What are the odds on the big betting companies, Flutter Entertainment, Entain and 888 Holdings posting results in the coming week that will gee up their abysmal share price performance this year?
Not good, if the recent profit warning from Entain PLC (LSE:ENT) is any indication, as it revealed the industry is being affected as the cost of living crisis puts the squeeze on consumer wallets.
The owner of Ladbrokes and Coral will be first in line, on Thursday, with its interim results come just over a month after its profit warning, where it welcomed the return of retail in its first quarter results but it said the number of consumers who are willing to bet has declined.
Its online growth guidance was cut to ‘flat’ from ‘mid to high single digit’ for the full year as online sales across sports and gaming fell 7% in the first six months.
It isn’t all doom and gloom, however, with its US and its online sports betting joint venture, BetMGM, becoming increasingly important as the market across the Atlantic continues to grow.
Changes in laws in the US have opened a whole new market, with many punters able to chance their money online, with BetMGM in the top two places in the 23 states where it currently operates as it looks to assert an early dominance.
Investors will undoubtedly be keeping a key eye out for more information surrounding the Stateside business, as well as any more updates surrounding potential takeovers in overseas markets, after it recently closed an initial €300mln deal for Dutch betting company Bet City.
Entain's shares are down roughly 22% in the year to date, while fierce FTSE 100 rival Flutter Entertainment PLC (LSE:FLTR), which follows quickly on its heels with interim results on Friday, is down around 25%.
The owner of Paddy Power and Betfair will be hoping to build on its first-quarter performance where betting and gaming revenue grew by 6% to £1.6bn.
However, Flutter achieved much of this success through its US business, with its US arm FanDuel accounting for over half the stakes for the entire group in the three months to March end.
Like Entain, the UK business could be set for some certainty following the UK Gambling Act review which “should act as a meaningful positive catalyst, even in the event of a cut in online slot stakes to £2, as investors are provided with much needed certainty,” according to Citigroup analysts.
Its own overseas deals recently included the acquisition of Sisal, an Italian online gaming player, which was announced in December and completed on Friday.
As with Entai, the focus to be on the UK and Ireland, the US and consumer behaviour, said analysts at UBS, forecasting half-year revenues of £3.17bn, group underlying earnings (EBITDA) excluding the US of £594mln and a US EBITDA loss of £129mln.
Finally, to round off the betting firms, 888 Holdings PLC (LSE:888) will also announce its results on Friday.
Key for 888 will be any guidance on the performance of William Hill’s non-US business, which it finally got hold of last month.
Indications of the amount of revenue it will contribute to the firm in the coming months will be welcomed by investors, after it finalised the cut-price deal.
And that information may be the only positive in the results, after the first quarter saw revenues slump by 18%.
Much of this was down to a heightened focus on safer gambling and its temporary exit from The Netherlands, of which it still hasn’t re-entered.
However, there was some growth in the US, Romania and Portugal, which help offset some of the losses.
888 has suffered more in terms of share price than the two larger companies by market cap, with the firm losing some 48% since the start of the year.