iGB’s latest series covering the newest developments in the gambling industry is here, and it’s the perfect way to prepare for ICE 2024, the biggest show of the year. The first installment of the series dives into the developments since the 2023 show and focuses on the trials and tribulations of Entain, a major player in the sports betting and gambling world.
In 2023, Entain experienced a tumultuous year, marked by its ambitious strategy of sports betting mergers and acquisitions. The company’s CEO, Jette Nygaard-Andersen, ultimately lost her job due to the uncertainty surrounding the company’s future. One of the major acquisitions made by Entain was the purchase of Polish sportsbook operator STS Holding in August, followed by the acquisition of Angstrom Sports in October. However, Nygaard-Andersen’s resignation in December, partly due to the expensive acquisitions made under her leadership, signaled a lack of confidence in Entain.
The company’s sports betting M&A strategy was a key focus of its growth plan. The acquisition of Angstrom Sports, aimed at bolstering its market share in US sports betting markets, was touted as particularly beneficial for BetMGM, Entain’s joint venture with MGM Resorts. However, the launch of BetMGM’s brand in the UK in partnership with LeoVegas, rather than Entain, created competition for the company’s UK brands, leading to raised eyebrows.
In addition to its sports betting endeavors, Entain also ventured into the esports industry, acquiring Unikrn and later scaling back its direct-to-consumer operations with the company. Despite mixed success, with a 7% increase in net gaming revenue in Q3, Entain faced mounting concerns about its future, especially after a financial payment agreement with the Crown Prosecution Service over historic activities in Turkey.
These doubts culminated in investment bank Goldman Sachs downgrading Entain from buy to sell, citing regulatory headwinds, increased competition, and market dynamics as reasons for the downgrade. Nygaard-Andersen’s departure and criticism over her leadership further clouded Entain’s future, prompting activist hedge fund Corvex Management to call for further changes to address the company’s “unacceptable” recent performance.
In response, Entain unveiled Project Romer, outlining a plan to reach an online EBITDA margin of 28% by 2026 and 30% by 2028, along with cross cost savings of £100m by 2025. Despite its challenges, Entain remains committed to driving cost efficiencies and operational leverage to secure its future.