When sports betting was legalised in America and the great rollout began, Entain – home of Ladbrokes, Coral and other power players of the UK gambling industry – were right at the forefront.
They teamed up with MGM Resorts, the legendary casino brand, with the aim of dominating this new and exciting market.
Has it worked? According to estimates, BetMGM – the output of the Entain and MGM partnership – has a market share of around 10%, dwarfed by that of the likes of DraftKings and FanDuel. So, perhaps not, although 10% is still a lot of money in an industry worth more than £40 billion annually.
There was more to their partnership than met the eye, too. MGM wanted a slice of Entain’s global reach, and so set about trying to acquire their new running mate – however, they couldn’t come to an agreement, causing Entain’s share price to plummet.
And there could be further ructions in the camp with the news that BetMGM plans to launch its product into the UK market – without the express support of Entain.
Trouble in paradise?
MGM Resorts has been granted a UK operating licence for the move, which will see them make both their sports betting app and online casino available to the punting public.
Entain will play no part in the rollout, with MGM leaning on the expertise of LeoVegas – who they acquired for around £475 million in 2022 – and software specialist Kambi to bring their products to market.
Although they continue to collaborate in the United States, it appears as though the partnership between Entain and MGM has ceased to exist outside of America.
That’s news that won’t please their shareholders very much – particularly with the value of Entain’s stock dropping by a mammoth 5% when it was revealed that BetMGM were going ahead with their UK rollout without them.
Mind you, Entain have come out swinging. In a statement, they dismissed BetMGM’s UK entry, stating that ‘we do not consider that this new launch will make any impact to our business or indeed the market.’
“They [BetMGM] are not permitted to operate the BetMGM brand on the highly developed Entain platform utilising its advanced technology outside of the US and Ontario, Canada.
“The UK market is a highly competitive, well-regulated market where many brands operate and where leadership is gained through brand familiarity and high quality, in-house technology.”
How the two firms will co-exist from here remains to be seen, although there’s been no movement in recent months in MGM’s planned acquisition of Entain – several overtures to that end have been rejected by Entain shareholders already.
Perhaps they’ll take the view that if it ain’t broke, don’t fix it. BetMGM posted net revenues of $944 million – around £740 million – for the first half of 2023, leaving them on course to meet their own in-house target of between $1.8 million and $2 million for the year.
That chimes with an improved performance from Entain for the same period, with revenues up to £2.37 billion for the first six months of the year and gross profit at £1.45 billion – up from £2.09 billion and £1.32 billion respectively for the same period in 2022.
That said, there could be some crosswinds ahead as the firm continues to battle HMRC over a legacy case involving their former Turkish-facing business.
Entain sold that entity back in 2017, but allegations of bribery and corporate naughtiness led the HMRC to launch an investigation into the subsidiary’s antics, which has since been passed on to the UK’s Crown Prosecution Service.
To combat the fallout of any such legal battle, Entain has confirmed that it will set aside £585 million to pay for the case to disappear – or in anticipation of a settlement, to use the necessary legalese.
It’s thought that authorities will approve the settlement, with the matter to close by the end of 2023.
Barry Gibson, chair of Entain, commented: “We are pleased to be making good progress towards drawing a line under this historical issue, which relates to a business that was sold by a former management team of the group nearly six years ago.
“We have been working closely with the CPS throughout this process, and they have recognised our extensive co-operation. Following a complete overhaul of our business model, strategy and culture in the last few years, the Entain of today bears no resemblance to the GVC of yesterday.”