BetMGM had delivered a strong performance in the first half of the year, with NGR of $608m (approx £498m/€590m), 65 per cent ahead of 2021, and expected to deliver more than $1.3bn of NGR over the full year. It is also expected to become profitable in 2023.

The company announced it had partnered with Czech investment firm EMMA Capital in a new venture to drive expansion in central and eastern Europe.

The new venture, called Entain CEE, has acquired Croatian operator SuperSport Group from EMMA in a deal expected to value SuperSport at €920m (approx £776m).

Entain chief executive Jette Nygaard-Andersen: confident of continuing to deliver for stakeholders

Chief executive Jette Nygaard-Andersen said of the results: "While we remain vigilant to the consumer backdrop, our geographic and product diversity provides resilience which, together with our proven ability to drive superior returns, gives us confidence that we will continue to deliver benefits for our stakeholders."

Entain shares rose sharply on Thursday morning before falling back to close on 1,357.50p, up 3.74 per cent.

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