FOBT reduction will knock £160m off EBITDA by 2020, says GVC

Multinational sports betting and gaming group GVC Holdings has anticipated that the slashing of FOBT maximum stakes from £100 to £2 will see the firm’s Group EBITDA fall by £160 million by the end of 2019.

Disclosing the news in its trading update for the first 20 weeks of the year, GVC also expects a drop of £120 million in Group EBITDA by the end of the year, as well as a general shift in emphasis away from retail betting towards online growth.

In the ‘Triennial Review’ section of the report, it read: “The focus in the UK Retail operation over the last two years has been to create a business that is well placed to face these structural and regulatory headwinds. As such we expect to be able to reposition the business within two years following implementation, with an anticipated fully mitigated impact of c£120m on Group EBITDA secured by the end of this period.

“In the first full year the impact on Group EBITDA is anticipated to be in the region of £160m. Therefore, we expect to retain a profitable and highly cash generative UK Retail estate. Furthermore, our proven leading multi-channel expertise presents additional opportunities to drive online growth.”

Elsewhere, the firm’s European retail operation rose by 28% thanks chiefly to its Eurobet business, while online net gaming revenue also saw an increase, up 18%.

One blight on the report was UK gaming revenue, which fell by 5% – a decline that GVC put down to adverse weather conditions for the first five months of the year.

“UK Retail NGR was 5% behind last year with OTC net revenue 8% behind, impacted by severe weather,” the report read.

“During the 20 week period, 12% of all planned horse racing fixtures were cancelled. Volumes were also adversely impacted by lower levels of recycling at the start of the period due to the exceptionally strong gross win margins at the end of Q4 2017.”

Another notable highlight from the period was GVC’s acquisition of Ladbrokes Coral, in a deal that could eventually be worth up to £4 billion. The firm stressed that the integration remains very much in its infancy.

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