Entain PLC (LSE:ENT) (Entain PLC (LSE:ENT)) raised guidance following positive results driven by the World Cup, a trading update revealed, but its hardiness could be marred by the UK government's gambling review.
“Historically, gambling has been resilient in recessions,” said Ivor Jones, an analyst at Peel Hunt.
“It’s not immune from inflationary pressures, but it’s a lost-cost form of entertainment that people continue with when they’re not spending much money on cars or moving houses,” he added.
Entain and Flutter Entertainment PLC (LSE:FLTR) (Flutter Entertainment PLC (LSE:FLTR)) have both remained buoyant throughout the last twelve months with shares trading at a -6.5% and 13% difference respectively.
888 Holdings PLC (LSE:888) (888 Holdings PLC (LSE:888)), owner of William Hill, witnessed its share price sink by 32% in four days after the company failed to follow anti-money laundering regulations with its VIP customers.
“The biggest issue around the gambling industry is regulation and what the government decides to do with its gambling review white paper that’s been under discussion for more than two years,” stated Jones.
In December 2020 the culture secretary launched a widespread probe into the gambling industry, analysing the harm to consumers and how the industry can be better regulated.
“Operators have spent the last two years greatly increasing their Responsible Gambling checks in anticipation of changes in the government regulation,” Jones stated.
Entain is partnered with MGM Resorts International (NSX:MGM) (MGM Resorts International (NSX:MGM)), owner of hotels like the Bellagio and MGM Grand, for the development of US national online sportsbook BetMGM.
This may have caught the eye of Entain, since gambling in areas like Las Vegas remains illustrious due to its lack of regulations, added Jones.
Entain is currently trading at 1,504p having risen one percent today.