GVC, the parent company of Ladbrokes Coral, has upgraded its earnings forecast for this year following better-than-expected results for online and over-the-counter betting.
The FTSE 250 company claims that wagers in its 3,200 shops in the UK had increased by as much as 7% during the past three months up until September 30.
This £20m ($24m) increase is surprising considering industry warnings issued following a drastic maximum stake reduction on fixed-odds betting terminals (FOBTs). The UKGC slashed the maximum stake allowed on FOBTs from £100 ($122) to £2 ($2.44).
Retail shops closed
Major players in the retail betting industry, including William Hill, were quick to feel the impact of the FOBT decision and have since decided to close up to 700 shops.
GVC itself has closed 198 shops this year. The company expects to close up to 900 more shops over the next two years. Still, it seems that the loss is not as bad as first thought and punters are finding other ways to gamble. GVC has lost roughly 18% of its retail net gaming revenue (NRG) due to the reduction in stakes on FOBTs, which is ahead of expectations.
The impact of last year’s successful World Cup in Russia was always going to be tough to compare forecasts against, but surprisingly, chief executive Kenny Alexander said the net gaming revenue was still strong.
Figures show that NRG remained up by 12% after online momentum remained strong across online territories. Alexander said that he is delighted about the group’s financial performance and that it continues to be driven by
our [GVC’s] industry-leading technology, products, brands, marketing capability, and people.”
GVC in the headlines
The company itself has been in the news this year after a dispute over executive pay caused a drop in the share price.
Questions have also been raised over European territories, such as Germany, which could affect licensing issues. GVC issued a statement warning shareholders about potential licensing challenges, stating:
the probability of legal challenges impacting the interim license rollout is heightened.’’
Shares rose for the company following the surprise announcement. The gaming giant also suggested further growth in the fourth quarter, as the integration of Ladbrokes, Coral, and Gala progresses. This integration is due to be completed by the end of 2020.
Joint venture with MGM also a success
A joint-venture with MGM Resorts in the United States has also put the group on firm soil as it launched its BetMGM mobile app last month in New Jersey. GVC has so far said it is encouraged by the strong start. In the trading statement, Alexander said of the app:
“It is a key milestone, and our US sports-betting joint venture with MGM Resorts remains very well-placed to capitalize on the US sports betting opportunity.”