Two of the UK’s biggest gambling firms are set to disclose the impact of more cautious UK punters, as household spending comes under pressure from turmoil in the economy.
Investors of Ladbrokes owner Entain and Paddy Power’s parent firm Flutter will be hoping that profits have been protected despite worries over consumer sentiment, when they deliver half-year updates next week.
Shareholders will also be looking for signs of robustness as the wait continues for the Government to unveil its latest gambling white paper which could impose new restrictions on the sector in the UK.
Both firms have however shielded themselves somewhat from the shaky UK market with strong growth in the US, where they have benefited from loosening betting laws in many states.
Entain, which also owns Coral, said last month that online gaming revenues dipped over the first half of 2022.
Attention will be focused on whether management believe the previous spending habits will remain intact
Charlie Williams, Hargreaves Lansdown
Charlie Williams, equity research assistant at Hargreaves Lansdown, said focus will therefore turn to how profits for the period have fared when it updates the market on Thursday August 11.
He said: “The impact on profit should come to light next week, and attention will be focused on whether management believe the previous spending habits will remain intact.
“If not, online revenue could continue to decline into the future.”
Concerns over lower demand from punters therefore means that shares are about 30% lower over the past three months, despite a rebound in retail revenues following the reopening of shops after coronavirus curbs were lifted.
Investors will also be hopeful that a bumper sporting calendar for the rest of the year, including the winter World Cup in Qatar, could provide a much-needed boost to sports betting.
Its BetMGM business in the US will also provide solace, with growth predicted at more than 50% for the year.
Flutter will also find reason for optimism stateside, through its FanDuel sportsbook business.
On August 12 the gambling firm is expected to announce continued strong growth in the division, which recorded 45% growth in the first quarter.
It has continued heavy investment internationally, with about one billion dollars (£830,000) pumped into promotions, sales and marketing across the US business last year.
On Friday, Flutter also said it has secured regulatory approval for its 1.9 billion euro (£1.6 billion) takeover of Italian group Sisal.
The Italian business saw 58% sales growth and 51% earnings growth over the first half of the year, in a reassuring sign of activity on the continent.