Entain Scrambling To Save Its Ship of State
In further desperate measures to right its sinking ship of state, British betting leviathan Entain–which posted an £879 million (US$1.12bn) FY23 loss earlier this week, following a recent £585 million (US$737m) sanction on historic money laundering charges–is planning to jettison several of its overseas brands.
Company sources are declining to speak to the media but one top-level observer, who asked for anonymity, believes the FTSE-100 gambling giant, seriously wounded by a series of corporate miss-steps overseen by Chair Barry Gibson, is scrambling to avoid losing its 50 percent share of BetMGM, its increasingly successful sportsbook and iGaming joint-venture with MGM Resorts International — the one bright spot on Entain’s gloomy financial horizon.
MGM has made no secret that they would like to take full control of BetMGM, which now–after massive investment since its launch in 2018–is set to go full EBITDA positive.
And tellingly last year MGM launched the BetMGM digital platform in the UK in partnership with LeoVegas — and not Entain.
Entain’s latest volte-face overturns the supercharged mergers and acquisition policy of its recently-fired CEO Jette Nygaard-Andersen, who embarked on what some industry analysts dubbed a reckless spending spree during her three-year tenure, in a vain bid to buy the company out of trouble.
Now, following sharp criticism from major investors, falling share value and the formation of a Capital Allocation Committee, Entain–the owner of the storied Ladbrokes Coral, bwin, Sportingbet and partypoker brands, et al–has hired forensic Wall Street investment analysts Moelis to help streamline operations.
Accumulated Complexity
Among Entain assets under scrutiny are BetCity in the Netherlands, which Entain bought for £398 million (US$508.02m) last year; a Ladbrokes vertical in Australia, Enlabs in Sweden and CrystalBet in Georgia.
Funds raised by selling-off these random, relatively-recent acquisitions, would allow Entain to shore up its investment in BetMGM, currently riding third, behind Flutter’s FanDuel and DraftKings, in the race to dominate online US sports betting and iGaming.
Interestingly, Entain’s SuperSport Croatia brand, bought for £599 million (£US$764.59m) in 2022, and Poland’s dominant STS Holdings, acquired for £750 million (US$957.33m) last year–a move which triggered savage criticism from key Entain investor Ricky Sandler of New York-based Eminence Capital, who now has a seat on the board–are not in the proposed fire sale.
Last week, as Entain unveiled its disastrous Full Year 2023 results, interim CEO Stella David emphasised the “accumulated complexity” accrued from previous acquisitions.
“The problem with complexity is that it’s hampering our agility, and therefore our ability to get things done,” said David.
Lucky for her and Entain, Jette Nygaard-Andersen and her Chair declined to invest in Antarctica and The Vatican City when they were on a roll and the world appeared to be their oyster.
