Entain: Current company culture ‘worlds apart’ from GVC days

The Entain that operates today has ‘no resemblance’ to its forerunner GVC Holdings, Chairman Barry Gibson informed investors this week after the group’s H1 trading results

Britain’s HMRC tax office has been conducting an investigation into Entain for a dispute involving the Turkish online betting and gaming business operated by GVC Holdings which was dissolved in 2017.

In 2020, GVC rebranded to Entain, one of only two gambling companies on the FTSE100 index and the operator of several prominent international brands such as Ladbrokes, Coral and bwin, among others. In the years since, the company has changed significantly, Gibson asserted.

“The Entain of today bears no resemblance to the GVC of yesterday, which had a different management team, a different strategy, and to be blunt, different standards,” he said.

“Over the last few years, we’ve taken very deliberate steps to drive a complete transformation to become a best-in-class responsible operator with outstanding corporate governance.

“Every aspect of our business model strategy and culture has been reviewed, analysed and changed. We’ve also completely overhauled the board and the leadership team and I’m very confident in saying that the culture of the two businesses is worlds apart.”

Although the group recorded strong revenue growth in its H1 trading update, this was clouded by the revelation that Entain had reserved a £585m legal provision to settle the investigation with HMRC.

Explaining to investors, Gibson stated that although negotiations with the Crown Prosecution Service (CPS) are still ongoing, Entain is confident that talks have ‘progressed to a point’ where a resolution to the investigation can still be achieved.

Addressing a question from investors later on the call, group CEO Jette Nygaard-Andersen – who assumed leadership in January 2021 – reiterated Gibson’s argument that Entain is a ‘very different business’ to GVC. 

Entain’s group-wide revenue rose 14% year-on-year to £2.4bn (H1 2022: £2.1bn), and aside from providing clarity on the HMRC investigation, the company has also been keen to highlight the progress made by US-facing JV BetMGM, which is on track to achieve its goal of positive EBITDA in H2.

However, in the UK, NGR has declined 2%, though Chief Financial officer Rob Woodprojected that the ‘drag on growth’ caused by affordability checks will ‘start to recede’ during the rest of the year.

The picture remainsmurkier in Germany, however, where ‘lack of effective regulatory oversight’ – with the GGL regulator having only come into force at the start of this year – is posing continuing challenges.

“More and more customers in the UK continue to play with us,” he said. “In Germany, the uneven playing field on regulatory limits has also driven NGR declines with spend per head down materially as higher value customers continue to move to non-compliant operators, but activities remain relatively flat.”

Further afield, Nygaard-Andersen reiterated that Entain – like many other operators – is anticipating the launch of a nationwide, federally-regulated sports betting market in Brazil to provide a significant boost to its operations.

The CEO remarked: “Latin America has experienced intense competition, and there’s a lot of noise in the market still, but we do expect that in the second half of the year the curve should turn for us, and then we’re ready for the market to go live hopefully at the beginning of next year.”

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