Entain’s online NGR dips 8% against strong 2021 as retail drives overall growth

Entain has posted an 8% decrease in online net gaming revenue (NGR) year-on-year (YoY) for the opening three months of 2022.

Delivering its financial update for the period, Entain attributed the Q1 dip to “strong 2021 comparators”, suggesting the drop was in line with its expectations so far.

At a divisional level, online sports NGR fell by 7% with the total number of sports betting wagers also dropping by 7%. Sports margin stood at +0.2pp for the quarter.

Entain’s online gaming NGR dipped 10% during the first three months of 2022.

Entain did point to a stronger three-year CAGR (compound annual growth rate) for online sports betting NGR, which was up 19% on a constant currency basis, with online gaming up 10% by the same metric. Overall three-year CAGR NGR increased by 14%.

Total NGR did increase 34% YoY thanks to a 1,000% increase in retail-derived NGR following the relaxation of lockdown measures almost two years since the start of the Covid-19 pandemic.

Entain said it was noting “continued momentum in all major markets” bar the Netherlands and Germany and that its active customer base was up 34% over the last two years.

In terms of the US, Entain said BetMGM continued to go from “strength to strength” after establishing itself as the number two operator with a 24% market share.

Entain also said it anticipates BetMGM to become EBITDA positive in 2023 based on current assumption of future live markets.

Entain CEO Jette Nygaard-Andersen remained upbeat despite the downturn in online NGR, asserting her belief that the London-listed firm had started the year with a strong performance.

“We have started the year with a good performance across all areas of our business, driven as ever by the strength of our industry-leading platform,” Nygaard-Andersen told investors.

“We have delivered strong performances in all of our major markets, and I am pleased to report that retail is performing well with customers returning for our instore experience,” she added.

Touching on the impact of the BetMGM JV, Nygaard-Andersen continued: “In the US, BetMGM is firmly established as the number two operator, and our market launches during Q1 mean that we now have access to over 41% of the US adult population.

“Elsewhere, our strategy of expanding into new markets is continuing at pace, having acquired businesses in Canada, Latvia and Poland during Q1.”

Delivering its assessment of Entain’s Q1 performance, Regulus Partners’ Paul Leyland suggested Entain continues to “demonstrate the value of a diversified and increasingly localised geographic and product portfolio” with Leyland pointing to strong momentum in emerging markets offsetting more challenging trading and regulatory conditions in more mature jurisdictions.

“What the three-year CAGR results also show is that the positives and negatives have broadly netted off to achieve the kind of growth that investors have come to expect from online gambling companies,” Leyland explained.

“The next three years will hopefully not have a global pandemic which sends whole countries into lockdown, but it may contain a global recession which online gambling is now too big to avoid, at least in parts of Europe. The ability to capture and sustain secular growth in less developed markets (including large parts of Europe) will therefore be key; for that localisation will be critical.

“Entain has the opportunity to create a powerful hub with local spokes, but the risks of over-centralisation (lose share in each market) or over-localisation (lose synergies and control) are significant, in our view,” he added.

Entain’s share price was down 1.8% to 1,592p at the time of writing on the London Stock Exchange.