Entain, parent of Ladbrokes and Sportingbet, is emphasising recreational play in a move prodded by the regulator in its biggest market, the UK.
The London-listed company claims it generated 90 percent of its second-quarter revenue from recreational gamblers in the UK, up from just over 50 percent in July 2020.
The move comes as the UK Gambling Commission has been seeking to drastically reduce gambling companies’ reliance on big-spending players.
Entain wants to roll out this focus on recruiting more players spending smaller amounts in its other key markets, said chief executive Jette Nygaard-Andersen.
The company generates 29 percent of its revenue in the UK, followed by 14 percent in Australia, 13 percent from its USA BetMGM venture and 9 percent from Italy.
Its overall number of active players is up 57 percent over two years ago, the company said.
In the second quarter, the UK Gambling Commission said gross gaming yield from reporting online operators dropped nearly 22 percent over the comparable period last year and 17.6 percent in the year ended July 2022.
Although some impact came from an explosion of sports in the year-earlier period, plus the fact many retail venues were still locked down, a big factor in the decline was affordability measures that licensees imposed on themselves in anticipation of a long-awaited white paper that will update UK gambling regulations.
Overall UK net gaming revenue was down 15 percent over the previous year.
In the half, Entain had about 90,000 first-time live casino players and it converted 140,000 free-to-play customers to gamblers during the period, it said.
“Gamification”, or making gambling more like games, is also appealing to recreational players, executives said.
Nygaard-Andersen told an analyst that Entain’s definition of “recreational” gambler is “quite complicated” and includes not just their level of spending, but also price sensitivity and gambling habits.
But one analyst report found the lack of clarity somewhat troubling.
The suggestion that the company has drastically lowered focus on big spenders in the UK could be seen to conflict with UK industry studies, such as one by GambleAware, that suggest significant concentration, said Ed Young and Jamie Rollo of Morgan Stanley.
The analysts asked for details of the factors other than spend for head that are used to assess a player as “recreational” and data on the average monthly losses of those gamblers.
Entain’s first-half revenue gained 18 percent to £2.1bn, while so-called underlying EBITDA rose 17 percent to £471m, led by a recovery in the retail markets.
Online revenue dropped 7 percent to £1.45bn.
Entain has also started a venture called Entain CEE, with Emma Capital, to invest in central and Eastern Europe.
Its first acquisition is SuperSport, which it claims has a 54 percent market share in its main Croatian market and which is 85 percent online.
The venture, of which Entain owns 75 percent, will pay an initial €800m toward an expected value of €920m, the company said. The deal should close by the end of the year.
Regulus Partners calls SuperSport a “local hero” which generates about €200m in revenue in Croatia annually at about a hefty 52 percent EBITDA margin.
The drawback is that the company already generates about €50 per capita in Croatia, making further gains challenging, the gambling consultancy said.
Combining Entain’s Baltic enterprises, including SuperSport, is a promising move, but because each central and European market is different and complex, and the region has high per capita gambling spend, growth may not come easily, Regulus said.
The BetMGM USA venture reported $608m in net gaming revenue in the first half, toward its goal of $1.3bn for the year.
The company’s share of losses grew almost 40 percent to £108.6m, but the company expects positive EBITDA next year.
It claims a 21 percent market share in the states it operates in.