Gambling stocks plunge again at prospect of prolonged sporting drought
William Hill, Playtech and Rank Group the worst hit companies as coronavirus outbreak paralyses swathes of Europe
Share prices of the gambling industry’s leading companies suffered further sharp falls in early trading Monday as the spectre of no sport for months caused investors to run for cover.
In what was a sea of red on traders’ screens in the City, William Hill plummeted 30% to 62p, while GVC’s shares tumbled more than 20% to 375p and Flutter Entertainment endured a fall of 16% to 5,870p per share.
Shares in Playtech, which was already hit hard by the lockdown in Italy and the closure of its B2C Snaitech business, plunged by another 26% to 130p.
As things stand, all of European football’s major leagues are suspended, including the Premier League until 3 April, due to Covid-19.
However, it is looking increasingly likely this domestic football season could be scrapped completely and Euro 2020 – scheduled to be played in 12 host cities across the continent from 12 June until 12 July – will be postponed until summer 2021.
Meanwhile, most sport across Europe and in the US is also in lockdown, while UK horseracing is set to be run behind closed doors until the end of March.
In a statement issued this morning, Flutter said it estimates that if restrictions remain in place until the end of August, including the full suspension of Australian sport and the cancellation of Euro 2020, EBITDA for the group will be hit to the tune of £90-110m.
In 2019, approximately 78% of Flutter’s revenue was generated by sports betting.
Flutter and The Stars Group are due to complete their £10m mega-merger in either Q2 or Q3, yet Julian Buhagiar, co-founder of RB Capital, suggests the process could be on ice for now.
“I think it is unlikely that it is going to happen this year – the whole sports calendar has been reset for six months. This virus has pretty much frozen the deal for about six months, and that’s assuming things start calming down before the summer.”
Meanwhile, the increasing prospect of people avoiding casinos and bingo clubs – or their forced closure – caused Rank Group’s shares to crash by another 35% to 110p this morning.
Shares in the Maidenhead-based operator, which has 52 Grosvenor Casinos and 82 Mecca bingo clubs up and down the UK, were trading at 326p at the end of February. Rank also has nine bingo clubs in Spain, which is currently in lockdown due to the outbreak.
In a note issued on Saturday, Regulus Partners said: “In Great Britain and Spain, bingo clubs are likely to be hit particularly hard.
“For a start, customer bases are weighted towards older people, more vulnerable to Covid-19; while the pari-mutuel nature of bingo means that reduced liquidity affects the value proposition for those who do turn up.”
The hope is that online gaming, particularly casino, poker and bingo, can go some way to plugging the gaping hole left by sport’s blackout and the likely decimation of land-based gambling.