2020 interim results 13 August 2020 - GVC Holdings
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2020 interim results 13 August 2020
Disclaimer
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2
agenda
INTRODUCTION Barry Gibson
FINANCIAL REVIEW Rob Wood
STRATEGIC PRIORITIES Shay Segev
Q&A
3
INTRODUCTION
• Group is in a strong position following an encouraging first half of the year
• New leadership
• Underpinned by a strong team
• Legacy issues to be resolved
• Delivering best in class corporate governance
• New Group well placed for strong growth
4
Financial review Rob Wood – Chief Financial Officer
Financials: Group Income Statement
Robust financial performance during a turbulent first half
Pre IFRS 16 Constant
Six months ended 2020 2020 2019 Change1 Currency2 • Group NGR -11% (-10% cc)
30 June £m £m £m % % • Online NGR +19% (+21% cc)
• UK Retail NGR -53% (-50% LFL5)
Net gaming revenue 1,616.7 1,616.7 1,810.6 (11%) (10%)
• European NGR -48% (-47% cc)
Revenue 1,582.5 1,582.5 1,782.1 (11%) (10%)
Gross profit 1,031.7 1,031.7 1,184.1 (13%) • Group underlying EBITDA £349m, -5% YoY
Contribution 782.2 782.2 924.9 (15%) • Online EBITDA £369m, +53% YoY
Underlying EBITDAR3 359.0 359.0 376.8 (5%)
Underlying EBITDA3 348.6 309.4 366.8 (5%) • Trading to 15 March pre COVID-19
• Online NGR +20% (+23% cc)
Operating Profit3 223.9 213.0 260.3 (14%) • UK Retail -9% (-5% LFL5)
• European Retail +20% (+24% cc)
Memo 2020 2019
No of shares (m) 582.8 581.9 • Net debt at 30 June 2020 £2,164.9m down £5m vs
Diluted EPS (1.0) (0.6) y/e, £137m lower excl. FX
Adj. diluted EPS4 28.7 31.3
Dividend/share (p) - 17.6 • Net debt / EBITDA 2.9x (2.7x excl. FX headwind on
Pre IFRS 16 debt retranslation)
Net debt (£m) (1,836.8) (1,929.3)
• Adjusted diluted EPS 28.7p, -8% YoY
Net debt/EBITDA 2.76x 2.65x
Post IFRS 16
Net debt (£m) (2,164.9) (2,279.6)
Net debt/EBITDA 2.91x 2.79x
(1) Percentage change between 2020 and 2019 post IFRS 16 (2) Growth on a constant currency basis is calculated by translating both 2020 and 2019 at the 2020 exchange rates (3) Stated pre separately disclosed items (4) Continuing EPS
6
adjusted for the impact of separately disclosed items, FX movements on financial indebtedness and gains/loss on derivative financial instruments (5) UK Retail numbers are quoted on a LFL basis. During H1 2020 there was an average of
3,079 shops in the estate, compared to an average of 3,432 in the same period last year.
Financials: Underlying EBITDA Bridge
Strong operational momentum pre COVID-19 but Retail closures impacting H1 EBITDA performance
• Underlying EBITDA excluding regulatory adjustments and the annualisation of the Triennial Review impact +7% despite COVID-19
• Online EBITDA growth excluding regulatory impacts +59%, a result of the Group’s diversified business model
£136.1m (£103.7m)
(£27.2m)
(£8.8m) (£13.8m) (£0.8m)
£366.8m £358.0m £348.6m
European Retail
UK RGD
FY19 EBITDA
FY19 EBITDA
Other
FY20 EBITDA
Corporate
UK Retail
Online
Rebased
7
Online
Continued market share gains with double digit NGR growth across all major territories supported by strong sports margins
Pre • NGR +19% (+21% cc)
IFRS 16 • UK +22%, Germany +14% cc, Australia +43% cc, Italy +29% cc,
Six months ended 2020 2020 2019 Change1 CC2 Crystalbet +39% cc, partypoker +60% cc
30 June £m £m £m % %
Sports wagers 4,697.2 4,697.2 5,542.7 (15%) (13%) • Sports margin +2.0pp mainly due to favourable results and product mix
Sports margin 12.8% 12.8% 10.8% 2.0pp 2.0pp • Contribution margin 42.9%, +3.3pp vs 2019
• Suspension of sports drove lower marketing spend in Q2 (H1:
Sports NGR 484.5 484.5 462.3 5% 8% 19.7%)
Gaming NGR 752.6 752.6 574.6 31% 32% • Lower GP margin as early synergy delivery offset by COVID-19
B2B NGR 8.0 8.0 8.6 (7%) (8%) impact on geographic and product mix and increasing regulated mix
