(Alliance News) - Ladbrokes Coral owner Entain PLC backed its full-year expectations and explained it has a "sufficient degree of confidence" to take a GBP585 million provision for a possible settlement of an ongoing UK probe of its legacy business in Turkey.
Entain shares were 2.3% lower at 1,327.50 pence each in London on Thursday morning, among the worst FTSE 100 performers.
The gambling firm said revenue in the six months ended June 30 climbed 11% on-year to GBP2.38 billion from GBP2.09 billion. Net gaming revenue, which excludes value-added tax and goods and services tax, rose 14% to GBP2.40 billion from GBP2.12 billion.
Entain swung to a pretax loss of GBP502.5 million, from profit of GBP28.1 million, reflecting the HMRC provision.
"This has been another period of strong performance for Entain as we make clear strides towards delivering our strategic ambitions. In particular, we are making excellent progress in broadening our customer base and deepening our audience engagement, as evidenced by the record number of active online customers on our platform. BetMGM continues to show momentum and backed by our technology and capabilities we are excited by the improvements we are delivering for customers in the US," Chief Executive Jette Nygaard-Andersen said.
The US is fast becoming a key market for London-listed gambling firms. Entain co-owns sports betting operator BetMGM with MGM Resorts International, a Las Vegas-headquartered entertainment and hospitality company.
Total net gaming revenue at BetMGM grew 65% on-year in the first-half of 2023.
Entain added: "BetMGM delivered a key milestone of profitability for Q2 2023. The maturity build of earlier cohorts remains on track to support sustainable profitability, with, for example, each of the annual cohorts of digital sportsbooks launched in 2022 and earlier, now delivering positive contribution. We remain on track for BetMGM to be Ebitda positive in the second half of 2023 and reiterate our long-term target Ebitda margin of 30-35%."
Entain lifted its dividend by 4.7% to 8.9 pence per share from 8.5p.
Excluding TAB NZ profit share payments, it expects to report full-year earnings before interest, tax, depreciation, and amortisation between GBP1.00 billion and GBP1.05 billion.
In May, Entain said it signed an agreement with TAB New Zealand, a statutory body that provides betting services to New Zealanders and makes returns back to New Zealand racing and sporting organisations.
Under the 25-year strategic partnership terms, Entain took over the running of TAB NZ at the start of June. It included a payment by Entain, and an ongoing gross profit share arrangement.
Also back in May, Entain said it was in talks with the UK Crown Prosecution Service regarding an ongoing investigation by HM Revenue & Customs into a potential breach of the bribery act at its former Turkey-facing business, which was sold in 2017.
"The [deferred prosecution agreement] negotiations have now progressed to the point where the company believes that it is likely to be able to agree on a resolution of the HMRC investigation insofar as it relates to the company and the group," Entain explained on Thursday.
The full terms of the agreement are yet to be confirmed and are subject to judicial approval.
However, it has booked the GBP585 million provision for a potential settlement, which would be paid over a four-year period.
Entain added: "Section 7 of the Bribery Act 2010 relates to the failure of a relevant commercial organisation to have adequate procedures in place designed to prevent persons associated with it from undertaking bribery for the benefit of the commercial organisation."
In July 2023, Entain, back when it was known as GVC Holdings PLC, said HMRC expanded its investigation on the matter.
At the time of the sale of the Turkish unit, GVC was led by Kenny Alexander. He left the post of GVC CEO in 2020. Alexander had eyed a return to the London-listed gambling industry by taking up the same position at 888 Holdings PLC.
FS Gaming, which in June snapped up a 6.6% stake in 888, is backed by Alexander, as well as Lee Feldman and Shay Segev. Segev was Alexander's replacement at Entain, but stepped down in January 2021 to head up sports streaming platform DAZN.
FS proposed adding Feldman, Alexander and Stephen Morana as 888 chair, chief executive and chief financial officer. Morana previously held the finance chief post at Betfair.
But the proposals and FS Gaming investment put 888 under the regulatory spotlight, and the UK gambling watchdog in July said it was reviewing the firm's licence.
"The Gambling Commission has expressed its concern regarding the ongoing HMRC investigation into GVC's activities covering the time the individuals proposed to the board by FS Gaming were in senior leadership positions at GVC," 888 explained in July.
888 then named Per Widerstrom as chief executive officer last month.
By Eric Cunha, Alliance News news editor
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