UK-listed online gambling operator GVC Holdings went from strength to strength in 2017, and 2018 promises to accelerate that momentum.
In its final 2017 report released Friday, GVC’s full-year net gaming revenue jumped 13% to €1.008b, while the gains were up 17% to €925.6m if you factor out the recently jettisoned Turkish-facing operations. Clean earnings were up 40% to €239.5m while adjusted pre-tax profits totaled €178.7m.
GVC assumed control of the Bwin.party digital entertainment brands in February 2016, making direct year-on-year comparisons tricky, but pro-forma sports betting handle improved 2% to €3.85b despite 2016 featuring the UEFA European Championship tourney. Even better, sports margins rose 1.4 points to a healthy 10.8%, which pushed sports revenue up nearly one-fifth to €331.2m.
Gaming/other revenue at GVC’s ‘sports brands’ (Bwin, Sportingbet, Betboo, Gamebookers) enjoyed 21% growth last year, pushing its 2017 total just ahead of sports at €332.6m.
Over at GVC’s dedicated ‘gaming brands’ (PartyPoker, PartyCasino, Casino Club, Gioco Digitale, Foxy Bingo) gaming revenue was up 12% to €224m while sports revenue rose 9% to a modest €4.7m.
Singled out for special mention was PartyPoker, which enjoyed revenue growth of 42% last year despite the global poker market nudging up only 2% in the same period. A new TV-led marketing campaign also helped PartyCasino return to growth following “many years of decline” under previous management.
Speaking during the analyst presentation, GVC CEO Kenny Alexander couldn’t help twisting the knife in the side of Bwin.party’s former brain trust, saying PartyPoker had been “very, very poorly managed” by its previous management, who paid “zero attention to it” and were just “letting it die.”
RUSSIA, USA, GERMANY, BRAZIL
With the 2018 FIFA World Cup in Russia now just months away, GVC expects big things from its Bwin.ru site, which launched in Q4 2017 via a B2B deal with Rambler Media. But Alexander cautioned that the operation was “still quite small … nothing to get too excited about at this stage.”
GVC is already licensed to provide online gambling services in New Jersey and the company says it’s in “active discussions with a number of parties” about providing B2B services in Pennsylvania’s newly regulated online gambling market. GVC is also optimistic regarding its US opportunities should the Supreme Court (as expected) strike down the federal sports betting prohibition in another month or two.
GVC expects its major 2018 geographical growth to come from two markets: Brazil and Germany. The latter market’s tangled regulatory situation will “definitely not” be resolved in 2018, but the company expects further progress to be made by the end of the year. In the meantime, GVC continues to pay “substantial amounts, ever-increasing amounts of taxes” on its German market revenue.
As for Brazil, Alexander said GVC was the biggest international presence “full stop” through its Betboo and Sportingbet brands. The business is strongly tilted towards sports betting, as Alexander suggested there was “less of a culture” for casino products but the company is still “scraping the surface” of the Brazilian market’s potential.
LADBROKES CORAL MARRIAGE NEARS
Earlier this month, GVC announced that it had arranged £1.95b in financing to help fund its ambitious takeover of UK rival Ladbrokes Coral Group. On Wednesday, GVC shareholders voted overwhelmingly in favor (99.75%) of the acquisition going forward. Assuming no regulatory hiccups emerge, the deal is set to take effect on March 28.
Alexander expressed confidence that GVC would be able to pull off the integration of the Lads Coral brands, noting that GVC had successfully pulled off a similar move when it acquired Bwin.party. Alexander also noted that there was also valuable experience on the other side of the table, as it wasn’t that long ago that Ladbrokes and Gala Coral Group were separate entities.
