Q&A: Entain’s CFO on facing up to UK challenges and why BetMGM has a bright future
Rob Wood discusses how a “levelling of the playing field” on home soil will bring major benefits as he champions the Angstrom Sports acquisition to drive parlay gains in the US
The post Q&A: Entain’s CFO on facing up to UK challenges and why BetMGM has a bright future first appeared on EGR Intel.
Having been with Entain since 2012, CFO and deputy CEO Rob Wood has seen more than most. But recent months may have been some of the more challenging in his decade-plus stint with the Ladbrokes and Coral parent company. Upheaval at the top of the business with CEO Jette Nygaard-Andersen departing in December has been steadied by interim CEO Stella David, who is set to replace chair Barry Gibson later this year after he decided to step down. Then there was the £585m payment to settle an HMRC investigation relating to a Turkish business Entain (then GVC) owned from 2011 to 2017.
Speaking to EGR following the publication of the group’s Q1 results, Wood remains upbeat and insists the team is “really pulling together” as the multi-brand operator looks to return to growth across its markets. Group NGR was up 6% year on year for the period, although downturns in the UK, Australia, Germany and the Netherlands were evident in the report.
However, Wood explains that a new normal in the UK should result in a better playing field for customers and operators, while product plans are in the offing for Ladbrokes and Coral. BetMGM – the 50/50 joint venture with MGM Resorts International – has seen market share slip to 14% from 18% in the middle of 2023, but last year’s acquisition of pricing specialists Angstrom Sports in a deal worth £203m could well be a “silver bullet” for success, the finance chief suggests. So, while 2024 may be a period of riding the wave, Wood remains confident 2025 with be a return to growth story.
EGR: Speaking in recent months you’ve said 2025 is the aim for return to growth but, in the interim period, how would you sum up your feelings? Are they ones of frustration or adjustment to a new reality?
Rob Wood (RW): The second half of last year was tough for lots of obvious reasons that were all well documented. The feeling around the place is night and day now. The togetherness is back, the desire to win is back, and that’s the most rewarding aspect for me.
So, I’m really pleased with the morale. It feels like we’re back. And it will take time for the numbers to get back into growth. But, if we focus on doing all the right things now, then we have increased confidence that the growth returns by the end of this year.
In Q1 we were -2% for online, of which UK was -9%. It’s not hard to see how we get back to growth from a financial perspective, and from an operational perspective we’re delivering. That’s the key when you can see there’s so much to do. You need everybody engaged and pumped and working together. And that’s what we’ve got now. So, it’s a great environment around the place now.
EGR: Looking at the UK, a 21% decline in sports bets and a 13% downturn in sports NGR was reported. Given you’ve been pivoting to a more recreational player base, is the loss of larger volume players taking its toll?
RW: From a revenue perspective, it was -13%. The wagers number will always be worse if you’re losing your top-end customers because they trade at a lower margins. It’s very much a continuation and it’s almost no fresh news really, other than what’s happening as we look forward.
It does feel like, as we probably spoke about in March, we are set now for a new industrywide approach to player protection, which is what we’ve needed for some time, but it’s coming. That’s everybody doing it the same way with a level playing field. That is the catalyst for change, and it’s the right thing to do for customers and it’s the right thing to do for operators. So, everybody understands it is simpler.
We’ve just created this overly complex approach to player protection. We need to simplify it, and that’s what’s coming. So, that’s what we’re really pleased about. And it’s also helpful for us that the stake cap on slots is coming. That is another sort of levelling of the playing field, but just simplifying things for customers up and down the country is a massive win. And we look forward to the benefits of that, particularly in the second half of the year.
EGR: During the full-year 2023 earnings, Stella David said: “Some of our apps have been a bit unloved in the UK.” What is Entain doing in-house in terms of Ladbrokes and Coral products specifically?
RW: Satty [Bhens], our chief product and technology officer, put up the slide in the full-year results in March which lays out what’s coming next in the UK, and one of the things that he was getting across is that it is perfectly true our priority was BetMGM for a period of time and that did create some gaps emerging for our UK business.
We’ve now got to a point where we’re pushing forward with multiple markets in parallel. And so, the UK does see fresh product, in particular, for the start of the football season. A priority area being the bet builder product, where we can start to leverage a lot of the developments that we’ve seen elsewhere as well. We’ve released a new app, and I think that the Ladbrokes app is now up to number five [in the iOS sports apps category], whereas it was previously below that. It’s lots of brilliant basic improvements, but also some more significant product developments coming in time for the football season.
EGR: In terms of BetMGM, market share for online sports betting and igaming combined is at 14% whereas it was at 18% back in the middle of last year. Could you shed any light on market share specifically, and what the feeling is internally on the 14%?
RW: We didn’t publish [igaming market share] but it’s a lot stronger. Low 20s is normally where that sits. And that is part of the reason why BetMGM’s market share has optically come off because we haven’t had any new US igaming states regulate for some time and, when that does happen, that will naturally be an advantage to us.
FanDuel and DraftKings are doing a very good job. They are growing the market further than our own expectations. So, while we might be on our own plan, market share is actually going back a bit because the market is just growing faster than we expected it to. But, as long as we’re delivering against our own numbers, that means we can see the path to $500m of EBITDA in 2026.
We do expect market share to continue to tick down but, by the time we get to the end of this year, we’re expecting to see stability as we either levelled the playing field or we remove any product gaps on NFL with the Angstrom [Sports] acquisition when the NFL season launches in September. Plus we have Nevada opening up which is a massive unlock for us.
By the time we get into the second half of this year, we should have our big developments ready and the business benefiting from them. So, we’d like to see market share stabilise and maybe even start to improve by the end of the year.
EGR: On Angstrom Sports, MGM Resorts International CEO Bill Hornbuckle has spoken highly of the accretive benefits of the acquisition. Could it be the “silver bullet” to make significant gains?
RW: Just to explain what it does and why that makes a difference, it means that we can price all betting opportunities in-house. So whether that’s a player prop or bet on a match result, if you price in-house, you can then offer the combination of those bets or the parlay.
That’s critical because same game parlay is so important, but at the moment we take the price from player bets from one source and match results from another so then we can’t offer the parlay because of the conditional probability on these two things happening. So, the way to think about is that we will be the only operator pricing everything in-house, which means full combinability of bets.
That is the most extensive parlay product, and that’s where the big competitive battleground is at the moment. So, it is the “silver bullet” in terms of taking away the weakness in our parlay product relative to the competition and by virtue of having a better parlay business, which trades at higher margins. That’s how your margin goes up. So, it all starts from pricing everything in-house.
EGR: Do you expect the engagement on the parlay product to be organic? Will there be marketing campaigns or is this a word-of-mouth process via customer experience?
RW: It’s a little bit of both. It’s so easy to download free apps. Most of the more engaged sports bettors already have our app on their phone. All you need is one hook to get them to use it and say, “that’s better” or “that’s an improvement”. There’s lots of different tricks, whether it’s through promos or marketing campaigns but, because it’s so easy to switch between one app or another, you will get players trying your new experiences. That doesn’t happen overnight, of course. And that’s why we’re more focused on the end of the year to see market share recovery rather than immediately when the NFL launches in September. But we’ve got lots to be excited about.
The post Q&A: Entain’s CFO on facing up to UK challenges and why BetMGM has a bright future first appeared on EGR Intel.
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