View from the City: Euro 2020 a key revenue driver for diversified operators

The wait goes on. Fifty-five years of hurt continued, as the England football team maintained its tournament drought. But for the online gambling industry, the script could not have been better. Draws (after 90 minutes) in both semi-finals and final, England limping out at the very end. This will drive revenue/profits well above the levels of the last Euros.

And while the Euros only account for c.2% to 3% of group FY21 NGR for the more betting-focused operators, they should meaningfully boost customer acquisition volumes. They also demonstrate the improving quality of sector earnings. Single football match bets have declined, with more in-play. The businesses are international, introducing a natural hedge – Entain had more money on Germany than England when they played.

The product offering is more diverse, with a heavy weighting towards higher margin multiples, such as request-a-bet, while pre-match football bets are less than 20% of betting volumes. And since 2017, market share of the top three UK operators has risen from 59% to 76%. This will have taken the edge off price competition, reflected in a steady increase in gross win margins across the industry.

The presence of the ongoing UK Gambling Act 2005 review was evident in the fact that the number of gambling ads during the Euros almost halved, versus the last World Cup. And there were signs of stricter affordability checks (most notably from 888), designed to show increasing focus on responsible gambling.

A progress report from John Whittingdale, the MP in charge of the review, may not come until September, with a white paper due by year end.

Current signs are that proposals will focus more around restricting advertising and sponsorship, reducing the risk of more costly £2 stake limits on slot games or deposit limits. But there is a risk that the next wave of mergers and acquisitions is deferred until there is a bit more clarity over the direction of travel.