Strong casino growth helped online gambling operator GVC Holdings overcome the impact of new taxes in the first half of 2015.
Overall revenue in the six months ending June 30 rose 15% to €121m while earnings rose 14% to €25.5m. Sports revenue per day rose 6% to €303k despite margins falling 1.1 points to 8.8%, while gaming revenue was up 25% to €365k per day. GVC’s core operations include the Sportingbet, CasinoClub and Betboo brands.
Sports betting turnover rose 18.5% year-on-year. In-play’s share of sports betting revenue rose 10 points to 73% while mobile’s share increased 16 points to 38%. Total customer deposits rose 18% as the number of active and depositing customers increased 14% and 7% respectively.
Looking forward, GVC says trading in the first two months of Q3 has been “strong” despite the absence of a major football tournament like last year’s FIFA World Cup. GVC’s board remains “highly confident” regarding its prospects for the rest of 2015.
GVC announced that it has agreed to pay the Romanian government €900k in back taxes to allow GVC to apply for a new Romanian online gambling license. Assuming that license is issued, GVC said the annual tax impact will likely be around €500k.
Unlike many of its competitors, GVC’s Sportingbet brand never pulled out of the Greek market and GVC said Greece would “continue to be important” for GVC’s future earnings. The market had softened following the country’s fiscal implosion, but GVC says it is “encouraged by signs of greater customer activity.”
BWIN.PARTY ACQUISIITION UPDATE
In a rare harmonic convergence, Friday saw all three parties involved in the bid to acquire Bwin.party digital entertainment report earnings and acquisition updates. GVC boss Kenneth Alexander told Bloomberg that his company expects “to bid significantly higher” for Bwin.party than rival 888 Holdings, “and as a result I expect to win.” Striking a Churchillian stance, Alexander said he was “very, very confident” and claimed he hadn’t so much as entertained the notion that GVC might fail to win the day.
GVC’s H1 numbers were considerably more favorable than either Bwin.party or 888, reflecting GVC’s greater willingness to retain a presence in grey- and black-markets. But this embrace of regulatory risk is reportedly among the factors that caused Bwin.party’s board to unanimously recommend 888’s bid offer, despite it being of less monetary worth than GVC’s.
On Friday, Alexander told eGaming Review that GVC would be submitting its latest formal offer to Bwin.party’s board later that day and Alexander expects the final decision will be made by Sept. 1. Alexander declined to specify whether the new bid would be higher than its most recent offer, saying only that “it will be a greater price” than 888’s £898m bid.
888 executive chairman Brian Mattingley has commented that GVC’s proposed €130m in post-acquisition synergies – twice the cuts proposed under 888’s bid – are too severe. Mattingley said that GVC couldn’t cut those kinds of costs “without destroying value.”
Alexander dismissed these concerns, pointing out that, unlike 888, GVC has been in the sports betting business a long time and this greater duplication of services between GVC and Bwin.party meant GVC “were always going to get greater synergies – it’s not because we are slashing and burning or anything else.”
Whomever eventually imposes whatever synergies, they better happen fast. GVC’s earnings report revealed that its pursuit of Bwin.party had already cost the company €3.8m as of June 30.