Covid-19 wreaks havoc on gambling share prices

Share prices across the gambling industry have plummeted as concern over the effects of the novel coronavirus disease (Covid-19) have led to sharp declines in the market as a whole.

The Dow Jones Gambling Index, which consists of shares of the largest gambling businesses on the New York Stock Exchange, fell by 17.5% to 449.88 points,  its lowest point since 2012. This was a much more drastic fall than the market as a whole, with the Dow Jones Industrial Average falling 8.4%. All prices are from 16 March.

Online betting and gaming operators
William Hill was the most drastically affected of the UK’s largest listed operators, with the suspension of almost all major sports last week playing a part in the operator’s share price falling 25.5% to £0.66 (€0.72/$0.81) per share at the close of trading in London after hitting a low of £0.57. Overall, more than two thirds of the operator’s share value had been wiped off in the past month alone and 80% in less than a year.

Earlier in the day, William Hill announced that it expects a material impact on revenue and earnings from the pandemic and suspended its 2019 dividend to retain financial resources within the business.

The operator had already been hit hard by the effects of the £2 stake limit on fixed-odds betting terminals (FOBTs), which led to it posting a £32.7m loss in 2019. The operator’s retail business accounted for £717.0m of its £1.58bn in revenue for the year, while  £307.6m of its £738.3m in online revenue came from sports betting.

Flutter Entertainment, the parent company of Paddy Power Betfair and FanDuel, saw its share price fall 12.2% to £56.84 at close, rallying from a low of £50.30. Earlier in the day, the operator warned that the cancellation of sports events around the world due to the global Covid-19 pandemic could lead to a £110m decline in earnings before interest, tax, depreciation and amortisation (EBITDA).

The operator said while the precise earnings impact is difficult as it is unclear how long the restrictions will be in place, with some events, including a number of sports in Australia, continuing behind closed doors, it has given an estimate based on a scenario where events are suspended until the end of August.

The operator’s revenue came to £2.14bn in 2019. Retail revenue made up £312m of that total, while Paddy Power Betfair’s online sports betting revenue came to £666.0m. Flutter took in £325m in revenue from the US, though this includes FanDuel’s retail operations.

Flutter’s future merger partner, the Stars Group, saw its price fall 17.7% from Friday’s close to CAD$19.08 (£11.17/€12.22/$13.63) at the time of writing after opening at CAD$18.85. The PokerStars and Sky Bet operator said that it has performed ahead of expectations so far in the current quarter, but warned that the outbreak of novel coronavirus (Covid-19) could have a material impact on sports betting revenue in the near term.

Last month, the Stars Group reported a 24.6% year-on-year increase in revenue for 2019 to $2.53bn. Its Sky Bet brand brought in CAD$528.1m in betting revenue in the UK, while international (non-UK or Australian) betting brought in CAD$72.6m.

Ladbrokes Coral operator GVC Holdings saw its share price fall 21.7% to £3.70 per share when markets closed as it revealed that its EBITDA for the current year could be reduced by up to £150m (€166.1m/$184.6m) if certain sports events are to be suspended as a result of the pandemic.

GVC based this guidance on the assumptions that that all football will be postponed until July 2020, with the 2020 Uefa European Championships pushed back to summer 2021.

It expects all major horse racings such as Aintree – including the Grand National – and Royal Ascot to be cancelled and all other meetings take place behind closed doors.

The Ladbrokes Coral operator’s share price has fallen 60.0% in just over a month. In 2019, GVC took in £1.13bn in UK retail revenue, £289.8m in European retail revenue and £966.5m in online sports betting revenue.

Despite many Australian events still occurring without spectators, Tabcorp’s share price still fell 12.1% to AUD$2.90 (£1.46/€1.59/$1.78) at close.

Unibet operator Kindred’s shares fell 11.6% to SEK26.36 (£2.21/€2.42/$2.70) at the close of trading, having made £110.7m in sports betting revenue in 2019.

888 Holdings saw its share price dip 12.5% to £0.84, while Gamesys shares fell 7.17% to £5.31.

Shares of French operator Française des Jeux (FDJ) fell to 17.5% to €18.52 (£16.92/$20.66) at the closing bell, the lowest price they had traded at since its November 2019 IPO.

Land-based operators
Casinos across the United States have closed, both voluntarily and by law, across the US in response to the ongoing outbreak of Covid-19.

MGM Resorts International, which yesterday (15 March) announced the temporary closure of several of its venues including its venues in Las Vegas, saw its share price fall 22.3% to $12.00 ($9.83/€10.75).

Having also been adversely affected by the effects of the virus in Macau, which prompted MGM not to issue guidance for 2020, the operator’s share price has fallen 64.6% since 12 February.

Caesars Entertainment’s share price has fallen 22.2% to $6.60, less than half of its value a month ago. The operator has not yet closed its flagship Caesars Palace Las Vegas facility.

Penn National Gaming was the most drastically-affected major US operator, with its share price falling 38.3% to $9.54. After peaking at an all-time high of $38.21 following its acquisition of media brand Barstool Sports in February, Penn shares have fallen 75.1% in just over a month.

Churchill Downs Incorporated has seen its share price fall 13.2% to $80.57. The operator said its preparations to host the Kentucky Derby on its traditional date, the first Saturday in May, are “currently still moving forward,” but the operator noted that a decision to postpone the event may be made later.

Boyd Gaming’s share price fell 15.9% to $12.89 at the time of writing. The operator announced the closure of its valley Forge property in Pennsylvania as well as properties in Illinois, Indiana and Ohio.

In London, the Rank Group’s share price fell 36.0% to £1.09, down more than 70% in the last month.

Suppliers
In the world of suppliers, Scientific Games faced some of the biggest losses, declining 30.4% to $6.08 after hitting a low of $5.55. The supplier’s share price has fallen 79.9% since 12 February.

Playtech’s share price fell 10.6% to £1.58. The virus’s effects in Italy – which led the supplier to close all of its Snaitech retail shops across Italy on 10 March – meant that its price had already declined by 49.2% from 21 February to 12 March.

International Game Technology (IGT) saw its shares, traded over the counter, fall 12.7% to $5.59. Intralot’s share price fell 18.9% to €0.10. Kambi’s share price in Stockholm fell 10.8% to SEK77.65.

Inspired Entertainment’s share price fell 4.5% to $4.80 at the time of writing.

Affiliates
Among major publicly traded affiliates, Catena Media was hardest hit. Shares fell 14.9% to SEK9.35 at close, down 72.2% since 21 February and 93.8% in less than two years.

XLMedia’s shares, on the other hand, fell only 4.6% to £0.19. Although shares briefly dipped to £0.14, they quickly recovered.