Bwin’s focus on regulated markets nets drop in revenues in 2013

TAGs: Business,, gambling’s approach of taking short-term steps back to make way for long-term leaps forward in the future was evident in its revenues in 2013 when it reported a 25 percent drop in earnings before interest, taxes, depreciation, and amortization (EBITDA) for the 12 months that ended on the last day of 2013. In that time, the company’s EBITDA fell to €108 million (USD$150 million) from the €143.6 million ($200.3 million) it earned the year before. Total revenue for the entire year also fell 19 percent from €801.6 million to €652.4 million.

Even if the decline was met with a tinge of disappointment, it wasn’t all that surprising considering its ISP blocking in Greece, the increased gaming taxes in Germany, the costs attributed to setting up shop in New Jersey all played major factors in the revenue decline. Still and all, there’s reason for optimism within the ranks of Bwin moving forward now that it has adapted a new strategy of shifting away from riskier grey markets and concentrating on those where regulations are a lot clearer. Bwin’s approach was already evident in 2013 when its revenues from nationally regulated markets amounted to 53 percent of the total pie, 43 percent more than what it had earned the year before. On the flips side, a majority of the company’s losses came from the unregulated business, with the company absorbing a 32 percent decline in revenue from from €456.1 million to €310.1 million.

All four divisions of Bwin’s online gaming business also took a hit with poker being the biggest victim, accounting for a 35 percent drop in revenue to €114 million. Turns out, even the re-launch of its PartyPoker client last September couldn’t swing the momentum on the positive side. Sports betting revenues didn’t have as steep a fall as poker, but the 10 percent drop to €235.8 million was also a disappointment, even with the promising 67 percent of total revenues being taken from the regulated markets.

If there’s a silver lining to Bwin’s run in 2013, it was the performance of its mobile department, which improved its revenue numbers by a staggering 77 percent to €76.9 million. Company figures for the first ten weeks of 2014 also posted growth in every area of the business, a reassuring sign that Bwin’s new business model, which now focuses on regulated betting markets, is off to a promising start. CEO Norbert Teufelberger doesn’t appear to be sweating the revenue drop in 2013 because in his mind, it came as a price of streamlining the shape and size of our business in the years to come. With its new model, Teugelberger believes that the company now has the foundations to return its business to sustainable growth moving forward. Easier said than done, but, given how dire 2013 turned out to be, it shouldn’t get any worse, right?

One significant source of revenue that everyone in the industry is banking on cashing on is the upcoming World Cup this June. Bwin is no different from the rest, and it hopes that the quadrennial sporting event will boost its business this year, especially with all the major European teams competing, as Teufelberger pointed out. “Given our footprint across Europe, we are well positioned to drive betting volumes over the summer months,” he added.

Of all the signs that Bwin has reached a turning point towards a more prosperous future, the most evident was when shares of the company rose 3.4 percent to 126.3 pence this morning as the market welcomed the prospect of renewed growth from a smaller base.

But make no mistake, Bwin is at a crossroads to reap the rewards of its new strategy this year. If it lives up to it and returns to positive growth, it won’t have to feel the pressure of having to explain why it failed on its promise to US investor SpringOwl, who agreed to buy 6.1 percent of the company last month. In the event things don’t turn around, then a major shake-up within the ranks could be on the table next year.

So Bwin is all-hands-on-deck for the year with the hope that it’s new strategy will more than live up to the company’s projections.


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