Q&A: Entain interim CEO on getting back to basics

Having been drafted in as interim boss in December after serving as a non-executive director at Entain since 2021, Stella David has a fair amount on her plate. Seemingly, she has taken it in her stride. With the business having released its full-year 2023 results yesterday, 7 March, David stepped up to deliver her first presentation and media rounds since taking on the top job.

In essence, the former Bacardi SVP has set a tone of getting back to basics. Given the difficulties in 2023, which included investors slamming the company’s M&A strategy and a £585m settlement with HMRC, David is aiming to push ahead with a carte blanche.

And while there were some difficult pills to swallow in terms of 2023 performance, and with forewarnings of further earnings hits due to regulatory headwinds in the UK and the Netherlands, there are signs Q1 2024 has delivered well. Management have insisted 2025 will be a true return to growth for the operator.

Here, speaking to EGR for the first time, David gives her thoughts on the past 12 months and how to push the business forward.

EGR: Stella, good to speak and meet for the first time. The rhetoric we are seeing coming out from Entain under your interim leadership is getting back to basics. Do you think straying away from core competencies had an impact on 2023 performance?

Stella David (SD): One of the things we’re very proud of is who we are. We’ve made it very clear that we’re a leading player in the global betting and gaming sector.

I understood why people wanted to get interested in interactive entertainment. Actually, it’s a distraction. People want to be proud and really proud of delivering against the core of who we are. And I think that is a reset. And I think it’s a really positive reset for people.

It gives them the energy and the confidence to go and start to come up with things which are market leading. So that’s why I feel very energised about that and hopefully people internally feel energised by that as well.

EGR: Looking at markets, Brazil revenue was down 14% year on year for FY 23 but you noted some traction for the start of this year. Is it a case of the hype not living up to billing, given all the talk there?

SD: I think it’s the opposite. I think Brazil is a fantastic opportunity for us. There are certain things we’ve done historically, which turned off our market share.

We’ve recognised those and we’ve put those right. There’s a local leadership team now who are very engaged. We’ve changed our marketing campaign and marketing approach and, importantly, we’ve gone to instant player withdrawals. We were going the opposite direction 12 months ago, it’s strange to think. We’ve got some really good evidence that our performance is looking really strong.

As regulation comes in later this year, we’re a leading player. That has got to be good news for us. I think the story on Brazil was bad news and good news. Bad news was we lost our way. Good news is we’ve got it back again.

Then the ‘good good’ news is the country is regulating and we’ll be in a strong position as it regulates. I have a very different point of view on Brazil to what the headline numbers might show.

EGR: In the UK, revenue is 4% up without regulatory headwinds. Assuming those are affordability checks and slot stake limits, when does that level out and become the new normal?

Rob Wood (RW): The honest answer is at this time 12 months ago we were saying ‘end of 2023’ but it hasn’t happened yet. That’s the reality. We made further changes and further changes and further changes through the course of the year, and that just created complexity upon complexity upon complexity.

We found ourselves where customers are getting requests for bank statements. They’re ringing up our customer service teams and our customer service teams can’t figure out why – the complexities got out of control. We are still seeing an impact from that.

Fundamentally, the UK is our biggest market. And if the UK is declining, that’s very significant for the overall [business]. We hope, but we don’t yet know, that by the end of this year, we should start to see a turn in performance.

We’ve had some positive regulatory developments. The stake cap on slots comes in in Q4. We think that’ll be good for us. We’ve already lost customers who play over the new cap level. So, it’s an opportunity for us to win them back. And the industry is working together on a uniform approach to safer gambling measures, which would solve the complexity that’s out there right now where every operator does it a bit differently. Those two things should mean we have a much better 2025. But I’d like to think by the end of this year, we will get back to some growth in the UK.

EGR: Regarding BetMGM, there is a lot of focus on the ESPN Bet and Fanatics entries. Presumably, before they tackle the duopoly in FanDuel and DraftKings they would have BetMGM in view. What is the state of play there?

SD: It’s getting our product right and getting the consumer experience right. We’ve put a huge amount of effort in over the last 12 months to get ourselves to a level playing field and above in terms of our product delivery.

I think input equal output. If we’ve got some of the best products and some of the best app experiences on the market, our ability to be able to gain share will be a lot stronger. Of course we’ve lost share of this period of time, but our confidence level in our product and our customer experience is better than it’s ever been.

It’s reflected in the fact that we’ve got MGM and ourselves really aligned in our commitment to the growth of BetMGM, more aligned than I think we’ve ever seen before because we both see a journey where we can be very profitable in the US.

It’s not always about who has the biggest market share. It’s about what niche you take and how you protect it. BetMGM is in a better position to be able to defend and grow share going forward.

RW: There’s quite a big drop from three down to four. If we get our market share back into growth, then we shouldn’t we be shooting for the top? It is important to remember FanDuel and DraftKings are fantastic businesses and we have a huge admiration for them, but they had a tremendous head start plus product expertise.

We thought we could solve it internally but in the end we acquired Angstrom Sports last year to help solve it for us. The fact is we are shooting for the top and not the middle. The deal with X [formerly Twitter] – they wouldn’t have partnered with us if we didn’t have aspirations of being at the top. I know others have come in but others have gone out and there is always going to be some chopping and changing in the market.

EGR: There were reports earlier this week around PartyPoker being a potential sale option. Could you shed some light on this as well as what is being looked at in terms of the potential trimming down of the business?

SD: Our share price isn’t where we want it to be. We’ve made some missteps and we’re rebuilding. As part of that rebuilding process, the board has a sub-committee called the Capital Allocation Committee.

It is perfectly legitimate to have it because it looks at all aspects of how we’re investing our resources to get the best shareholder returns. But it’s really early days and there are no findings to share, because actually, it’s something that is part of the suite of things we look at.

I don’t think it’s something we should get over excited about at this stage because there are lots of growth opportunities in the organisation; whether we’ve taken advantage of them as much as we should before is an interesting question. Whether we have a handle on how to do it? I think we do. We’re very aligned. The EXCO [executive committee] is working well together, and I think the results will come through from that.

EGR: A final question for Stella. You’ve been drafted in on an interim basis but is there an aspiration to take the role on permanently?

SD: I took this job on with a very clear mandate, namely, I’m here to make sure that the long-term solution for the CEO is the right one. For as long as I do the job, I engage 100% in it, because that’s the only way I know how to do it.

That’s why my husband would have a point of view because basically he says he’s lost his wife. But it’s true. Doing this job is very consuming but I am committed to do it and be consumed by it until the right long-term solution is in place.