Flutter and GVC face potential losses.
The spread of coronavirus (Covid-19) has crippled global elite sports, leading to profound consequences for the betting industry. The postponement of the European Football Championship to 2021 is just one example of this. Flutter Entertainment and GVC Holdings, two prominent British gambling companies, are dealing with losses in the millions. Let's see what the outlook is.
A "never-before-seen challenge"
The cancellation of sporting events worldwide due to the coronavirus pandemic has taken a major toll on betting providers, severely impacting their revenues. Peter Jackson, CEO of Flutter Entertainment, has acknowledged that "the challenges our company and the industry are currently facing are unprecedented." He went on to say that the suspension of gaming and sports events would have a "significant impact on the Group's revenue and earnings."
Jackson also issued a loss warning exceeding 121 million euros to the shareholders. He revealed that 78% of Flutter's total revenue in 2019 came from betting on sports events. The postponement of the European Football Championship to 2021 is forecast to cause a drop in earnings before interest, taxes, depreciation, and amortization (EBITDA) of at least 98 million euros.
About long-term effects on revenue, Jackson was uncertain. He emphasized that "it's too early to tell how long the standstills will last." Regarding the shareholders, he confirmed that the business performance so far was "above expectations," particularly in the first two months. For the time being, the company is focusing on safeguarding both its employees and customers.
Sports Outlook: Frozen Until August
Flutter Entertainment, which owns Paddy Power Betfair, Sportsbet, and FanDuel, has been significantly affected by the fallout. It is predicted that major sports leagues will suspend operations till at least August. The company has about 7,900 employees worldwide and is also in the process of a merger with The Stars Group. While The Stars Group has also been impacted by the pandemic, 62% of its total revenue in 2019 was derived from poker and casino games, making it optimistic about future revenue growth.
Flutter's CEO said that the future of sports was uncertain and that their priority right now was ensuring employee and customer safety. But throughout the crisis, the management remains committed to managing and protecting the company.
GVC Holdings Stays Resilient
Another gambling company feeling the crunch is GVC Holdings, the owner of Ladbrokes Coral, bwin, and Sportingbet. GVC estimates a loss of as much as 166.1 million euros in EBITDA. Kenneth Alexander, CEO of GVC Holdings, states that losses could exceed 140 million euros by December 31, 2020. He anticipates professional soccer to be shut down until at least July 2020, while major horse races, such as Aintree Racecourse and Royal Ascot 2020, are likely to be canceled. Closures of betting shops in countries like Belgium and Italy due to the pandemic are factored into the estimates as well.
However, should the UK retail sector face a lockdown, EBITDA could be further reduced by 55 million euros per month. Around 45% of GVC's net revenue originates from sports betting, highlighting the severity of the crisis for this company. Despite the challenges, GVC remains resilient. Alexander stated that his company is "in a robust position to manage the impact. We are a diversified global company with a skilled and knowledgeable management team operating across multiple industries and markets."
Crisis in the Sports World
As the coronavirus has led to the cancellation of almost all global sporting events, both major US leagues and top European soccer are experiencing disruptions. The English Premier League, Spanish Primera Division, German Bundesliga, and Italian Serie A have all put their fixtures on hold at least until April 3. UEFA, the organizer of the European Championship, issued a statement that "public health must take top priority." As a result, it deemed it unnecessary to overburden public services involved in the organization of the games.
The cancellation of the European Championship, however, presents both challenges and potential opportunities. While it affects European betting providers, it also means that domestic competitions like the Bundesliga can potentially be completed in the summer. The future remains unclear, but the betting industry's projections are looking rather gloomy right now.
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Source: www.onlinecasinosdeutschland.com
