The Euros are shaping up to be Ladbrokes and Coral owner Entain PLC‘s (LON:ENT) biggest ever sports betting event, the company said alongside a half-year financial statement the day after England’s 2-1 semi-final victory over Denmark.
With England getting into their first major final since the 1966 World Cup and a host of exciting games throughout the tournament, the FTSE 100 group reported “strong customer interest” across the 15 participating countries in which it operates, helping it to hike profit guidance for the current year.
Entain estimated that bets on Sunday’s final between England and Italy will total GBP17.5mln, of which around GBP15mln is expected to be placed between now and Sunday.
As of this morning, around GBP1mln so far is riding on an England win, with GBP1.45mln on Italy.
In total, Entain expects its bets from around 3mln customers around the world to total roughly GBP250mln for the Euro 2020 tournament as a whole – bigger than for the 2018 Fifa World Cup.
This reflected its growth into new markets, including the US, together with more exclusive products and greater engagement with customers, the company said, with new products around its ‘Betbuilder’ concept, such as ‘five a side’, ‘your call’ and ‘get a price’, accounting for a quarter of all UK bets.
France had been the most fancied by UK punters in the UK but since they were knocked out on penalites in the quarter finals, England have become the most backed team by English customers, a spokeswoman said, with Italy the third-best backed team in England before the semi-finals.
“England’s semi-final victory will be a double cause for celebration in the Entain offices,” said analyst Sophie Lund-Yates at Hargreaves Lansdown.
“An appearance in the final is an open goal for the group, and will be a boon for sports wagers. England’s long run in the tournament may well have been a contributing factor to the news that underlying cash profits are expected to beat consensus at the full year.”
Looking back at the group’s financials from the first-half she said while shop closures effectively parked the bus in front of the first quarter, the post-lockdown reopening led to a rebound in the second quarter.
Add in the stellar – and much higher margin – online business, she said the overall half year picture “looks quite bright indeed”, though the group faces a couple of potential ‘monsters under the bed’.
“The first is the threat of growing regulatory pressure in some of its markets. In the past Entain has done a reasonable job of staying on the front foot where regulation is concerned, and it’s vital it keeps doing so. The current share price valuation is very frothy, and it could go flat fast if there are any unwanted surprises.”
The shares were up 2% to 1,843.5p by mid-morning on Thursday, up almost 30% since the start of the year.
Analyst Greg Johnson at Shore Capital said although the group does face some regulatory hurdles, most notably in the UK, “momentum remains strong and opportunities for further value accretion across both its core operations and BetMGM [the US joint venture] over the medium-to-long term”.
At fellow broker Peel Hunt, analyst Ivor Jones said the half-year trading update statement showed that it was Entain’s geographic and product diversity that enabled its continued solid growth, with a 22nd consecutive quarter of double-digit online growth.
“With the US strategy continuing to deliver ahead of expectations, MGM free to bid again [from 19 July] and Tabcorp having decided not to accept Entain’s offer (for now) we believe that Entain’s shares will continue to outperform,” Jones said.