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adbrokes owner Entain said it will miss its full-year revenue guidance as the implementation of new UK safer gambling rules has had a bigger impact than expected.
The betting giant said revenue since the end of the summer has been “softer than expected”, due to a mix of punter-friendly sporting results, and a bigger-than-expected impact from safer gambling measures and regulatory challenges, especially in the UK. Slow growth in Australia and Italy also hit revenue.
In the UK, the Government opened consultations on new safer gambling rules that include “affordability checks” for higher-spending bettors, and a cap on the amount that can be staked on online slots.
The rules haven’t come into force yet, but Entain said it started to bring them in early. Before the rules were announced, Entain said it took a roughly £110 million revenue hit from implementing the reforms it expected to be introduced, with a smaller additional impact when the Government laid out the plans in more detail. But now it appears the changes may have had a larger impact than previously thought.
The group downgraded its revenue target but left profit unchanged, as it said “robust operational controls” would protect profits.
Those controls include a “comprehensive market review”, which could see the business – which also owns Coral and Bwin – quit countries where it doesn’t see big growth opportunities. It also hinted at job cuts, saying the group’s structures and operations would be simplified to cut costs.
A bright spot has been the US, where Entain has a joint venture with US casinos giant MGM. But analysts have long felt that neither party wants only 50% control of their US operations in the long run, and questions about the future of the joint venture arrangement only grew when MGM launched a UK betting site without Entain’s technology.
CEO Jette Nygaard-Andersen said: “We have made significant changes to the group over the last three years.
“Our focus now is on accelerating the actions we are taking to drive sustainable organic growth, expand our margins, capitalise on the US opportunity and deliver long-term returns for our shareholders.
“We remain confident in our ability to deliver on the vast opportunities ahead of us.”
Shares lost 4% to 1013p. They are now down 25% for the year. Paddy Power and Sky Bet owner Flutter’s shares lost 2.3% as investors expected its revenues to be hit by similar factors.
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