Gambling shares tank on coronavirus impact projections


uk-online-gambling-shares-tank-coronavirusSome major online gambling operators saw their share prices tumble on Monday after revealing the projected impact of the coronavirus crisis on their operations.

On Monday, online gambling operators Flutter Entertainment, GVC Holdings, The Stars Group (TSG) and William Hill all issued statements regarding the expected impact of the virus-related sports event interruptions on the companies’ operations.

Flutter got the ball rolling by noting that it generated 78% of 2019 revenue via sports betting, and thus any prolonged shutdown of sporting competitions will have “a material impact” on revenue and earnings. Flutter shares were down nearly 12% at the close of Monday’s trading.

Flutter estimated that should the current suspensions remain in place through August, which would necessitate the cancellation of the Euro 2020 football tournament, its earnings would fall between £90m and £110m. A further £30m hit would come if UK, Irish and Australian racing fixtures are cancelled and Flutter’s UK/Irish retail betting shops were ordered to close. Flutter’s underlying earnings totalled £385m in 2019.

TSG, with which Flutter is currently in the process of merging, issued a far more upbeat statement that indicated its current quarter trading was performing “ahead of our expectations” and the company remains confident that its Q1 revenue would enjoy “strong year over year growth.”

Despite the sports activity halt, TSG said it continues to offer “a broad range of betting options for our customers,” while acknowledging that its betting revenue will take a major hit if cancellations spread to other sporting events or extend beyond their current timelines. TSG’s shares are currently down 17.5% on the Nasdaq exchange.

William Hill informed the markets that 53% of its 2019 revenue came via sports and the company’s 2020 earnings could fall between £100m and £110m depending on a variety of sports-related scenarios, including the cancellation or postponement of Euro 2020 and the Grand National and Royal Ascot racing fixtures.

The above scenario included a one-month shutdown of its UK retail operations, and any prolonged retail shutdown would boost its expected earnings hit by £25m to £30m per month.

Hills also said it would suspend plans to issue a 2019 final dividend “until further notice” in order to “focus on retaining resources” until the situation clarifies. Hills shareholders reacted negatively, pushing the share price down more than one-quarter by the close of Monday’s trading.

GVC noted that 45% of its 2019 revenue came via sporting events and it expects its 2020 earnings to fall between £130m and £150m based on a variety of scenarios, including the postponement of Euro 2020, the suspension of all other football until July 2020 and the cancellation of Aintree and Royal Ascot fixtures.

The scenario also includes no extension of the halt in Italian and Belgium retail operations and UK retail operations being allowed to remain open. An order to close UK shops would subtract another £45m to £50m in lost earnings each month. GVC, whose 2019 earnings came in at £761m, saw its shares close Monday down nearly 22%.

The share price swoons were obviously bolstered by the dire forecasts, but are also reflective of global stock trends, which saw trading halted in the US after markets plunged more than 7% despite the Federal Reserve slashing interest rates to effectively zero. The UK’s FTSE250 index was down around 8% on the day.

Amid the doom and gloom, there is some evidence that online poker cash game and tournament activity are enjoying serious surges in some markets in which other gambling options have been curtailed. A shiny gold star for anyone who had ‘global pandemic’ as the only variable capable of reviving online poker’s flagging fortunes.