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The worst-case scenarios some sportsbook operators outlined last week are starting to come true as the coronavirus pandemic causes more closures.
GVC, Flutter and William Hill all suggested EBITDA could drop by more than £100 million this year compared to last year. That was based on sports suspensions as of March 16 and projections of what could come.
Most of those projections came true, like the postponement of Euro 2020 and major horse racing events getting canceled or postponed.
But those projections mostly included the continuation of UK and Irish horse racing without fans and retail betting shops remaining open. Those situations started changing over the weekend when the UK shut down its betting shops until at least late April. Racing in the UK is shut down through the end of April while Irish races are postponed at least through April 19.
The only international horse racing called out in their releases that hasn’t shut down is in Australia, though even that is a fluid situation. Racing in Victoria is temporarily postponed pending a coronavirus test.
These continued, additional closures could lead to significantly larger losses for the three sportsbook operators.
GVC initially projected the biggest potential EBITDA decline of £130 million to £150 million. Closing the UK betting shops was estimated to drop EBITDA by £45 million to £50 million each month.
GVC also confirmed the suspension of UK horse racing will cost the company an additional £20 million to £25 million each month. GVC reported £761.1 million in underlying EBITDA last year.
Flutter, the parent company of FanDuel, initially forecasted an EBITDA drop of £90 million to £110 million. The suspension of horse racing in Australia, Ireland and the UK, as well as those betting shop closures, will lead to an additional £30 million of lost EBITDA monthly. Flutter reported £385 million in EBITDA last year.
William Hill included a month of UK shop closures into its initial projections £100 million to £110 million of EBITDA declines. Each additional month of shop closures would result in £25 million to £30 million in EBITDA lost. William Hill reported £275.5 million in EBITDA last year.
EBITDA means earnings before interest, taxes, depreciation, and amortization.
GVC, half of the Roar Digital joint venture with MGM Resorts, expects big delays in sports because of the coronavirus pandemic.
About 45% of net gaming revenue was generated from sports last year, the company said.
GVC had £260 million in available cash as of December 31. The company is in a robust position to manage the impact on operations, CEO Kenny Alexander said.
Flutter is exploring multiple mitigation measures to offset the near-term profitability impact. Nearly 80% of its revenue came from sports betting last year.
“This will obviously have a material impact on the revenue and earnings of the Group,” the company said in its release.
The company expects all restrictions on sports to remain in place through the end of August, including a full suspension of Australian sports and the cancelation of Euro 2020.
First-quarter trading was ahead of expectations with good customer momentum and favorable sports results before the coronavirus cancelations.
William Hill has perhaps the most drastic expectations for sports:
William Hill is suspending its dividend until further notice and will not pay the dividend scheduled for May 15.
“Under the present circumstances the Board has determined that it is appropriate to focus on retaining resources within the Group,” the company said in its release. “…The Group has a robust financial position and has appropriate liquidity to absorb the impacts of the scenario outlined above.”
The company’s first quarter was ahead of expectations with a strong retail performance.
Stars Group CEO Rafi Ashkenazi is confident in the company’s ability to continue driving revenue growth in the years ahead considering its online-only business and revenue split.
The company, which operates the PokerStars and Fox Bet brands, brought in 62% of its revenue from poker and gaming last year.
So far, performance is ahead of expectations in the first quarter with strong revenue growth expected compared to last year.
The release did not speculate on potential losses from the coronavirus shutdowns.
The immediate impact on Kambi‘s business is substantial, the company said. That’s especially true in the US where there are fewer substitute sporting events and a large retail footprint.
But the company pointed toward its balance sheet as a protecting force throughout the canceled sporting events.
“Kambi will continue to evaluate the level of its cost base in the context of the evolving landscape but will not implement measures which may jeopardize the long-term growth prospects of the Company,” the company said in its release. “Kambi has a strong Balance Sheet with a substantial amount of cash in the bank, which places the Company in a healthy position to withstand a long period with limited sporting events while continuing to serve our partners.”
The company also did not speculate on potential losses.
PointsBet didn’t break down expected losses either but pointed out how its marketing costs are variable.
“It is important to note that marketing costs are predominately variable in nature, thus providing PointsBet flexibility to adjust and optimize its market spend given the developing circumstances.”
The company also pointed out its A$147.9 million in cash and no borrowings.