NGR 1,245.1 1,245.1 1,045.5 19% 21% • Full year contribution margin expected to be in line with original
VAT/GST (34.2) (34.2) (28.5) (20%) (23%) guidance (40-41%)
Revenue 1,210.9 1,210.9 1,017.0 19% 21% • Operating costs 4% lower
Gross profit 779.6 779.6 664.3 17% • On track for original guidance of low single digit deflation due to
Contribution 533.9 533.9 413.8 29% synergies
Contribution margin 42.9% 42.9% 39.6% 3.3pp
Operating costs (164.4) (164.4) (172.0) 4% • Underlying EBITDA +53% post IFRS 16
Underlying EBITDAR3 369.5 369.5 241.8 53% • Operating leverage of 64%, inflated due to GGR margin and low
marketing rate
Rent and associated costs (0.9) (8.4) (0.5) (80%)
• Additional H2 marketing investment expected to reduce full year
Underlying EBITDA3 368.6 361.1 241.3 53%
operating leverage to early 40%’s, in line with original guidance
Share based payments (1.3) (1.3) (2.2) 41%
Underlying depreciation and amortisation (55.7) (48.5) (53.9) (3%)
Share of JV income - - 0.3 (100%)
Operating profit3 311.6 311.3 185.5 68%
8
(1) Percentage change between 2020 vs 2019 on a post IFRS 16 basis (2) Growth on a constant currency basis is calculated by translating both current and prior year performance at the 2020 exchange rates (3) Stated pre separately
disclosed items
UK Retail
UK Retail heavily impacted by temporary closures, however encouraging early response post reopening
Pre • OTC wagers -54% (LFL3 -52%)
IFRS 16 • Half year results heavily impact by shop closures on 21 March
Six months ended 2020 2020 2019 Change1 • All shops now open with all English shops opening on 15 June (Wales,
30 June £m £m £m % Scotland and NI followed in line with local regulations)
OTC wagers 724.8 724.8 1,591.6 (54%) • Strong performance up to 15 March of +9% LFL3,4 benefiting from displaced
OTC margin 20.0% 20.0% 17.5% 2.5pp B2 revenue and competitor closures
• LFL3 SSBT wagers 43% ahead YoY pre-COVID-194 and density 30%5 higher
OTC NGR / Revenue 144.4 144.4 275.0 (47%)
• OTC margin 20.0% (+2.5pp)
Machines NGR / Revenue 133.5 133.5 311.8 (57%)
• Strong horse racing and football results
Total NGR / Revenue 277.9 277.9 586.8 (53%)
Gross profit 203.8 203.8 421.9 (52%)
• Machines NGR -57% (LFL3 -55%)
Contribution 202.1 202.1 419.0 (52%)
• Improved trend up to 15 March of -28% LFL3 (PY Q4 -31%, Q3 -36%, Q2 -39%)
Contribution margin 72.7% 72.7% 71.4% 1.3pp • Triennial impact now fully annualised
Operating costs (184.9) (184.9) (298.1) 38%
Underlying EBITDAR2 17.2 17.2 120.9 (86%) • Total Retail NGR -53%
Rent and associated costs (8.9) (36.4) (8.9) - • Only -5% YoY pre-COVID-194 despite triennial albeit benefiting from strong
Underlying EBITDA2 8.3 (19.2) 112.0 (93%) margins
Share based payments (0.3) (0.3) (0.6) 50% • Recent trends suggest footfall impact is currently down c.10-15%
Underlying depreciation and amortisation (40.1) (22.8) (31.8) (26%) • Operating costs 38% lower
Share of JV income - - - - • Mitigating actions in response to COVID-19 and tight underlying cost control
Operating profit2 (32.1) (42.3) 79.6 (140%)
• Underlying EBITDA -93% post IFRS 16
No of shops at 30 June 2020: 3,006 (2019: 3,274)
9
(1) Percentage change between 2020 vs 2019 on a post IFRS 16 basis (2) Stated pre separately disclosed items (3) UK Retail numbers are quoted on a LFL basis. During H1 2020 there was an average of 3,079 shops in the estate, compared
to an average of 3,432 in the same period last year (4) Pre-COVID-19 period from 1 January to 15 March (5) As at 30 June 2020
European retail
European Retail impacted by temporary shop closures following an excellent Q1 (NGR +24% cc to 15 March)
Pre • NGR -48% (-47% cc)
IFRS 16 • Half year results heavily impacted by COVID-19 related closures
Six months ended 2020 2020 2019 Change1 CC2 • Strong, margin assisted, pre-COVID-19 up to 15 March, NGR +20%
