Entain Could Sell Assets After Expansion Craze Doesn’t Pay Off

Article by : Erik Gibbs Mar 18, 2024

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One of the leading gaming enterprises in the UK is contemplating divesting its international subsidiaries. Entain plc has enlisted the expertise of Wall Street powerhouse firm Moelis to oversee the potential sale of ventures not integrated into the company’s proprietary technology framework, as per a Financial Times report.

A significant portion—almost a third—of Entain’s revenue in the initial half of the preceding year stemmed from assets not aligned with the company’s platform.

Entain, renowned for its co-ownership of the US sportsbook giant BetMGM alongside MGM, boasts a multifaceted presence across nearly 20 nations worldwide.

According to the Financial Times, BetCity, headquartered in the Netherlands, Ladbrokes in Australia, Enlabs in Sweden and CrystalBet in Georgia, are currently not integrated into the platform and are subject to evaluation.

On the other hand, while SuperSport in Croatia and STS Holdings in Poland do not utilize Entain’s technology, their achievements were prominently featured in the highlights of Entain CEE during interim CEO Stella David’s fiscal year review.

In the wake of a turbulent 2023, marked by a staggering $737 million settlement stemming from alleged bribery charges against former leadership involving a Turkish enterprise, Entain is on a quest to fortify its financial standing.

The fallout from these controversies, coupled with revenue apprehensions, precipitated the resignation of the CEO and the establishment of a capital allocation committee.

Emphasizing the paramount objective of maximizing value, the report underscored that the exploration may not inevitably culminate in the divestment of assets.

Providing insight into the process, a knowledgeable source informed that the capital allocation committee is diligently assessing every market. The focus lies in discerning Entain’s strategic priorities and pinpointing markets ripe for expansion while also identifying those considered surplus and possibly suitable for divestment.

Entain has recently poured significant capital into the acquisition of sports betting enterprises, but divesting assets could serve as a strategic pivot toward bolstering its presence in more robust markets.

Market setbacks in the UK and Germany have spurred the company to redirect its investments towards BetMGM and the burgeoning US market.

Notably, BetMGM has performed well. It witnessed a remarkable 36% surge in net gaming revenue year-over-year, propelled by a 23% expansion in its online customer base throughout 2023.