Wagering Under Pressure in Australia

The country’s biggest wagering companies are having to spend more money on marketing and inducements, to get people to gamble, as the betting market starts shrinking. Cost of living pressures are hurting the punters, and rising taxes are hitting the bookies. And, as the usually lucrative spring carnival looms, there is a gloomy outlook for the betting sector that had thrived during Covid lockdowns but has since found the going harder. Sportsbet, the country’s biggest betting company with about 48 per cent of the digital betting market, will – if its own projections hold up – have suffered a fall in profit of about 30 per cent in just two years. Entain Group, the owner of the Ladbrokes and Neds brands in Australia, says it is in better shape, but its revenue is also declining as point of consumption taxes levied by states and increased spending hit its bottom line. Flutter Entertainment, the London-listed parent company of Sportsbet, said this week that its adjusted earnings before interest and tax, depreciation and amortisation (EBITDA) for the six months to June 30 in Australia was down 27% compared to the same period in 2022.

The company is now forecasting adjusted EBITDA of £300m-320m ($583m-621m) for the full 12 months to December 31, compared with £390m last year and £437m in 2021. Flutter’s leadership group was subdued about the company’s prospects for the rest of the 2023 calendar year, including the spring racing carnival, and into 2024. “When we look to next year, I think we hope the business will get back to growth,” Flutter’s global chief executive Peter Jackson said about Australia. “But I think we have to acknowledge that going into the second half of this year, we’re going to see some (headwinds).” Sportsbet, like other bookies, is being hit by both a fall in spending by consumers and an increase in wagering taxes around Australia, as detailed in its financial results for the six months to June 30. The bookmaker was able to attract more punters, with its average monthly players rising to about 1.06m from 993,000 a year earlier – a seven per cent increase. But those punters are betting less. The amount staked with Sportsbet fell five per cent from about £5.2bn in the first half of 2022 to £4.95bn this year.

And to attract those punters, Sportsbet had to increase its sales and marketing spend by 20% or £10m, to £64m. (The increase was 23% in Australian dollars.) Flutter said point of consumption taxes, which have been increasing in states like Queensland, NSW, and Victoria, are costing it a further £33m ($64m) compared to last year. And in a warning to the racing sector, which is reliant on wagering for most of its funding, Flutter executives said betting on the horses is falling. “Our view of the market is, we can see the racing market down about 8% to 10% in (the three months to June 30),” Flutter’s head of investor relations Paul Tymms told analysts. In commentary in its financial results, Flutter said that “the softer racing market is expected to continue into H2, resulting in lower market growth expectations, which will impact Sportsbet profitability”. Mr Tymms said that in the market for betting on sports, including AFL and NRL, a far smaller betting market than racing, there was growth of about 5%, but “our view for Sportsbet for the rest of the year is revenue broadly flat and returning to growth next year”.

ASX-listed Tabcorp, the owner of the TAB brand, said it had clinched a 10-year extension for its Sky Racing broadcast service to be carried on Sportsbet’s website and app. The deal is worth up to $400m through to 2036 and is less per annum than Sportsbet is currently paying until 2026. It also makes it harder for Ladbrokes and Neds owner Entain to expand its own digital racing vision ambitions. Entain’s global bosses usually give far less guidance than Flutter about its Australian business, where it has market share of more than 20%. This week, Entain said its net wagering revenue in Australia was down about 2% for the six months to June 30 compared with the previous corresponding period. Entain’s global CEO Jette Nygaard-Andersen said in Australia the company had not increased its marketing spend like Sportsbet had and that the point of consumption taxes had hit its overall result. But she also noted that the overall betting sector was soft and acknowledged the company had to spend money to maintain its position.

Source: Compiled by APN from media reports

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