Entain Shares Plummet Following Brazil's Online Gambling Ban
The Ladbrokes owner forecasts a hit to earnings as Brazil moves to prohibit online sports betting and casinos.
Shares in Entain, the owner of the Ladbrokes betting brand, fell to a six-year low after the company warned that its earnings would be impacted by Brazil's decision to ban online gambling.
Entain stated it was 'disappointed' by the provisional ban, which was signed into order by Brazilian President Luiz Inacio Lula da Silva. The ban requires congressional approval within 120 days to become permanent. In response to the development, Entain has adjusted its full-year online net gaming revenues outlook to a growth of between 4% and 6%. The company anticipates its underlying earnings will be at the lower end of its previously stated guidance, which ranged from £910 million to £960 million.
Brazil was projected to contribute approximately 5% of Entain's total online net gaming revenues for the current year. However, the company noted that the earnings contribution was expected to be 'modest' due to the 'challenging and highly competitive operating environment' within the country.
FTSE 250 firm Entain indicated it would comply with the ban. The company's shares experienced a drop of 5.1%, or 22.7p, reaching 426.9p, a level not seen since March 2020.
Separately, New York-listed Flutter, which owns brands such as Paddy Power and Betfair, expressed that it was 'extremely disappointed by this development' and is considering an appeal against Brazil's decision.
This downturn follows recent news from Entain, which announced earlier in September that it was cutting around 400 jobs globally. This move was attributed to increased gambling taxes, with further job reductions potentially on the horizon amid speculation of a planned increase in machine games duty by the UK government. The group, which also operates the Coral brand, initiated a consultation process that could affect up to one-fifth of its 2,000-strong customer care workforce across 11 countries, including the UK, as part of efforts to mitigate the impact of higher gambling taxes in the United Kingdom. The consultation is expected to conclude by November, and the company did not specify the number of UK jobs that might be lost.