Entain: Shares tumble after US division predicts full year loss
Ladbrokes owner Entain’s aggressive marketing push in the US means the gambling firm’s North American division now expects to post a loss for the full year.
Bet MGM, which is a joint endeavour between FTSE 100 constituent Entain and MGM Resorts International, reported a first half adjusted loss of $123m (£95.8m).
The group said it expected the picture to be much the same for the rest of the year, and disclosed plans to ramp up its marketing spend in its online gambling division to a “greater than planned” level”, as it fights for supremacy in the fledgling but highly competitive North American gambling market.
The juiced up marketing budget will be funded by bank debt, Bet MGM said.
The hefty outlay helped stimulate single digit growth at the joint venture, with revenue for the first half of the year hitting the $1bn (£779m) mark for the first time, up six per cent year on year.
Growth was also aided by an expansion into North Carolina, which means it now has licences that give it access to over half the North American population.
Its weighty investment and steady geographic expansion has, the firm claims, allowed it to capture roughly 22 per cent of the online gambling market share.
But the growth numbers were not enough to stop Entain’s share price from tumbling between six and seven per cent in early morning trading on the back of the firm’s forecast for its bottom line.
Adam Greenblatt, Chief Executive Officer of BetMGM, said: “The first half of this year has been very important in laying the groundwork for BetMGM’s future. 2024 is a year of investment, focusing on improving our customer experience and stepping up our level of investment in players.
“We are encouraged to see this strategy delivering accelerating momentum. We have exceeded our goals for both acquisition and retention, which should lead to higher year-over-year revenue growth for the second half of this year into 2025.”
The results come just days after Entain, which owns Ladbrokes and Coral in the UK, announced Gavin Isaacs as its new chief executive. The industry veteran, who recently served as the chair of game development firm Games Global and will start in September, faces an unenviable in tray, as Entain looks to recover from a tricky trading period.
It has been weighed down by £2bn’s worth of acquisitions and a series of compliance battles, with investors in Turkey lining up for more than £100m in compensation for failing to disclose a high profile bribery case that forced them to pay HM Revenue and Customs almost £600m.