30 June £m £m £m % % (+24% cc)
OTC wagers 379.8 379.8 832.4 (54%) (54%) • Recent trends suggest footfall impact is currently down 15%-20%
OTC margin 19.7% 19.7% 17.3% 2.4pp 2.4pp • Shop estate has now almost entirely reopened
Sports NGR / Revenue 59.1 59.1 107.1 (45%) (44%) • Contribution margin -3.2pp
Other OTC NGR / Revenue 15.5 15.5 35.9 (57%) (56%) • Decreased due to territory mix
Machines NGR / Revenue 0.9 0.9 1.1 (18%) (7%)
Total NGR / Revenue 75.5 75.5 144.1 (48%) (47%) • Operating costs 23% lower
Gross profit 34.8 34.8 72.6 (52%) • Cost mitigation actions in response to COVID-19
Contribution 33.6 33.6 68.7 (51%)
Contribution margin 44.5% 44.5% 47.7% (3.2pp) • Underlying EBITDA £7.2m
Operating costs (26.1) (26.1) (33.8) 23%
Underlying EBITDAR3 7.5 7.5 34.9 (79%)
Rent and associated costs (0.3) (4.5) (0.5) 40%
Underlying EBITDA3 7.2 3.0 34.4 (79%)
Share based payments (0.1) (0.1) (0.2) 50%
Underlying depreciation and amortisation (14.6) (11.0) (13.4) (9%)
Share of JV income - - 0.7 (100%)
Operating profit3 (7.5) (8.1) 21.5 (135%)
Estate at 30 June 2020:
Eurobet Italy 890 (2019: 852); Ladbrokes Belgium 309 shops, 400 outlets (2019: 316 shops, 374 outlets); Ladbrokes ROI 138 (2019: 139)
10
(1) Percentage change between 2020 vs 2019 on a post IFRS 16 basis (2) Growth on a constant currency basis is calculated by translating both current and prior year performance at the 2020 exchange rates (3) Stated pre separately
disclosed itemsFinancials: statutory Income Statement
Reported profit after tax of £2m; profit before FX, tax and separately disclosed items of £187m
Post IFRS 16 Pre IFRS 16 • Underlying depreciation and amortisation £112.1m
Six months ended 2020 2019 Change 2020 2019 Change • Increase (12%) due to ongoing investment and in-house SSBTs
30 June £m £m % £m £ % • Share of JV loss £8.6m
Underlying EBITDAR 359.0 376.8 (5%) 359.0 376.8 (5%) • Driven by share of BetMGM loss (-£8.8m)
Rent and associated costs (10.4) (10.0) (4%) (49.6) (53.4) 7%
• Finance cost £36.6m (£9.1m lower)
Underlying EBITDA 348.6 366.8 (5%) 309.4 323.4 (4%)
• Benefits of re-financings in 2019 and early 2020
Share based payments (4.0) (5.5) 27% (4.0) (5.5) 27%
• Reduced issue cost amortisation
Underlying depreciation and (112.1) (99.9) (12%) (83.8) (74.9) (12%)
amortisation • Foreign exchange loss £132m
Share of JV (loss)/income (8.6) (1.1) (682%) (8.6) (1.1) (682%) • Group operates a commercial hedge on trading/interest cashflows
Operating profit 223.9 260.3 (14%) 213.0 241.9 (12%) and the retranslation of assets/liabilities
Finance costs (36.6) (45.7) 20% • £132m loss on retranslation of debt in H1 recognised in the P&L
Foreign exchange (131.9) (2.5) (5,176%) • £170m gain on retranslation of overseas assets in H1 recognised in
Profit before tax pre Equity
separately disclosed items 55.4 212.1 (74%)
• Separately disclosed items
Separately disclosed items: • Amortisation of acquired intangibles £158.5m, primarily on
Amortisation of acquired (158.5) (184.3) 14% Ladbrokes Coral acquisition
intangibles
• Impairment of financial services business £19.3m
Impairment loss (19.3) - -
• Other £147.2m (see following slide)
Other 147.2 (40.1) 468%
Profit/(loss) before tax 24.8 (12.3) 302% • Tax £23m charge
Tax (22.7) 14.4 (258%) • Includes £13m tax charge on separately disclosed items
• Underlying H1 ETR 18% post FX
Profit after tax 2.1 2.1 -
• Full year underlying ETR excluding FX expected to be 13%, in line with
guidance
11Financials: Other separately disclosed items
UK VAT receivable of £200m post corporation tax recognised following court ruling but £61m of one-off cash outflow in H1 in line with guidance
Profit & Loss Cashflow • Tax litigation £212m income
Six months ended 2020 2019 2020 • P&L represents UK VAT receivable of £213m, £200m net of
