bet365 operating profit drops to £15.4m but global outlook remains strong
While retaining a dominant position in global online betting, bet365 Group has revealed a mixed performance for 2021/22 trading, citing modest gains in betting and gaming profit, but a decline in overall group profit year-on-year.
Submitting its filings to the UK Companies House, the private limited betting operator detailed total sports and gaming revenue of £2.851bn, an increase of 2% on corresponding 2021 figures of £2.817bn.
Covering the trading period of March 2021-March 2022, the statement also outlined gross betting and gaming profit of £2.355m, increasing from £2.328m the previous year.
However, when the group’s football operations – as owner of Stoke City FC’s bet365 Stadium – are taken into consideration, coupled with some declines in sports betting turnover, bet365 Group’s total profit declined by 89% from £424.7m to £45.6m.
Additionally, in her Directors’ Statement, Joint CEO and Founder Denise Coates noted that operating profit had fallen by 94.6% from £285.5m to £15.4m.
Coates attributed this to a £319.5m rise in admin costs and a hike in staff expenses due bet365’s employee base growing from 5,443 in March 2021 to 6,092 in March 2022. The group compensated for this by reducing Coates’ salary by £57m.
On sports betting, total revenue fell by 2%, but this was against a bulwark of a 25% increase in gaming revenue and a 48% increase in active customers, the latter up significantly from 13% in 2020/21.
Overall, bet365’s financial position in March 2022 remained stable, with total group equity standing at $2.413m, having fallen slightly by 2% from 2.468m in March 2021, whilst its overall balance sheet and invests total £3.3bn.
It is also important to note that eight months have now passed since March 2022, and so bet365’s financial performance and outlook could have changed substantially as it continues to consolidate its position in the US.
In September 2022 the firm added a second US state to its portfolio of international markets, securing a licence in Colorado – having already made market entry in New Jersey in 2020.
This was followed in November by a partnership with Massachusetts’ Raynham Park Sportsbook, whilst on a wider global scale the firm also gained a licence to operate in Ghana towards the end of last year, making its debut in Africa.
In her statement, Coates remarked that bet365’s directors ‘are pleased with the strength of the financial position reported on the balance sheet’, and are confident that ‘the balance sheet will remain strong’.
The CEO did also acknowledge some ‘principal risks and uncertainties’ in her report, however, relating to volume, margin, regulation, technology and retention and recruitment of personnel.
On volume, bet365 noted that competitors could ‘entice’ its customers. In its home market there are a number of established competitors such as Entain, 888 and its William Hill subsidiary, Betfred and Flutter Entertainment.
Some of these firms are also present in the US – such as Entain’s BetMGM joint venture with MGM Resorts, Betfred US and Flutter’s FanDuel – as well as other big players such as PointsBet, DraftKings and Caesars Entertainment.
Coates also observed that ‘regulatory, legislative and fiscal concerns’ could impact the group’s trading performance. The UK’s Gambling Act review, which according to the government is due soon, is one example of this.
Lastly, the CEO noted that as internet-based business technology is of paramount importance to bet635, ‘there remains a risk that technology failure could adversely affect the group’s ability to trade for a period, and therefore its profits’.
The group’s tech subdivision, Hillside Technology, recently announced an extension of its Software Testing Academy in Manchester, whilst a Times report last November stated that bet365 is monitoring the global technology talent pool following layoffs at giants Meta and Twitter, among others.
Source: SBC News
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