Published on: October 18, 2024, 07:23h.
Last updated on: October 18, 2024, 07:23h.
Entain, the prominent online gambling company, has raised its earnings forecast following a successful Q3. This positive news came after a week of turmoil caused by reports of potential tax increases on the industry by the UK government.
The company, which co-owns BetMGM in the US with MGM Resorts, announced in an earnings call that its EBITDA for the year is now expected to be at the upper end of the £1.04 billion to £1.09 billion range.
BetMGM’s net gaming revenues saw an 18% increase, with significant growth in both online gaming and sports betting, particularly in the latter category.
In the UK, Entain experienced a 6% growth in its online segment, driven mainly by casino gaming, while sports betting remained stable.
Furthermore, the company reported strong growth in international markets, including Brazil, resulting in an 8% increase in total group net gaming revenues.
Challenging Times
Speaking about his new role, Entain’s CEO Gavin Isaacs expressed confidence in the company’s potential and current progress despite recent challenges. He emphasized the positive Q3 performance as evidence of the company’s improvements.
Isaacs’ appointment aims to stabilize Entain, which has faced difficulties leading to the resignation of the previous CEO Jette Nygaard-Anderson in December 2023.
Anderson’s leadership was marred by internal unrest as activist investors voiced concerns about the company’s direction and strategy.
Waiting for Certainty
Although analysts viewed the latest update positively and the shares rose nearly 5% on Thursday, investors are advised to wait for clarity from the upcoming UK budget announcement on October 30.
Entain’s stock dropped by as much as 14% earlier in the week following reports of potential tax hikes by the new Labour government to address a financial gap of £22 billion (US$28.7 billion).
One proposal suggested an increase in taxes on the gambling industry, potentially generating £900 million (US$1.2 billion) to £3 billion (US$3.9 billion) in additional revenue, as reported by The Guardian.
Isaacs warned that harsh tax hikes could have negative implications on the industry, leading to job losses and funding shortages for sports and racing, while also benefiting the black market.