30 June £m £m £m corporation tax
• £27m cash outflow on Greek tax, in line with guidance
Tax litigation/one-off legislative impacts 211.6 - (26.7)
• Integration costs £(20)m
Integration costs (19.6) (20.0) (13.6) • Includes capex of £4m
Corporate transaction costs (1.6) (2.5) (1.6)
• Legal and onerous contract provisions £(12)m
Triennial restructuring costs (4.7) (2.9) (4.7) • Includes property related closure costs following triennial review
Legal and onerous contract costs (11.9) (9.0) (10.6) (£6m) and other one-off legal costs (£6m)
Movement in fair value of contingent consideration (23.3) (5.6) (1.9)
Other including issue cost write-off (7.3) (0.4) (1.5) • Movement in fair value of contingency consideration £(23)m
Profit on sale of assets 4.0 0.3 - • Increase follows significant outperformance from Crystalbet and
Subtotal (64.4) (40.1) (33.9) partypoker in H1 2020
Total 147.2 (40.1) (60.6)
12Financials: Cashflow
Strong free cashflow generation of £172m despite the impact of COVID-19
Six months ended 2020 2019 • Underlying working capital £9m inflow
30 June £m £m
Underlying EBITDA 348.6 366.8 • Capital expenditure £70m outflow as a result of phasing while shops
Underlying working capital 8.9 (15.4) closed
Capital expenditure (70.0) (77.6)
Investments in US (23.3) - • Investments in US £23m ($30m) outflow following second tranche of
Finance lease (incl IFRS 16) (42.1) (39.3) investment
Interest paid (incl IFRS 16) (44.5) (45.4)
• Finance lease £42m outflow
Corporate taxes (6.0) (12.9)
• Lease costs on operational (£38m) and non-operational (£4m) leases
Free cashflow 171.6 176.2
following the adoption of IFRS 16 and the payments against SSBTs in UK
Separately disclosed items (60.6) (100.7) Retail
Net movement on debt & cost of debt issuance (26.7) 4.0
Equity issue 3.5 - • Interest paid £45m outflow
Dividends paid (7.3) (97.6) • Savings from refinancing not evident in H1 cashflow due to timing of
Net cashflow / (outflow) 80.5 (18.1) interest payments
Foreign exchange (1.2) (6.5) • Corporate tax payments £6m outflow
Net cash generated / (outflow) 79.3 (24.6)
• Net movement on debt & cost of debt issuance £27m outflow
• Principally the repayment of the £35m drawn down on the RCF at the
year end. (RCF undrawn as at 30 June 2020)
13Financials: net debt
Net debt 2.9x (2.8x pre IFRS 16) despite impact of COVID-19 and £132m of FX losses on debt translation
Issue • Net debt post IFRS £2,165m or 2.9x
costs/ • Net debt pre IFRS 16 £1,837m or 2.8x
Six months ended Par Value Premium Total
30 June £m £m £m • Excluding £132m FX loss, leverage ratio of 2.7x despite COVID-19 (2.6x
Bonds (500.0) (21.4) (521.4) pre IFRS 16)
Term loans / RCF (1,667.5) 9.4 (1,658.1)
Interest accrual (19.5) - (19.5) • Total accessible cash1 £347m, up from £260m at 31 December 2019
Gross cash debt (2,187.0) (12.0) (2,199.0)
Cash 469.4 • Next material refinancing not until 2023
Subtotal (1,729.6)
• Interest cost c3.5% of gross debt excluding IFRS 16 leases
Cash held on behalf of customers (376.2)
Fair value of swaps held against debt instruments 28.0
Short term investments / deposits held 144.1
Balance held with PSP 110.0
Finance lease debt (13.1)
Adjusted net debt pre IFRS 16 (1,836.8)
Finance lease liabilities IFRS 16 (328.1)
Adjusted net debt post IFRS 16 (2,164.9)
Proforma underlying EBITDA post IFRS 16 742.9
Leverage ratio post IFRS 16 2.91x
14
(1) Accessible cash reflects cash plus deposits held plus PSP balances less cash held on behalf of customersRegulatory update
Germany, Brazil and The Netherlands heading towards full regulation
• Full regulation of betting and gaming expected mid 2021 with restrictions
• Subject to regulatory discretion, key restrictions can be relaxed on grounds of customer affordability
• A tolerance policy has been proposed with respect to Gaming, although the details have not yet been confirmed
