Published: 24.03.2020, 12:58
5 min read
The spread of the coronavirus has been hitting the sports and gambling world hard. More and more casinos are closing by the day and many major sports leagues have been suspended. However, the effects run even deeper than that. We will take a look at how COVID-19 is impacting gambling share prices.
The Impact on Online Operators
Let’s start by taking a look at one of the operators that have been hit the hardest in the UK: William Hill. This bookmaker’s share price fell a massive 25.5% after the announcement of major league match suspensions. Furthermore, William Hill’s share value has decreased by ⅔ in the last month – and by 80% in under one year.
On March 17th, William Hill gave a statement declaring that they will suspend their dividends from 2019. A dividend is a payment (most often cash, but sometimes issued as shares of stock or other property) that a company makes to owners of its stock. This is a way for companies to allocate some revenue back to its investors. Suspending dividends for the time being is William Hill’s best bet at recouping some of its losses.
The coronavirus could not have come at a worse time for William Hill; the company was already feeling the repercussions of the £2 wager limit placed on betting terminals that have fixed odds. This action caused William Hill to lose out on £32.7 million in revenue in 2019.
Flutter Entertainment is another company that has been hit hard by COVID-19. It is the parent of both FanDuel and Paddy Power Betfair. Flutter Entertainment’s share price fell by 12.2% (£56.84) at the close of trade; however, it had thankfully recovered from the lower point of £50.30. Before the close of trade, the company stated that the impact of the coronavirus on sports could potentially lead to up to £110 million in revenue loss. This figure would be EBITDA (earnings before interest, taxes, depreciation, and amortization).
It is difficult to predict the exact figure of impact on revenue because nobody is sure how long sports events will be restricted. Adding to the confusion is the fact that some countries are continuing to play matches behind closed doors. The £110 million estimate is based on an assumption that sports events will continue to be suspended until late August.
Stars Group, which will merge with Flutter at some point in the future, had share prices fall 17.7% between March 13th-17th. Regardless of this, the operator gave a statement that they have been out-performing their financial expectations for this quarter of the year. However, the continuation of the coronavirus could impact their revenue soon, and cause them to not reach their financial goals.
Last month was great for Stars Group; they had seen a 24.6% increase when compared to the same time period in 2018.
At the closing of the markets, GVC Holdings’ share price fell by 21.7% – to a total cost of £3.70 for one share. The company revealed that its EBITDA for the 2020 fiscal year could end being reduced by potentially up to £150m. This estimation is based on a scenario in which football matches are suspended until July 2020, and in which the Euro 2020 is postponed until the summer of 2021. Furthermore, it is based on the assumption that important horse races will be canceled.
We have a few more statistics for you: another operator, Ladbrokes Coral, saw its share price fall 60% in about one month. Tabcorp, an Australian operator, had its share fall by 12.1% at the close of markets. Kindred’s shares fell by 11.6%, and 888 Holdings dropped by 12.5%. Française des Jeux fell by 17.5%. And, finally, Gamesys share value dipped down by 7.17%.
Land-based Casinos
Next, we have some information for you about the impact on share costs of land-based operators.
Due to casinos closing across the US., there have been some serious market repercussions. For example, after MGM Studios announced that its venues would be closing temporarily, its share value dropped by 22.3%. Overall, the company’s share value has plummeted by 64.6% since February 12th.
Another casino operator saw similar statistics: Caesar’s Entertainment shares fell by 22.2%, which is more than a 50% drop compared to one month prior.
Churchill Downs Incorporated, which recently announced its decision to postpone the Kentucky Derby to September, had share losses of 13.2%.
Boyd Gaming saw a decrease of 15.9% after the closure of properties in Pennsylvania, Ohio, Illinois, and Indiana.
The US-based operator that was impacted the heaviest is Penn National Gaming; their share value dropped by a whopping 38.3! What’s interesting is February’s share price was at an all-time high, and it is fallen by 75.1% in just a little more than one month.
This effect on land-based operators is not just happening in the US. For example, the Rank Group (a London-based operator) saw a share price decline of 36%. The total decrease over the last month was 70%.
Suppliers and Affiliates
Lastly, we will take a look at how the markets for suppliers and affiliates have been impacted- starting with suppliers. Scientific Games declined 30.4%, while Playtech fell 10.6%. Even though Playtech’s decline is smaller in comparison, keep in mind that it had already declined by nearly 50% between February 21st and March 12th.
The International Game Technology’s share price fell by 12.7%; Izntralot’s price fell by 18.9% and Kambi’s value dipped down by 10.8%. Inspired Entertainment’s impact hasn’t been as big; their share price only fell by 4.5%.
Now, among major affiliates, the one that was hit the hardest is Catena Media. During the last market close, its shares had fallen by 14.9; they have fallen by 72.2% since February 21st. And, in the last two years, its share price fell by 93.8%.
Another affiliate, XLMedia, only saw a 4.6% drop in share price.
