Entain reveals £45m hit after run of football favourite wins

The Ladbrokes and Coral owner said it had seen an ‘unprecedented’ run of favourites winning last month, particularly in UK and European football.

Ladbrokes and Coral owner Entain has cut its outlook for profitability in 2023 (Mike Egerton/PA) (PA Wire)

Ladbrokes and Coral owner Entain has cut its outlook for profitability in 2023 after gaming revenues fell and a £45 million hit from punter-friendly football results last month.

The group revealed pro-forma gaming revenues, excluding the US business, dropped 6% in the third quarter.

Online gaming revenues fell 6%, dragged lower by a 15% fall for sports results, while it saw a 4% drop across its betting shop business.

Entain, which also owns the bwin and partypoker online brands, said sports bets going the way of punters in October impacted its earnings by around £45 million after an “unprecedented” run of favourites winning, particularly in UK and European football.

It said that its online business has been down on its football margins for a full week only three times in the last four years – and two of those were in the second half of October.

The group trimmed guidance for its earnings margin this year, to around 25% after the recent gaming revenues performance.

This compares with 27.1% last year and is lower than the 26% it previously guided for in 2023.

It has also been under regulatory pressure due to online safer gambling measures and incoming UK regulations.

But Entain said it was on track for full-year underlying earnings guidance of £1 billion to £1.05 billion.

Jette Nygaard-Andersen, Entain’s chief executive, said: “We have made significant investments in responsible gambling initiatives.

“While these steps have impacted EBITDA (underlying earnings), they are unquestionably the right thing to do to improve our long-term prospects.”

The group said it expects next year’s online net gaming revenues to be in the low single digits, but to return to growth in the second half of 2024.

It is speeding up its transformation plans under an overhaul that has been ongoing for the past three years, which includes a review of its markets and moves to simplify the group structure and operations to cut costs.

This will see it deliver cost savings of £100 million – £70 million on a net basis – by 2025, with aims to ditch some smaller lower-performing operations.