Germany • Sports-betting licence process underway
• Significant uncertainty remains around timing
• Current proposals include restrictions that can be relaxed by the regulator in individual licences
• Continue to focus on customers and investing in the bwin brand
• The government has committed to reviewing the 2005 Gambling Act
UK • Awaiting response from Government to House of Lords Report
• Review process expected to commence Q4 2020
• Brazilian sports betting regulation is now not expected until 2021, with licences being potentially granted in 2022
Brazil
• Individual licensing and other requirements are yet to be defined
• Online gambling regulation will enter into force on 1 March 2021 with market opening on 1 September 2021
The Netherlands • We expect to be licensed by early 2022
• In the meantime under the Dutch tolerance policy GVC is allowed to continue its non-targeted offer to the market
152020 guidance
• Full year EBITDA expected to be in range of £720m-£740m, subject to no further material disruptions to the Group
• Benefit from c£20m of accelerated synergies from 2021, offset by COVID-19 related impacts on non-core businesses
• Net debt expected to decline YoY, helped by UK VAT refund, leaving leverage ratio broadly unchanged from the prior year
• Previous guidance for Online and Cashflow items broadly unchanged – see below
• UK Retail estate continuously reviewed in line with BAU
• Expected BetMGM equity injection increased to $50m - $60m and expected loss for 2020 of c£40m, reflecting increased investment in
marketing in H2
• Reinstatement of dividend payments to be considered with future results
Online Cashflow
• Online NGR double digit growth • Capex c£160m with an additional c£10m for one-off license costs
• Online contribution margin 40%-41% • One-offs:
• Greek tax, final instalment of 2010/11 Assessment £7m and anticipated
• Marketing rate 22%-23%
settlement of 2015-2017 amounts £52m (resulting in a c£133m
• Online operating costs low single digit deflation receivable)
(including synergies) • Integration £45m
• Operating leverage early 40s% • Shop closure and other one off cost £20m-£35m
• Interest costs c3.5% of gross debt (excluding IFRS 16 interest)
• Tax rate c13% (excl. FX), cash tax c£65m
16Strategic priorities
Shay Segev – Chief Executive Officer
17Key priorities leveraged off Industry leading platform
Key strategic Driven by our Delivering benefits
priorities Competitive advantages for stakeholders
Market leadership in US o Proprietary technology Customers
o Operational excellence
o Leading digital marketing skills
Organic market growth Colleagues
o Customer centric approach
o Exciting diversified product suite
New market expansion o Omni-channel operations Communities
o Expertise of our people
Lead on responsibility o Capital discipline Shareholders
BUILT ON A STRONG TRACK RECORD OF DELIVERY
18The technology edge driving growth opportunities
Speed & Control Marketing
Conversion Product development
Voice of the customer New Market Entry
Technology
Personalisation Innovation
resilience protection
DELIVERING AN INDUSTRY LEADING CUSTOMER EXPERIENCE
19US Update
Shay Segev – Chief Executive Officer
20Significant opportunity in the growing US market
SPORTS MARKET ASSUMPTIONS
38 States
224.3m adults
$20.3bn Spend per adult ~$60
Expected market size ~$13.5bn
Sports ~$13.5bn
iGaming ~$6.8bn IGAMING MARKET ASSUMPTIONS
13 States
61.6m adults
Spend per adult ~$110
Expected market size ~$6.8bn
15% - 20% BETMGM’S EXPECTED MARKET SHARE
21
Note: Market sizes based on expected GGR in the states currently expected to have legislated for sports and/or igaming by 2025BetMGM - Driving momentum through key strategic pillars
KEY STRATEGIC ENABLERS CURRENT STATUS
• Prime MGM assets in key states
