SBC News Voice of the Sports Betting Industry
Big plans are underway at Entain, according to two of the group’s leading executives in separate investor presentations, providing analysis of the company’s partnership with TAB NZ and acquisition of 365scores.
Entain expects these plans to bring about EBITDA of between £15m-£20m in 2024 and subsequent growth by 2025 of 50%. In their respective presentations, Dean Shannon and Sameer Deen explained how the FTSE100 group aims to achieve this.
Combining expertise in New Zealand
Entain is no stranger to partnership and M&A announcements, having made several in recent years. However, the strategic partnership with TAB NZ to manage the New Zealand wagering offering looks set to become the firm’s most defining of 2023.
The company will make an upfront payment of NZ$150m, with a follow up investment of $10m in New Zealand racing expected later this year and a $25m cash injection into marketing over the next three years. A fourth payment of $100m will be made once geo blocking legislation against unlicensed overseas firms comes into effect.
Breaking down the 25-year partnership to investors, Dean Shannon, CEO of Entain Australia, emphasised the growth opportunities of the New Zealand market. Also on the agenda was the prospect of the new partnership to bring New Zealand bettors back to the regulated market.
Shannon explained: “Our partnership agreement is a mutually beneficial growth opportunity for both Entain and TAB New Zealand, delivering New Zealand customers an enhanced betting experience whilst also providing long-term funding and support to the racing and sporting industries.”
Entain’s plan for New Zealand will see the international gambling group combine its scale, expertise and capabilities with TAB NZ’s embedded position in the local market, which Shannon reiterated is an established sector with strong potential.
Going into the numbers, Entain Australia’s CEO highlighted annual national revenue of NZ$600m, driven by turnover of around $2.5bn. He added that third party estimates put New Zealand’s growth rate at 35% to $830m.
TAB NZ’s licence covers both exclusive retail and online wagering, but digital betting is becoming the dominant vertical, amounting to 80% of betting volume with 250,000 active digital wagering customers.
From a product perspective, racing will be the key focal area for the partnership, Shannon outlined. As it stands, TAB NZ currently delivers 100,000 races to its customers, covering all codes of the sport from 70 tracks across the country.
“With racing being the dominant betting product in this part of the world, a strong racing industry is a critical success factor for Tab NZ and Entain,” he continued.
“The arrangement delivers significant returns to these industries. From day one and for the first five years, Entain has committed to a minimum annual return of 50m back to the TAB.
“These much needed funds will allow the right investment to be put back into racing immediately, which will benefit all stakeholders in the ecosystem in the coming years.”
Lastly, leveraging media will also be a key objective for the duo, unsurprisingly since TAB NZ owns and operates the only betting horse racing media service in New Zealand.
Entain will combine this business with its own experience in content production, marketing and streaming. This may not come as a surprise to some, as Entain Australia has been mulling up an expansion of its media activities for some time, according to regional reports.
New Zealand has a passionate fan base which has created a ‘vibrant and engaged market’ with substantial growth opportunities, Shannon asserted.
Additionally, he believes that the deal represents an opportunity to bring the approximate one-third of New Zealanders who bet with overseas bookmakers back into the regulated fold via a high-quality betting experience.
365scores – the future power of sports content
On the topic of media, Entain also moved to strengthen its standing in this area by making its first acquisition in the sports content space, acquiring 365scores for £120m in April this year.
Sameer Deen, Entain’s Chief Strategy Officer and President New Ventures, who led the acquisition and will be responsible for the brand’s development and direction going forward, discussed the takeover in a separate presentation.
The presentation made it clear that media operations and sports content are a key focus of Entain’s future strategy. Reflecting on the industry as a whole, Deen emphasised that sports content ‘will play a core role’ in the sector’s development.
365scores has strong synergies and is ‘highly complementary’ to Entain’s strategy in Latin America, he said. This is particularly the case in Brazil, a market which Group CEO Jette Nygaard-Andrsen highlighted as a priority ahead of much anticipated federal regulation, and the firm launched its Unikrn brand there earlier this year.
On a wider scale, Deen underscored that Entain’s new media holding engages ‘avid sports fans around the world’. The brand has secured a top five position among global sports apps and top three position regulated Latin American markets such as Mexico and Colombia.
Regarding Entain’s strategy, the CSO shared his belief that 365scores is ‘fully aligned’ with the firm’s ambitions of ‘deepening presence, broadening offer and expanding across recreational audiences’.
“Sports content is critical for betting and gaming operators for two reasons,” he said. “Firstly, it improves customer acquisition by reaching new and recreational audiences, and secondly it improves customer experience and ultimately engagement over time by providing fresh offerings that complement ours.
“Within sports content, live scores is one of the most attractive verticals. As I have outlined, scores apps have highly engaged audiences of sports fans and bettors, and their offering is mostly built on data, making it highly scalable.”
He concluded: “365scores is Entain’s first acquisition into the sports content space, following through with the interactive entertainment strategy that we laid out for the group.”
