By Radhika Anilkumar
-British gambling firm Entain raised its annual profit outlook on Wednesday and said it would end its financial support for BetMGM, the joint venture with MGM Resorts, once that business turns profitable.
BetMGM, the U.S. sports-betting platform, last week said it expects to turn profitable in the second half of 2023, aided by strong gaming margins.
“Assuming no major changes to our environment and markets, we expect financial support for BetMGM to come to an end as we move to profitability in the U.S.,” Entain CEO Jette Nygaard-Andersen told analysts.
The joint owners were expected to invest an additional $150 million in 2023.
Shares of Entain rose as much as 3% on the day.
“The real question here is how long this will remain a joint venture…. If we had to put money on it, a bid from MGM to take full control looks the most likely outcome,” Matt Britzman, equity analyst at Hargreaves Lansdown said in a note.
In the fourth-quarter, Entain saw a 12% rise in online gaming revenue, benefiting from demand for betting during the FIFA World Cup amid a record rise of 14% in active customers.
The owner of Ladbrokes and Coral betting shops as well as bwin and partypoker online brands, said including BetMGM its full-year net gaming revenue rose 15%.
Retail gaming revenue surged 66% in 2022 as punters returned to betting shops, but the company’s online gaming revenue fell 1% as it absorbed regulatory changes in Britain and Germany.
While gambling firms gained popularity during the COVID-19 pandemic as more punters placed online bets, the sector now faces some challenges as customers limit non-essential expenses amid a cost-of-living crunch.
The company now expects its core profit for the year to be between 985 million pounds and 995 million pounds ($1.21 billion-$1.23 billion), up from an earlier forecast of between 925 million pounds and 975 million pounds.
($1 = 0.8120 pounds)