• B2C access to 20 markets secured to date
• Additional access secured via other partners
Market • Currently operational in 7 markets
• Proprietary platform enables entering markets
access through B2C and B2B partnerships
• 11 markets to be operational by end of 2020
• Ongoing access discussions in further states
• Available to BetMGM at lower cost vs competitors
• Global GVC platform deployed in all active online states
• Proprietary GVC retail and online platform, including
• Significantly localised for the U.S. market
Technology & advanced trading, marketing, CRM and BI tools
• Leading gaming product - proprietary content in gaming supporting NJ
product • Flexibility to respond to different conditions
performance
• Available to BetMGM at lower cost vs competitors
• Single app launch due shortly
• All live states offering BetMGM as the lead sports brand
Brands & • MGM’s retail sportsbooks now also rebranded to BetMGM
marketing • More work to do to position BetMGM as a sports brand
• Partypoker to re-launch as a national U.S. poker brand
• Integration with M life Rewards – phase 1 milestone delivered
Player • Integration with Yahoo! ready for sports return
access & • Omni-channel campaigns launched to drive customer
retention • Acquisition at a lower cost
• Further affiliations under consideration
22Our capabilities outstrip the competition
Broad, direct market access
BETMGM’S In-house technology and
product development
STRATEGIC
“FOUR KEY Strong entertainment,
sports and gaming brands
PILLARS” Omni-channel customer acqn
and marketing strategy
Large and established
rewards program
Broad media and league
partnerships
ADDITIONAL Fantasy sports platform
KEY ENABLERS Pure-play U.S. sports
betting and online casino
Dual sports betting
and iGaming focus
23
Source: GVC, BetMGM & Goldman SachsBetMGM is live in 7 states with further launches by mid-2021
Market Retail Sports Online Sports iGaming
ME
NJ WA
VT
NH MA
MS MT ND
MN NY
OR
WV H2-20 ID
SD
WI MI
CT
RI
NV WY
IA
PA NJ
DE
OH
IN NV NE
IL IN
WV VA D.C.
MD
MI H2-20 H2-20 CA
UT
CO
KS MO
KY
NC
CO On hold TN
SC
NM H2-20 AZ NM
OK AR
GA
MS AL
PA H2-20
OR H2-20 TX LA
FL
TN H2-20
IA H1-21
VA H1-21
Legend: Live Launching Unregulated 24
Note: Current BetMGM estimates on launch periodsunderpinned by proprietary, dynamic technology platform
BetMGM’s Integrated Tech Stack
Peers heavily reliant on third party tech
User Scalable and rich customer experience
Transition to SBTech no earlier than fall 2021
experience
CRM & Data enabled customer retention
data analytics
Marketing technology Tech driven customer acquisition
expertise
Significant cost Customised and localised by
advantage vs Built for the US dedicated team
competitors with
outsourced tech
Proven execution through decades
GVC’s proprietary digital platform of international experience
25Demonstrating leadership in iGaming in New Jersey
NJ iGaming GGR market share1 BetMGM NJ iGaming GGR in $m
iGaming GGR Jan-20 Feb-20 Mar-20 Apr-20 May-20 Jun-20
18
BetMGM 17.6% 14.1% 17.8% 18.9% 18.4% 18.9%
Betfair 19.6% 19.4% 18.3% 17.3% 16.6% 16.6% 16
DraftKings 14.3% 15.8% 13.8% 12.1% 12.9% 12.8%
Golden Nugget 12.3% 12.2% 11.5% 10.7% 10.7% 11.2% 14
Caesars 6.7% 7.6% 9.0% 9.6% 9.6% 9.1%
12
Sugarhouse 6.2% 6.1% 5.8% 6.2% 6.3% 6.2%
Hard Rock 4.2% 5.2% 4.3% 5.0% 5.7% 6.1% 10
Tropicana 5.9% 5.5% 6.0% 5.6% 5.8% 5.3%
Resorts 4.3% 4.8% 4.2% 4.2% 4.5% 4.5% 8
6
• Leading market share of iGaming in New Jersey – July data will
be impacted by $3.3m jackpot win 4
• BetMGM brand is the fastest growing brand in this market
• Opportunity to cross-sell to sports customers 2
• Confident of replicating this performance in other states where
-
iGaming is permitted
26
(1) Based on DGE dataUser acquisition advantage driven by brands,
partnerships and customer database
Cost of customers acquired via partners
