Ladbrokes and Coral owner, Entain, warns over £40m hit from regulatory pressures
Entain, the company that owns Ladbrokes and Coral, has warned that it could face a £40m hit this year because of new rules in the UK and other countries.
The company made a loss of £842.6 million in 2023, compared to a profit of £102.9 million in 2022. This was mainly because it had to pay £585 million to settle a case about alleged bribery at a former Turkish subsidiary, as well as costs mostly related to its operations in Australia. However, its earnings were 1% higher at £1.01 billion last year.
Entain said that its earnings for the coming year could be affected by around £40 million because of changes to rules in the UK and the Netherlands. It will give a new profit forecast for the year in August. The company's shares fell by 6% on Thursday morning after it made the announcement. This comes after a difficult time for Entain.
Its former boss, Jette Nygaard-Andersen, resigned suddenly in December just weeks after the legal settlement and sports results that went against the bookmaker. She has been replaced by non-executive director Stella David until a permanent successor is found.
Entain has also been under pressure from activist investors. In January, it announced that it had appointed activist investor Ricky Sandler who has previously called for the company to sell some or all of its stake in a major US joint venture to its board.
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Mr Sandler is a member of both the capital allocation committee and the people and governance committee at Entain. The company has announced that it will collaborate with Eminence Capital, where Mr Sandler works, to find another director for Entain's board.
Entain revealed in its annual results that stricter gambling rules in the UK will impact betting in the short term, including new limits on online slot games. The company said: "In the UK, we are delighted to see the long-awaited regulatory review draw closer to conclusion."
"We look forward to the implementation of stake caps on online slot games and a potential agreement on uniform safer gambling measures across the market. While we expect these changes to be a positive for Entain in the long run, we may see continued player disruption over the short term."
Changes to regulations in the Netherlands are also expected to affect the group as the country plans to introduce stricter deposit limits from the second quarter.
Entain also stated that it is moving forward with plans to simplify the business and save £70 million annually by 2025. Interim boss Ms David said: "2023 presented a number of challenges for the group, both industry-wide and Entain-specific."
"We have started the new financial year with a clear plan to accelerate our operational strategy, and are making pleasing progress across a range of initiatives to re-focus our market portfolio, prioritise organic growth, drive our share in the US, and expand our margins."
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