U.K.-listed gambling operator GVC Holdings reported modest revenue gains in the first half of 2019 despite a double-digit decline in its U.K. retail operations.
On Wednesday, GVC issued a trading update covering the three months ending June 30, during which net gaming revenue (NGR) rose 3%. For the first half of 2019, NGR is up 5%. Company CEO Kenny Alexander hailed the “very strong” performance and predicted that his company would live up to its earnings and operating profit projections for the full year.
GVC’s digital operations were the star of the show, with Q2 NGR up 16% (sports +19%, gaming +15%) despite Q2 2018 enjoying a boost from the FIFA World Cup. Online sports betting handle was up 7% during the period, but would have been up 14% if one discounts last year’s World Cup wind-assist.
GVC said all its major online markets enjoyed double-digit growth in Q2, including the U.K. (+19%), Germany (+24%), Australia (+38%), Italy (+19%) and Brazil (+38%). One can’t help but notice that all those gains exceed the overall 16% digital improvement, so clearly there was some serious retrenchment in markets that GVC deems ‘minor.’
The larger drag on GVC’s overall results was its U.K. retail division, represented by the Ladbrokes and Coral brands. U.K. retail revenue was down 19% year-on-year, despite an 8% rise in over-the-counter sports betting wagers. (In stark contrast, European retail was up 12%, with double-digit growth in all territories.)
The U.K. retail slide was entirely due to the April 1 reduction in maximum stakes on fixed-odds betting terminals (FOBT) from £100 to just £2. Retail gaming revenue was down 39% year-on-year on a like-for-like basis, but Alexander claimed the transition was “progressing very well” and that his firm was “best-placed to take market share” away from similarly affected rivals.
Last week, GVC announced the latest step in its ‘Changing for the Bettor’ social responsibility program by donating the final year of its shirt sponsorship of Charlton Athletic FC (formerly held by GVC’s Betdaq betting exchange brand) to the Children with Cancer U.K. charity. Betdaq pulled a similar move in May with its Sunderland shirt deal.
GVC can use all the good press it can get after enduring a flood of negative headlines this year, including Alexander and outgoing chairman Lee Feldman unloading huge portions of their GVC shares, which ultimately led Alexander into a face-saving cut of his base salary. The company is also mulling axing thousands of retail jobs thanks to the change in FOBT stakes.
GVC was also forced to justify the manner in which it disposed of its lucrative but very black market Turkey-facing operations following a Sunday Times report alleging insider dealings involving Alexander and his associates. Those Turkish operations almost prevented GVC from acquiring a Nevada gaming license, particularly when Alexander got a little testy under questioning by Nevada gaming regulators.