Entain admits affordability checks have been 'overly complex' for customers

Affordability checks introduced in advance of the UK government's gambling white paper had made things "overly complex" for customers, the parent company of Ladbrokes and Coral has conceded, as it unveiled its full-year results for 2023 on Thursday.

The government is planning to introduce what it calls "financial risk checks", but a number of operators introduced their own measures in the long wait for the white paper and under regulatory pressure from the Gambling Commission, changes that have been blamed for contributing to a reduction in online betting turnover on racing by £900 million in 2022-23.

Entain warned that regulatory changes in the UK and abroad will continue to hit earnings in 2024 by around £40m.

In its update on Thursday, Entain said online net gaming revenue in the UK was down six per cent in 2023, "reflecting the ongoing digestion of regulatory changes".

The drag caused by these changes did not ease as expected in the second half of the year "due to the imposition of further affordability measures", while the company admitted the introduction of cumulative safer gambling measures throughout 2023 "has resulted in overly complex journeys for our customers".

Talks are ongoing between the Gambling Commission and operators to establish a standard approach to checks while the wait for the promised 'frictionless' solution continues.

However, Entain added: "In the short term we expect that the measures currently in place will continue to weigh on performance."

It was a theme taken up by Entain's chief financial officer and deputy chief executive Rob Wood, who told the Racing Post: "Every operator is in a slightly different position, but for Entain we've inadvertently created an awful lot of complexity for customers.

"It's even hard for us to articulate our approach and for customer services people who are picking up the phone to confused customers, it's hard for them to explain why they've been sent an alert or why they've been asked for bank statements and so on. The opportunity to simplify has to be a good thing."

Entain is the parent company of Ladbrokes and CoralCredit: Edward Whitaker

The company said its results were in line with expectations with reported group ebitda (earnings before interest, taxation, depreciation and amortisation) up one per cent at £1 billion.

Total group net gaming revenue (NGR), including the company's 50 per cent share of US joint venture BetMGM, was up by 14 per cent.

Entain reported a record level of online active customers, up 23 per cent year-on-year, while UK retail NGR was up two per cent "with a good performance in both sports and gaming" across both machines and over the counter. 

BetMGM delivered 36 per cent revenue growth to $1.96bn and achieved profitability in the second half of the year.

The joint venture had a 14 per cent market share in sports betting and iGaming in the US markets where it operates, behind market leaders FanDuel and DraftKings.

This week 888 announced a review of its US operations, which could include a sale or a "controlled exit", reflecting the fierce competition in the market.

Wood said: "Scale really matters and while I'd love to be number one, I'm also happy to be number three and, as 888 called out this week, if you are subscale it's very difficult in a marketplace like that.

"We are delighted to be number three, to deliver top end of guidance, to deliver profitability in the second half of the year.

"Yes FanDuel and DraftKings are doing a fantastic job and we have ceded a little bit of share to them but we are happy with progress and now we are set for a big year."

Last year was a turbulent one for Entain, with chief executive Jette Nygaard-Andersen leaving in December following pressure from investors, and the company having to pay a total of £615m following the conclusion of a long-running investigation by HMRC into bribery claims surrounding a Turkish-based business owned by Entain's predecessor, GVC Holdings, between 2011 and 2017.

Jette Nygaard-Andersen: left Entain in December

Interim chief executive Stella David said: "2023 presented a number of challenges for the group, both industry-wide and Entain-specific. I am extremely proud of how our people around the world came together to navigate the business through an eventful and at times difficult year."

She added: "We remain confident that our continued focused execution will drive organic growth into 2025 and beyond."

Entain's chairman Barry Gibson said the company was making "positive progress" in the search for a new permanent chief executive, adding: "In the meantime Stella is driving the business as it continues to take appropriate actions to deliver changes to drive a better long-term performance."

David Brohan, gaming and leisure analyst at stockbrokers Goodbody, said there were "pros and cons" in the update, but added that the results came in ahead of their expectations, "which is encouraging given some concerns in the market ahead of the update".

Entain's share price was down four per cent at 797.2p on Thursday afternoon.

Elsewhere, Australian financial watchdog Austrac has begun an enforcement investigation into whether bet365 have complied with their obligations under anti-money laundering and counter-terrorism financing laws.

Entain is also the subject of a similar investigation, while Austrac has appointed external auditors to assess the compliance of Flutter Entertainment's Australian arm Sportsbet.

Austrac chief executive Brendan Thomas said: "Corporate bookmakers must have robust systems in place to ensure they can manage and mitigate risks associated with money laundering and terrorism financing.” 

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