EGR Power 50 2021: 5. Gamesys Group
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5. Gamesys (5)
FINANCIALS: H1 revenue grew 17% YoY to £398.8m and adjusted EBITDA rose 16% to £110.3m. Revenue in the third quarter hit $278.6m, which was a record high on a constant currency (cc) basis
STRATEGY & IMPACT: A leader in bingo and casino, and a favourite among female UK players. Targets the low-staking segment – around half of UK website visits don’t involve any betting
GEOGRAPHIC REACH: The UK and Asia (specifically Japan) remain engines of growth. Regulatory pressures in Germany, Sweden and Spain have put a spanner in the works, though
INFLUENCE & LEADERSHIP: A shining light in safer gambling and ESG. The appointment of Lee Fenton, who has been with Gamesys since 2008, as the Bally’s CEO was an astute decision
The US gold rush that is fuelling much of the M&A merry-go-round in the sector of late prompted land-based casino group Bally’s Corporation and Gamesys Group to merge in a £2bn combination (completed on 1 October). Rhode Island-based Bally’s, which owns and manages 14 casinos in 10 states, insisted the marriage had a “compelling and strategic rationale”. Principally, Bally’s provides Gamesys with access to key US states, and Bally’s acquires Gamesys’ proven tech platform, industry knowhow and a highly profitable business.
Indeed, the Gamesys operation remains a major force in the sector with its panoply of strong casino and bingo brands, including Jackpotjoy, Virgin Games and Monopoly Casino. It is also particularly adept at customer retention and maximising LTVs, underlined by the fact average active players per month grew 16% to 744,807 during H1 2021. UK growth has been particularly impressive of late, with the market delivering record performance for the six months to 30 June as revenue rose 20% YoY against a backdrop of 2020’s Covid lockdowns forcing people to seek out digital entertainment.
The company is still quite heavily exposed to Asia, in particular unregulated Japan, where revenue grew 30% in constant currency in H1 and average monthly actives jumped by almost a quarter. Gamesys is the clear market leader in the Land of the Rising Sun with its Vera&John and InterCasino brands, while another grey market, Canada, was a “standout performer”, the firm said, in H1 with triple-digit growth YoY. The largest market in its Rest of World (RoW) segment is New Jersey where Gamesys has invested in the headcount and tech platform.
The one blackspot has been Europe (non-UK), which has been buffeted by regulatory headwinds in Spain, Germany and Sweden, resulting in a 29% slide in H1 revenue across the region. Gamesys is diversified enough geographically to weather the storm, and while the prospect of the UK’s review into the Gambling Act 2005 was probably a concern for this gaming-focused operator, indications suggest it won’t result in extreme measures.
In fact, Gamesys has very much been on the front foot when it comes to RG efforts, particularly during the pandemic. So, a year or two from now when we come to look back on Bally’s move for Gamesys, it could very well stand out as the smartest piece of business amid the M&A mayhem.