Ladbrokes gets blessed by sporting gods yet still can’t turn digital profit

ladbrokes-football-online-bettingBookmaker-friendly sporting results helped UK betting operator Ladbrokes post better than expected revenue in the first half of 2016 yet it still couldn’t manage to turn a digital profit.

For the six months ending June 30, Lads reported revenue of £662m, 12% higher than the same period last year. Operating profit rose more than one-third to £52.3m while after-tax profits came to £20.7m compared to a £41.4m loss in H1 2015.

Online posted the biggest revenue gain, rising 41% to £158m. Despite the gains, the online ops posted a net loss of £9.6m, although this was an improvement over the £11m loss in H1 2015.

The Euro 2016 tournament helped drive a 69% rise in online sportsbook revenue to £58.3m, the 10th consecutive quarter of year-on-year growth. Digital stakes rose 19.5% and mobile accounted for nearly 78% of all digital sports wagers. In-play betting was up 43.6% year-on-year.

Lads said it was pleased to see basketball rising to its fourth most popular online wagering sport, as it represents a broadening of its recreational customer base, making it less dependent on big football events.

Digital gaming enjoyed a smaller but still significant 26.8% rise to £54.9m, the seventh consecutive quarter of gaming growth. Only the Betdaq and Ladbrokes Exchange products were in negative territory, falling 6% to £6.4m. Telephone wagering revenue was flat at £2.7m

Australian online revenue was up 41.5% to £35.5m as stakes rose more than one-half, thanks to a 70.6% rise in active customer ranks. But marketing expenses were also up and helped drive operating profit down nearly one-quarter to £2.1m.

Revenue at Lads’ Belgian site and its Spanish joint venture was collectively up 36.4% to £3m and the operating loss improved by one-third to £2.1m.

Lads’ core UK retail business saw revenue improve 6.8% to £444.3m and operating profit gained 11.6% to £63.5m. OTC betting stakes were flat but favorable sporting results pushed OTC revenue up 7.7% to £197.6m. Machine gaming stakes were up less than 1% but revenue rose 5.3% to £239m.

Lads said its new BetStation wagering machines (formerly known as self-service betting terminals) accounted for 10% of OTC stakes – up from 4% in H1 2015 – thus establishing themselves as a “key customer product.”

There has been a tsunami of bad press in the UK regarding betting shop staff having to work alone, particularly at night. Lads said it had undertaken a review and was rolling out a program by which ‘single scheduling’ in the evening would now be on a “voluntary only policy.” Lads says this will boost its costs but believes it is “the right decision for the business.”

European retail betting revenue rose 7.3% to £64.4m. Stakes were up across the board, rising 14.3% in Belgium and 41.4% in Spain. Lads’ Irish business has shrunk since its restructuring but the remaining shops saw stakes rise 9.7% on a like-for-like basis. The streamlined Irish arm even managed to turn a £4.4m operating profit.

Lads CEO Jim Mullen (pictured) copped to the fact that the H1 numbers were in large part due to the sporting gods siding with the bookies but emphasized that, contrary to traditional patterns, punters hadn’t made a corresponding reduction in their stakes. Mullen said this demonstrated that customers were “continuing to respond to the delivery of our strategy.”

Mullen said the favorable sporting results had continued in the July portion of Euro 2016 and the company’s revenue was 14.5% up in the first five weeks of H2. Accordingly, Mullen said Lads had “slightly” increased its FY16 expectations.

Mullen said the merger of Ladbrokes with Gala Coral Group was proceeding apace, and the companies hoped to have sold off their required 350-400 betting shops by the end of Q3. That would clear the way for a “significant restructuring of the organization” to take place in Q4.