Entain Shares Plunge on Tepid iGaming Revenue Forecast

Entain shares plunge on tepid iGaming revenue forecast

Entain Plc (OTC: GMVHY ) was one of the worst-performing gaming stocks on Monday after the Ladbrokes Group owner gave disappointing 2023 net gaming revenue (NGR) guidance, citing weakness in online gaming - Gaming said.

The firm, which owns half of BetMGM, also told investors that regulatory headwinds in the UK were lasting longer than expected, while growth was slow in Australia and Italy. Entain expects NGR to grow by a high-single-digit percentage in the third quarter, but expects NGR to decline by a high-single-digit percentage.

We now expect group online NGR for FY23 to grow in the low double-digit percentage range, while NGR is expected to decline in the low single-digit percentage range. "We reiterate our guidance for fiscal 2023 EBITDA of $1.22 billion to $1.28 billion, supported by strong operating controls," the company said in a statement.

FTSE-listed Entain, which also owns the BetCity, Bwin, Coral and Crystalbet brands, is expected to release a full trading update on November 2.

Regulatory resistance

The UK Gambling Commission (UKGC) recently published new guidance for online gambling operators. While this newfound clarity may be beneficial to operators in the long term, it may also pose a hindrance in the short term.

That, coupled with Entain's $744.5 million drawdown from a bribery scandal involving Turkey's former leadership, creates regulatory headwinds.

On the other hand, the operator noted that its current long-term acquisition wave, including a series of deals in Eastern Europe, is paying off.

Entain said in a statement that recent purchases have performed well, particularly for Croatia's SuperSport. Analysts expect the operator to continue looking for deals in Central and Eastern Europe. Part of Eastern Europe's appeal to business-hungry suitors in the gaming industry is that these markets are not as mature as the UK, Germany or Italy, suggesting there is greater potential for growth.

In July, Entain announced it was acquiring analytics provider Angstrom Sports for $266 million in cash. Although not mentioned directly in the press release, Entain and MGM Resorts International (NYSE: MGM ) executives actively discussed the deal because of the synergies it involves with BetMGM.

Speaking of BetMGM...

BetMGM has performed admirably and may be able to mitigate some of the impact of Entain's weak business in other markets.

BetMGM remains on track to deliver positive second half EBITDA and full-year NGR results at the high end of our expectations, and we are particularly pleased with the product improvements we have made throughout the NFL season. " CEO Jette Nygaard-Andersen said in a statement.

With Monday's losses, Entain stock wiped out nearly all of its gains since the start of the coronavirus pandemic and its market capitalization now stands at $8.26 billion. That could fuel fresh speculation that the company is a target for potential suitors, including MGM, which has made no secret of its desire to take control of BetMGM.