eGaming Review Power 50: Top 3
A detailed look at the three powerhouses of the egaming industry
Welcome to the 2013 edition of the Power 50, eGaming Review’s guide to the power players in the online gambling industry
3. PADDY POWER
(3)
For all its headline-grabbing tomfoolery and PR stunts, Irish operator Paddy Power is a serious, data-driven operator rated highly by its competition. It has continued to impress over the past 12 months, with bold investment into both brand and product crucial to its success story.
It has positioned itself as a market leader in mobile and social media and backs both as key drivers of growth in 2014. Its mobile product suite and user experience is widely considered to be the strongest among top-tier operators. Chief executive Patrick Kennedy predicts that 90% of future online growth will come through the mobile channel.
Its H1 results showed online net revenue rose 29% year-on-year to 243m with mobile revenues increasing 100% to 104m, representing an industry-leading 43% of total online revenue. The acquisition of Australian operator Sportsbet continues to bear fruit as a huge source of online revenue, recording a 33% year-on-year increase in H1 to 86.5m.
Paddy Power looks and feels like a modern egaming company. Its social media presence is strong, with its Facebook page reaching one million likes and the launch of a real-money in-play sports betting oï¬ering on Facebook. Its scale of operations is below the big two, but it is well-placed to beneï¬t from future growth.
2. WILLIAM HILL
(2)
William Hill is a business that seems almost unstoppably ascendant at the current time. During the period under review it completed its buyout of Playtech’s JV share, bought the Spanish and Australian business of Sportingbet, launched in Italy and hammered down the accelerator pedal on mobile. In stark contrast to its rival in the red corner, this land-based giant looks at the cutting edge of egaming with plenty left in the tank.
Much like its rival in Stoke, William Hill’s success is driven by its sportsbook with the ï¬rm placing an even greater emphasis on sports betting in its recent analyst presentation. The trading team is one of the sharpest in the business, and it has signiï¬cantly upped its game when it comes to in-play betting over the past year with Hills now claiming a larger range of in-play markets on major football matches than bet365.
Mobile has also been a cornerstone of its growth in 2013 with 41% of sportsbook revenues coming from the mobile channel in its Q3 results at a handily higher margin than pure online. Its ï¬at performance in gaming is internally believed to be down to its customers’ migration to mobile and the ï¬rm is putting considerable resources behind development to catch up. Expect big things from Hills in mobile during 2014.
Its core market remains the UK where it is only rivalled by bet365, with the potential downside of Hills’ geographic focus giving a greater exposure to impact of point of consumption tax compared to bet365. However, it has gone to some lengths to extend its geographic reach during 2013 and will be high on many Power 50 operators’ radars as a result. Its recent acquisition of Sportingbet’s Australian business and Tom Waterhouse has made Australia a real area of focus and will concern Paddy Power. Likewise the acquisition of Miapuesta will ruï¬e a few feathers in Spain and there is some resource being put behind its Italian operation.
Hills is doing a lot of things right, and has proved its not afraid to make signiï¬cant capex plays. There is every chance it will continue to be heavily involved in any future M&A in the sector. But right now its impact outside of the UK is limited compared to its dominant position within its home market. That is sure to change as it expands marketing in Spain, Italy and Australia and Hills has a mix of core sportsbook operational strength and casino nous that few other ï¬rms can easily match. The risk for Hills is the rapid and geographically broad expansion might prove tough to manage in the coming year with integrating three new businesses on two continents clearly a major challenge. Australia is likely an easy win, but growing market share in Spain and Italy will be potentially a harder and more expensive proposition. That said, the feeling is Hills has some considerable upside momentum.
1. BET365
(1)
In a year when other ï¬rms have dominated the headlines, bet365 has once more quietly gone about its business with pretty spectacular results. Despite launching in Demark, Spain and Australia in the period, it saw operating proï¬ts rise by 54% to £176.8m driven by mobile and in-play with amounts wagered rising by 150% and 61% respectively.
The ï¬rm’s historic strength in in-play betting was boosted by the addition of more than 10,000 additional live streaming events and the expansion of its Match Live feature to eight additional sports. Mobile likewise beneï¬tted from signiï¬cant expansion with Android and BlackBerry releases as well as launches in Australia, Spain and Denmark.
Total revenue growth of 44% and a 50% rise in active users alongside a 57% rise in amounts wagered would be impressive for a smaller company, but is particularly stellar for a ï¬rm the size of bet365. Active users for the year ended March 2013 were above two million and lifetime sign-ups crossed the 10 million mark in the period. In order to support this growth the ï¬rm increased its headcount by 20% to 2,596 with its Stoke head oï¬ce now resembling a small town.
The UK-based ï¬rm continues to be a sports betting-driven business, with casino a smaller component of revenues than rivals such as Hills, but gaming shows continued growth across all verticals including bingo and poker, where growth was 25% and 10% respectively. It continues to increase its gaming footprint, particularly on mobile.
Despite more than £360m in shareholder funds the ï¬rm is unlikely to be a player in any future M&A activity in the sector, with management thought to consider it an unnecessary distraction. Although with some distressed assets in the sector at the moment it must be a temptation for senior management, eGR understands it’s not a strategy consideration at the current time. In any event, bet365’s impact is felt throughout the industry.
The ï¬rm is a dominant force in sports betting with a huge presence in the UK and Spain, and a dominant presence throughout Europe. It also has a rising presence in Australia. There are few major markets in egaming where operators aren’t butting heads with bet365 and its well-deï¬ned strategy of low-margin, high-volume business in sportsbook makes it a ï¬erce competitor.
Its regulated reach is not to be underestimated and it would be no surprise to see further launches in 2014, while its dot.com revenues are a source of envy and admiration for many of the other members of the top 10. Despite its low corporate profile bet365’s clear brand proposition and operational strength make it an imposing competitor. Its financial ranking also had it a clear leader over the rest of the sector.
The company faces some strong competition in mobile and it will interesting to see both how it responds to this and what impact this has on next year’s ranking. But on a pure ‘might is right’ basis, it’s hard to argue against bet365’s continued place at the top of the list. It remains the one to catch.
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