GVC boosted by online growth as revenue climbs in first half

17 July 2019

GVC Holdings has cited growth within its online gambling business as the main reason behind a 5% year-on-year increase in net gaming revenue during the six months to June 30, 2019, despite a decline in revenue within the operator’s UK retail arm.

Although the operator has opted not to publish financial figures, it has revealed that total online gaming revenue increased by 17% on a year-on-year basis in the first half.

GVC noted growth across all areas of its online arm, with online gaming revenue up 17% and sports betting 18%. Online sports wagers were also up 13% year-on-year.

However, it was not such positive news for GVC’s retail business – which includes the Ladbrokes and Coral land-based network – with UK retail revenue down by 10% year-on-year.

This was primarily the result of new regulations in the UK for fixed-odds betting terminals. Laws came into effect on April 1 cutting the maximum state on such machines from £100 to just £2.

Despite the UK decline, GVC did highlight growth within its European retail business, with revenue in the six-month period up 7%, boosted by an 11% rise in sports wagers.

The first-half results were boosted by a strong performance by GVC’s online arm in the second quarter, during which total net gaming revenue was up 3% year-on-year.

Q2 online revenue climbed 16% - boosted by an 18% rise in revenue from online sports betting – but it was the same story for UK retail, where revenue slipped by 19% year-on-year due to the FOBT stake change. On the other hand, European retail revenue increased 12% in the period.

Despite the drop in UK retail revenue, chief executive Kenny Alexander remains optimistic about this area of the business, saying that he believes the operator is in a strong position to increase its market share.

“Trading in Q2 remained very strong with the online division delivering continued material market share gains across all major territories,” he said.

“This outperformance is driven by the sustainable competitive advantages of our proprietary technology platform, leading product, cutting edge marketing and leading brands, all delivered with an unrivalled understanding of the markets in which we operate.

“The transition to a post £2 stakes-cut environment in UK Retail is progressing very well and we believe the Ladbrokes Coral estate is best-placed to take market share.”

Away from the UK, Alexander noted significant movement in the US, where he said GVC’s Roar Digital joint venture with MGM Resorts is on-track for its full online launch ahead of the NFL American football season in September.

During the first half, GVC was also granted licences in Mississippi and Nevada, while Roar Digital received a transactional waiver to conduct business in New Jersey.

In addition, Alexander said that clarification on new sports betting licences in Germany, which is expected next month, will help position the operator for further growth.

“The strong trading performance of the group means that any potential costs in 2019 associated with the new sports licences are expected to be fully mitigated,” he said. “The board therefore remains confident of delivering EBITDA and operating profit in-line with expectations for the full year.”