UK gambling giant GVC Holdings lost nearly £141m in 2019, weighed down by the costs of its frantic expansion and regulatory shake-ups.
Figures released Thursday show GVC reported net gaming revenue of £3.65b in 2019, up 22.6% from 2018’s result, while gross profit rose 18.6% to £2.38b, underlying earnings rose 18.7% to £761m and underlying pre-tax profit gained 23.2% to £535.8m. However, after-tax losses hit £140.7m, up from a £56.4m loss in 2018.
The pro forma numbers, which pretend that the official absorption of Ladbrokes Coral operations into the GVC fold happened pre-2018, show revenue rising a more modest 2%, while gross profit dipped 1% and underlying earnings fell 10%. For simplicity’s sake, all figures cited from hereon in are of the pro forma variety.
ONLINE
GVC’s online unit saw its 2019 revenue spike 14% to £2.11b and gross profit gained 8% to £1.37b. Online sports turnover was up 9% despite 2018 having benefited from the FIFA World Cup, while betting margins improved slightly, pushing online sports revenue up 16% to £966.5m. Online gaming revenue was up 13% to £1.19b while the B2B segment plunged 37% to £15.1m
On a geographic basis, GVC said its UK operations benefited from the “re-invigoration” of its Ladbrokes brand, while its Foxy brand benefited from a new TV campaign. GVC boldly claimed that its “sustained market share gains” have put it “on track to be” the UK’s top online operator, which really only means that it’s still number two.
GVC says it’s already the top online operator in Italy thanks to 21% growth (in constant currency terms) across its Eurobet, Bwin and Gioco Digitale brands. In Germany, online revenue was up 15% (using constant currency) despite the loss of the PayPal payment processing option for GVC’s online casino brands.
In Australia, revenue rose 22% thanks in part to a full-year’s contribution from its Neds business. GVC’s Crystalbet brand in the Republic of Georgia reported revenue rising nearly two-thirds after gaining access to GVC’s marketing capacity.
GVC’s PartyPoker brand had been the star performer of previous reports but its revenue was up only 8% last year as business slowed during the second half on “ecology changes” intended to improve profitability. GVC is confident that a new mobile app later this year will give the brand some new life.
RETAIL
GVC’S UK retail operations reported revenue falling 15% to £1.13b as contributions from fixed-odds betting terminals (FOBT) tumbled 28% to £562m following last April’s drastic stake reduction. OTC wagering revenue nudged up 3% to £566m as turnover rose by a similar percentage and margins remained constant.
GVC said the regulatory changes resulted in retail earnings falling around £118m last year. GVC closed 245 betting shops last year and expects to close a further 200 in the current quarter. GVC closed out 2019 with 3,233 shops in its UK portfolio.
In Europe, retail revenue was up 4% to £290m, with betting up 4% to £218.2m thanks to a 6% rise in turnover. But earnings fell 12% to £57.8m and operating profit slid 27% to £36.2m thanks in part to rising taxes in Ireland and Italy.
U-S-A
GVC’s US-facing Roar Digital online gambling and sports betting joint venture with MGM Resorts cost GVC £12.5m in 2019, as expansion costs weighed on its relatively minimal revenue to date. The JV is currently live in seven US states and hopes to be live in 11 by the end of 2020.
GVC CEO Kenny Alexander called last year’s launch of Roar’s BetMGM brand in New Jersey “an important milestone for our business” but GVC still expects its share of Roar’s losses to come in between £20m-£30m in 2020.
THE FUTURE
GVC said 2020 trading through February 23 showed revenue up 5% year-on-year, while online revenue was up 16% on strong sports margins. GVC expressed confidence of delivering on its FY20 earnings and operating profit expectations.
Alexander celebrated the efforts his company made last year in the responsible gambling area but warned that “over-regulation in the UK would result in customers moving to the black market,” which would lead to “a reverse in the considerable decline in problem gambling that the industry has delivered over recent years.”
GVC said it’s still dealing with its hefty back-tax demands in Greece, having recognized a charge of £186.8m in its 2018 report. GVC has appealed portions of this assessment, and said it expects to learn the verdict by mid-year.
GVC’s announcement made no mention of its Russian-facing online betting joint venture, which has struggled to find a toehold in the local market. The Bwin.ru business lost its CEO last May and reportedly lost its Russian sugar-daddy last month.