13
Omni-channel
brand experience
Locations $0 - $150
>2x
Omni vs single-channel customer value
Cost of customers acquired directly
34m+
Customer
rewards
Customer database – forecast c.5- 10% of
customers acquired via M life
$200 - $550
and database >2x
Expected higher value Expected long term blended CPA
60m+ 1,200+ $250
Media and Monthly users Locations
entertainment
9m+
DFS customers Giving BetMGM unique advantages
Lower acquisition cost
Sports
affiliations and Higher Retention
direct marketing
Higher customer value
Note: GVC & BetMGM estimates 27Multi-channel marketing campaign
BETMGM BRAND OMNI-CHANNEL
1. Brand aligned with MGMs leadership 1. Integrate M life Loyalty programme to
position provide unique benefits to customers
2. Advertising – Significant uplift of brand 2. Engagement with MGM VIP customers
marketing and visibility
3. Engage with MGM on-site guests ‘from
3. On property branding in and on MGM check-in to check-out’
assets
4. Significant expansion of MGM Resorts
4. Deliver “Only BetMGM Can Provide” direct marketing (digital & offline)
unique experiences
MARKETING SPREAD – NEW AMBITION Differentiated Customer Engagement
1. Increase marketing spend to match 1. Fully optimise tailored digital
pace of expansion and market focus experience using GVC Tools
2. Continue data-driven spend 2. Expanded VIP team and capabilities
optimisation
3. Increase proprietary gaming
3. Leverage brands and content and enhance sports
partnerships eg Yahoo! offering
4. Leverage strength in gaming 4. Voice of customer established
and cross sell
28Significant branding campaign
29Rebranding the luxor
30Organic and new
market growth
Shay Segev – Chief Executive Officer
31Inbuilt growth opportunities
Vast majority of Online revenues are generated in fast growing, regulated and regulating markets, with long runways for future growth
% of GVC FY19 Online NGR in countries…
…that are either …where the …where GVC …if taxed, then …with online
regulated or online market is is growing are taxed1 at 15% penetration currently
regulating growing >5% pa >10% pa or more less than 20%
(ex UK)
94% 80% 93% 98% 81%
Source: H2GC 32
1. Sports betting and gaming duty or equivalentsNew market opportunities
The opportunity Standout m&A capabilities
• GVC operations currently represent 6%1 of the global online betting • Unrivalled sector experience of M&A
and gaming market
• Successful platform integrations
• There are over 50 regulated markets in which we are currently not
• Customers migration without incidence
active. These have:
• Proven ability to accelerate growth and grow market share
• An aggregate population of over 1.3bn
• Proprietary technology
• Combined GDP of over $6trn
• Global brand recognition with bwin and partypoker
• Potential gaming market GGR of around $45bn
• Best-in-class marketing capabilities
• Largely undeveloped from a competitive perspective
Central/Eastern Europe LATIN AMERICA AFRICA
POPULATION: c.160m POPULATION: c.300m POPULATION: c.850m
GDP: c.€1.8trn GDP: c.$2.7trn GDP: c.€1.6trn
POTENTIAL GGR: >$10bn POTENTIAL GGR: >$25bn POTENTIAL GGR: >$10bn
CEE LATAM AFRICA
33
1. Source: H2GC 2019 Global Online GGRresponsibility
Shay Segev – Chief Executive Officer
34Our safer gambling strategy
GUIDING PRINCIPLES
To be the most trusted and enjoyable
betting operator in the world
ONGOING DEVELOPMENT OF MONITORING TOOLS
UNDERSTAND THE EDUCATE PROMOTE
PROBLEM AND OUR KEY RESPONSIBLE
BEST SOLUTIONS STAKEHOLDERS ATTITUDES
FUND CHAMPION DRIVE CULTURAL
EMPOWER
TREATMENT FOR RESPONSIBLE CHANGE WITHIN
CUSTOMERS
THOSE IN NEED PRODUCT DESIGN OUR BUSINESS
35Doing what’s right for customers
“
Despite the adverse impact from lockdown on revenues, our belief is that we
should always act in the interest of the customer and we therefore took a
