Home > Casino & games > Gambling businesses issue Covid-19 updates

Gambling businesses issue Covid-19 updates

| By Daniel O'Boyle
Businesses across the gambling industry continue to see the effects of the novel coronavirus disease (Covid-19), with several issuing trading updates on how the pandemic may affect their earnings.

Businesses across the gambling industry continue to see the effects of the novel coronavirus disease (Covid-19), with several issuing trading updates on how the pandemic may affect their earnings.

British land-based operator the Rank Group said that its UK venues remained profitable in the week ending 15 March, but the business has been seeing a slowdown for three weeks and a “sharper decline” this week.

The group said that after the UK government’s guidance for the public to avoid leisure venues, it expects net cash costs of approximately £25m, which should be reduced to around £17m with mitigating actions.

In Spain and Belgium meanwhile, the operator closed all its venues due to government measures and was forced to temporarily lay off employees. However, “substantial support from those governments subsidising payroll costs” has helped keep the number of layoffs down, it added.

The business’s total available cash and facilities after customer deposits at the end of February came to £163m.

The board will not provide financial guidance for the financial year ending 30 June 2020.

LeoVegas, as an online casino operator primarily, expects to be less affected. The business said that 91% of its revenue comes from casino, so the shutdown of almost all major sports is not expected to have too large an impact.

“Of course it is sad to see many sporting events cancelled along with the festivities surrounding them,” LeoVegas Group chief executive Gustaf Hagman said. “This is expected to lead to lower revenue for LeoVegas in the sports betting segment, but given our strong position in casino, we can mitigate this effect to some extent by shifting the focus even more to our casino product.”

LeoVegas said it could not quantify what it expects the financial impact of the pandemic to be.

Supplier SBTech, meanwhile, did not mention how the virus may affect revenues but said it “aim[s] to deliver the best product experience and support levels” for its customers.

“We know that the cancellation or postponement of major sporting events globally is a major concern for our sports betting focused partners, we continue to work closely with our third-party data providers to ensure we have a calendar of events, along with the available pre-match and live betting opportunities where available,” SBTech chief operating officer Dave Hammond said.

“In addition, we will continue to offer our suite of alternative products, whether that be across non-sporting events and betting markets, virtual sports, esports or casino and live-casino and indeed expand these to enhance the product offering.”

Pan-European lottery operator Sazka Group said it has “successfully implemented contingency and business continuity plans with no significant impact to business processes”.

However, the operator added that its retail networks have “adopted various measures to safeguard public health”.

“We anticipate that these developments will impact our financial performance,” Sazka said. “The extent of the impact will depend on factors including the duration of the outbreak, how longer current restrictions remain in place, further measures taken by governments, and the extent of economic disruption.”

Robert Chvatal, chief executive of Sazka, said the business was taking efforts to limit the financial impact the virus has on the group.

“Management are working on mitigating steps to minimise the financial impact for our companies, our employees, and our partners,” Chvatal said. “SAZKA Group is in daily contact with its local operating companies to coordinate timely response to the developments in individual markets.”

Gaming Innovation Group (GiG) said it had deployed a “business contingency plan” involving all employees working from home and all systems and operations are performing well.

The business said that, as its business is mainly casino-focused, with only 6.5% of revenue from sports betting, its daily net gaming revenue in March remains in line with January and February.

GiG added that initiatives have already been taken to move spending in the media vertical, where a significant portion of revenue does come from sports, from sports to casino. Measures have also been taken to reduce operating expenses related to sports in both B2C and B2B.

Because of these plans, the business said the cancelation of sports events are not expected to have any material impact on GiG’s revenue and EBITDA.

GiG added that it stands by its targets for 2020 communicated in its 2019 earnings report.

“Our focus is on protecting our employees and our customers, as well as securing a stable continuation of service to our partners,” GiG chief executive Richard Brown said. “Board and management are continuously monitoring the situation and further measures will be taken if necessary to protect employees, customers and shareholder value through these turbulent times.

“In these times of turmoil GiG has so far proven that our technology is robust, our staff are agile and that there is an increased demand for our services across different verticals.”

In the past week, several other companies in the industry have issued updates of their own.

Flutter Entertainment, the parent company of Paddy Power Betfair and FanDuel, warned that the cancellation of sports events could lead to a £110m (€121.3m/$136.0m) decline in (EBITDA) as approximately 78% of its total revenue in 2019 was generated by betting on sports.

Flutter’s future merger partner The Stars Group, however, said that while these cancellations will have a major impact on its sports betting revenue, it remained confident of growth as much of its revenue comes from poker and casino. The operator added that so far it has performed ahead of expectations so far in the current quarter.

Ladbrokes Coral operator GVC Holdings revealed that its own EBITDA could decline by £150m because of the lack of sports betting opportunities, before adding a further loss of up to £25m when it was announced that all British horseracing until the end of April would be suspended.

William Hill, meanwhile, suspended its 2019 dividend as it expects significant disruption from the suspension of professional sports – with 53% of 2019 revenue coming from sports betting – and the closure of US casinos.

Affiliate giant Better Collective has said its financial targets remain unchanged despite the ongoing postponements and cancellations.

Across the industry, share prices have plummeted with the The Dow Jones Gambling Index falling more than 20% in a day on Monday and more than 50% in the past month.

Subscribe to the iGaming newsletter