Gambling companies predict losses from sports shutdown

GVC, William Hill, Flutter, The Stars Group and several other gambling companies expect to be impacted due to the cancellation of sporting events amid the spread of COVID-19.

Several gambling companies across expect to make losses due to the disruptions caused by the spread of coronavirus.

GVC Holdings, Flutter, William Hill and The Stars Group (TSG) are among several companies that have revised their 2020 guidance after the sporting world came to a standstill last week.

GVC Holdings: up to £150m decline in EBITDA

GVC Holdings, the company behind Ladbrokes-Coral, has revealed that earnings before interest, tax, depreciation and amortisation (EBITDA) for 2020 could decline by up to £150m due to suspension of sporting events amid the coronavirus pandemic.

While GVC has reported strong figures for the period between 1 January to 23 February with Group net gaming revenue up 5% on a constant currency basis.  At the same time, online net gaming revenue was 16% higher than it was in 2019.

In its update, GVC governance said: “In our financial year to 31 December 2019, approximately 45% of our Group NGR was generated from sporting events, with 43% of our online NGR generated from sports.”

When considering, its performance in the sports market, it will be difficult to precisely predict the impact the coronavirus epidemic will have on the company. GVC predicts that the UEFA Euros will be postponed until 2021 and all other football will be cancelled until July 2020. The company also believe that major horse racing events, including the Grand National and Royal Ascot, will be cancelled.

GVC Group CEO Kenneth Alexander commented: “While we do not underestimate the challenge presented by Covid-19, GVC is in a robust position to manage the impact on our operations.  We are a diverse global business, with an experienced and expert management team, which operates across multiple products and markets. Our priority is to protect our employees while maintaining our offer to our customers at this difficult time.”

William Hill’s guidance

William Hill expects the postponement of sports and the closure of casinos across the US to have an impact on its performance in 2020. In its update, the operator noted that 53% of its 2019 revenue came from its sports betting operations.

The operator believes that it too early to accurately predict the impact coronavirus will have on its operations. William Hill predicts that inwith the postponement of the Euros until 2021, the closure of UK retail shops for one month, the cancellation of the Grand National and Royal Ascot and US sports resuming in time for the new NFL season in September, group EBITDA could reduce by £100 to £110m.

William Hill’s shops in the UK remain open but believe an additional month of closure could impact EBITDA with additional losses between £25m and £30m.

Ulrik Bengtsson, CEO, said: “We are taking action to maintain our operational capability, to secure and enhance our liquidity and to ensure we are in a strong position to resume full operations when the sporting calendar returns to normal.

“We have been quick to initiate our business continuity plans, which have been in place for some weeks, with our colleague’s and customer’s welfare highest on the agenda. Large parts of the business continue to operate on a ‘business as usual’ basis.”

Flutter’s outlook

Flutter Entertainment was the first UK gambling firm to revise its outlook for the year due to the impact of coronavirus. The betting giant issued a market filing this morning, predicting EBITDA losses between £90m and £110m due to the disruption caused by the pandemic.

In its announcement, Flutter noted that 78% of its group revenues come from wagers placed on global sporting events.

The figures in its prediction were based on the assumption that Flutter’s Irish and UK betting shops will remain open and that racing events would still take place, but behind closed doors without an audience.

Commenting on the figures, Peter Jackson, Chief Executive, said: “The challenge currently facing our business and the industry more widely is unprecedented in modern times. Our focus, first and foremost, is on protecting the welfare of our employees and our customers and we will leave nothing to chance in this regard.

“While our near-term profitability will be impacted by the essential measures being taken globally, the Board will remain focused on protecting shareholder value and managing the business through these turbulent times.”

The Stars Group also predict impact from COVID-19

The Stars Group also announced that it predicts to be impacted by the coronavirus epidemic, but unlike other companies, was slightly more positive.

In a business update published today, The PokersStars operator announced it has performed better than expected so far this quarter but said that the coronavirus pandemic will have an impact on sports betting operations.

Stars said that 62% of its overall revenue in 2019 came from poker and online gambling operations and is confident of long-term growth in online revenue.

In the business update, Rafi Ashkenazi, Chief Executive Officer of The Stars Group, said: “Outside of our strong performance so far this year, the recent outbreak of the coronavirus pandemic (COVID-19) has resulted in the cancellation or postponement of major sporting events globally.

“We are closely monitoring the continued impact of the coronavirus, and the health and safety of our employees and customers remains our top priority, as we implement our business continuity plans and continue to observe and comply with local mandates and guidelines across our global offices. Our employees are working remotely to ensure that our customers can continue to enjoy our products, and while we currently still offer a broad range of betting options for our customers, any sustained outbreak resulting in the further postponement or cancellation of major sporting events could have a material impact on our sports betting revenue in the near term.”

Sports leagues hit by COVID-19

Last week, several major sporting leagues across the globe announced plans to postpone events due to health concerns caused by the spread of Coronavirus.

The English Premier League (EPL), FA, EFL and WSL have collectively agreed to postpone all professional matches in England due to the spread of coronavirus. In the US, the NBA, NHL, MLB, MLS, decided to put postpone sporting events indefinitely after a player for the NBA’s Utah Jazz tested positive for coronavirus.

Following the news of an NBA player testing positive for coronavirus, several college basketball conferences cancelled their postseason tournaments and the NCAA have put March Madness on hold.

Formula 1 has suspended its season-opening Australian Grand Prix in response to an outcry from drivers and team members. Prior to this decision, McLaren already withdrew for, the race after one its team members test positive for the virus.

Italy’s football division Serie A has also postponed all games until April 3, while Spain’s La Liga has put the next two rounds of games on hold.

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