number of steps to enhance our customer safety net during COVID-19
• We added two new markers to our behavioural algorithm – comparing a “There is no
customer’s activity pre and post lockdown evidence to
• We also replaced our TV adverts with dedicated safer gambling ads suggest an
• We significantly increased our Responsible Gambling (RG) team to be more proactive increase in
with customers problem
• Technology enables us to help customers manage their activity: gambling”
• 9 out of 10 new customers in 2019 used RG tools
UK Gambling
• Helped double the number of customers using RG tools between 2018 and 2019 Commission quote
12 May 2020
RESPONSIBILITY = SUSTAINABILITY
36Summary
• Encouraging first half performance
• Momentum in the business as sports return
• Well positioned for market leadership in the US
• Significant growth opportunities both organic and through M&A
• Robust governance in place
• Clear focus on industry leading responsibility
• Proprietary tech platform enabling great customer experience and growth
• Best people in the industry
• Driving value for all stakeholders
37Q&A
38Appendix
39Product diversification
Revenues are well diversified by product, with football revenues spread over multiple leagues
Group Online NGR Product Splits (2019)
Football by
League
Gaming Sports
55% 45%
Premier League 8%
UEFA Champions League 5%
Italian Serie A 5%
Spanish La Liga 5%
Friendlies (Domestic & International) 4%
Casino & Games 46% Football 20% German Bundesliga 4%
Europa League 3%
Poker 4% Horse Racing 10%
Euro 2020 3%
Bingo 3% Tennis 5%
Remainder includes other leagues eachMarket leading consumer focused brand portfolio
Well-established global and regional brands increase marketing efficiency and create barriers to entry
Country Online: Sports offering Online: Games offering
UK *
Germany
Australia n/a
Italy *
Belgium *
Ireland *
Georgia
Brazil
Worldwide
41
* Multi-channel offering (Note: In Italy multi-channel offering for Eurobet brand only, In Belgium multi-channel offering for Ladbrokes brand only)Leading Technology for the us from GVC’s platform
Powerful proprietary technology gives us a unique and sustainable competitive advantage
B2B Operators With In-house Betting-led B2B
Suppliers Multi-product B2B Suppliers
Technology
Models & Algorithms ✓ ✓ ✓ ✓ ✓ ✓ ✓
Bet Engine ✓ ✓ ✓ ✓ ✓ ✓ ✓
Trading & Risk Management Tools ✓ ✓ ✓ × × × ×
Trading Services ✓ ✓ ✓ × × ✓ ✓
Risk & Liability Strategy ✓ ✓ ✓ ✓ × × ×
Turnkey Sportsbook ✓ ✓ ✓ × × × ×
APIs ✓ ✓ ✓ ✓ ✓ ✓ ✓
Casino Management & Loyalty Integration ✓ × × ✓ ✓ × ×
Platform ✓ ✓ × ✓ ✓ ✓ ✓
Marketing & Bonusing Tools ✓ ✓ ✓ ✓ ✓ ✓ ✓
Casino Integrations ✓ ✓ × ✓ ✓ × ✓
Slot Provider ✓ × × ✓ ✓ × ✓
Poker Network ✓ × × × × × ✓
Managed Services ✓ ✓ ✓ × × ✓ ✓
Retail Sportsbook ✓ ✓ ✓ ✓ ✓ ✓ ✓
Omni-Channel Journeys ✓ × × ✓ × × ✓
42BetMGM market access providing path to market leadership
Live Markets (19) Legal Markets (4) Legalizing (3) Count of Active
AR CO DC DE IN IA IL MI MS MT NV NJ NM NY OR PA RI WV NH NC TN VA WA OH MD MA Key Markets Imminent
✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ⁱ ✓ ✓ⁱⁱ ✓ ✓ ✓ ✓ ✓ ✓ 17
✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ 16
✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ 15
✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ 15
✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ 15
✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ 14
✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ 14
✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ⁱ ✓ ✓ ✓ ✓ ✓ 13
✓ ✓ ✓ ✓ ✓ ✓ ✓ⁱ ✓ ✓ ✓ ✓ 11
✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ 10
✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ 10
✓ ✓ ✓ ✓ ✓ ✓ ✓ 7
✓ ✓ ✓ ✓ ✓ ✓ 6
✓ ✓ ✓ ✓ ✓ 5
✓ ✓ ✓ ✓ 4
43
VA market access assumed for all operators ⁱNeed legislative change for access ⁱⁱiGaming access onlyYou can also read
