Entain CEO Jette Nygaard-Anderson remains upbeat about the prospects of sports betting regulation in Brazil despite former President Jair Bosonaro’s failure to sign the agreed-upon legislation before the December deadline.
Nygaard-Anderson addressed investors as part of its Q4/FY Trading Update, which revealed steady NGR growth across its global businesses, with revenue growth at 12% online and 10% in retail.
Entain CEO expects Brazil regulations by end of 2023
The CEO outlined her stance on the Brazilian market, explaining that whilst Bolsonaro’s reluctance to regulate sports betting was disappointing, she still ‘expects’ regulated sports betting in 2023.
She explained: “We had expected that the sports betting legislation would come through and that Bolsonaro would sign that during this transition period. So now Lula has one and he’s setting up his government. But despite this delay, we still expect regulated sports betting, in Brazil, during 2023 with the new administration.
“So that means legislation probably toward the end of 2023. Then hopefully, we’ll be regulated by the end of the year or into 2024. But we are waiting for the new administration to pick up the matter.”
Whilst Bolsonaro’s administration was reluctant to sign any sports betting legislation into law and set up a regulatory framework across Brazil’s federal states, it is generally understood that President Lula is more receptive to sports betting given the tax revenue opportunities that regulations could yield for both federal and state government.
Entain’s leader also anticipates that 2024 could see the advent of regulated igaming in Brazil, too, with the legislation currently being developed in the early stages of the Lula premiership.
She added: “We will also be waiting to see what happens with that (igaming). But that should also be on the agenda later on. So all in all, sports betting might be regulated through 2023, it might slip into 2024 and then on the online casino, probably also beginning of 2024.
“However, that doesn’t change our excitement about the Brazilian market and underlying trends.”
These developments have emerged as Entain recently soft-launched its UNIKRN esportsbook and skill-based wagering platform in both Brazil and Canada.
It is part of Entain’s commitment to only operating in either regulated markets or markets that are set for realistic future regulations, which Brazil is perceived to be.
On the UNIKRN market launch, Nygaard disclosed that the soft launch has ‘had a good start’ and is ‘looking good’ as a competitive product in Brazil, with further scope for expansion.
“We’re playing the long game here,” she told investors. “It’s really important for us that we build almost a market around our business, and we’re going about this the right way. In 2023, we’re looking to expand into global markets. I’m not gonna line them all up here, but we are looking at, for example, Australia and New Zealand that have really strong regulations and a great esports audience.
“Of course, we learn as we go along and upgrade our products. So I think we should stress that we’re playing the long game here, we’re really flexible in marketing.”
MGM takeover on the cards?
Entain leadership was also quizzed about recent press reports mooting a possible acquisition bid from its BetMGM JV partner, MGM Resorts International.
Understandably coy about addressing speculation, Nygaard-Anderson noted that ‘both parents are focused on maximizing the success of BetMGM’ and that ‘they both work well together’.
Recent reports have suggested that MGM are considering a bid to acquire Entain after a shakeup of the UK gambling regulations – a process that has taken over two years owing to political upheaval and stakeholder pressure but is expected to be ‘imminent’.
Nevertheless, Nygaard-Anderson did not suggest that any movement was on the cards, rather that the success of BetMGM is the priority of its dealings with MGM.
She explained: “There’s really no change to our previous comments here. When it comes to our US business, both parents are focused on maximizing the success of BetMGM.
“We work really well together, and I hope the results that we showed last week prove that point.
“I would also say that neither parent would do anything to create disruption or distraction that jeopardizes BetMGM.”
Q4/FY Trading figures
As alluded to, Entain and MGM provided a business update on BetMGM last week, so from a numbers perspective, there was little new information provided on the JV, just the reiteration of the continued $150m investment over the next year and that profitability is expected by H2 of this year.
BetMGM currently holds around 19% of the market share in sports betting and igaming markets in the states in which it operates. Entain stated that its JV firm is the market leader in igaming, holding a 30% market share.
For full coverage of the BetMGM update, click here.
From a holistic perspective, Entain is faring in a positive manner in comparison to some of its competitors.
Q4 reading saw net gaming revenues (NGR) increase by 12% YoY to a record high level, which was largely driven by a ‘successful’ men’s soccer World Cup. The World Cup also saw active customers continue to grow at record levels, up 14% YoY.
Including its share of BetMGM revenues, Entain’s FY22 NGR grew by 15% YoY at constant currency.
With European headwinds felt in the UK and Germany from a regulatory standpoint, full-year online NGR dropped by 1%, however, group NGR on a retail level grew by 66%, back above pre-Covid levels.
For the full year, group EBITDA is expected to stand in the range of $1.21bn – $1.23bn, ahead of previous projections and around 12% up YoY.
CFO Rob Wood told investors this morning: “I am delighted that our business continues to perform well delivering strong numbers in both q4 and across 2022.
“In q4, we posted all-time record revenue for both our online business and the wider group. Group NGR was up 7% year on year in q4. For the full year, it was up 10%.”
Wood also gave an update on BetMGM, noting that its bullishness towards profitability came from cost per acquisition coming down by 21%, as well as bonus optimization and strong same-state revenue growth, which was up by 51% in 2022.
He also set some goals for the future, stating that whilst profitability in H2 is an exciting prospect, there are more objectives.
Wood noted: “The focus for BetMGM remains on delivering our longer-term objectives, the 20% – 25% market share, and the 30% – 35% EBITA margin.”