2021 has been an extraordinarily successful and eventful year for Entain, albeit one in which we continued to contend with the significant challenges of operating against the backdrop of the Covid-19 pandemic. In successfully doing so, we proved beyond doubt the resilience of our business model as well as our ability to take advantages of growth opportunities in the most challenging of circumstances.
If 2020 was the year in which Entain redefined its strategy and articulated its ambition to be the world-leader in sports betting and gaming entertainment, then 2021 has been the year in which we emphatically delivered on the first stage of that journey.
Entain has now delivered nine years of double-digit growth in our online business, so we feel confident in asserting our strong belief that this is a business that is capable of delivering sustainable and meaningful long-term returns for all of its stakeholders.
Entain has now delivered nine years of double-digit growth in our online business.
This confidence is underpinned by our powerful, unique and market-leading platform, which encompasses everything from our outstanding proprietary technology to our capabilities in digital marketing, customer interaction, regulatory engagement, and M&A. And, of course, the foundation on which the Entain platform is built – and which connects it directly to our customers – is the industry-leading talent that we have across the business. On this front, we are working hard to continue to attract and retain the very best people at all levels at Entain and we know that, as a world-leader in technology, we need to be able to compete with the global tech giants in order to do so.
It is the strength and viability of this platform which is behind our conviction that, as we announced in August, our total addressable market will grow more than three-fold to $160bn. There are vast growth opportunities ahead of us, which we intend to capture by: achieving leadership in the US market; growing our presence in core markets; expanding into new regulated markets; and extending into new interactive entertainment experiences.
As a result, it was no surprise that Entain attracted interest from other industry players during the year. We strongly felt that the proposals that we received from MGM Resorts in January and DraftKings in September both substantially undervalued the Company and its prospects. But their interest was a great endorsement of the attractiveness of our strategy, operations, technology, and people. In the case of MGM Resorts, our relationship through our BetMGM joint venture in the US continues to go from strength to strength.
ESG at the heart of Entain
2021 was also a year in which we cemented our commitment to putting ESG at the heart of everything that we do. We are clear that this approach will make us an even more successful business for the future, and we want to take a lead on the issues that matter most to us including sustainability, diversity, and responsibility.
As part of this, our goal is to provide the most trusted environment for betting and gaming in the world, so that our customers know that they can have a fantastic experience with us and that we have their interests at heart. This philosophy has been the driving force behind the development of our Advanced Responsibility and Care™ (“ARC™”) programme, which has made great strides during the year and is redefining the critically important area of player protection.
As a further demonstration of the fact that safer gambling sits at the core of our strategy, we have incorporated a safer gambling metric into remuneration. Colleagues are now assessed against whether certain milestones have been achieved in implementing our ARC™ programme, as part of the conditions of their annual bonus. We will be adding to this further in 2022, with an additional portion of the Group annual bonus being based on ‘customer centricity’.
I’m pleased to be able to reflect on another set of strong results, delivered whilst both the business and our customers continue to face the challenges presented by Covid-19. This performance is a tribute to the quality of our people and resilience of our business model due to its diversification across product, brand, territory and channel. Group net gaming revenue (“NGR”) was up by 8%cc for the full year, while our online NGR was ahead by 13%cc, the ninth consecutive year that we have delivered double-digit growth online. With all key markets in growth, with the exception of Germany and the Netherlands, which were subject to regulatory changes – our online business continues to go from strength to-strength. The performance of our US joint venture, BetMGM, was particularly pleasing, securing our leading position with a 23% share of the the states we were active in during the fourth quarter of 2021. This is an outstanding achievement, in line with our target to secure 20-25% of the US market and we look forward to building on this position as further states regulate in 2022. Overall this performance enabled us to deliver £881.7m of underlying EBITDA, a 5% increase on the year, and gives us confidence that our strategy of growth and sustainability remains on course.
A clear commitment to robust corporate governance
Our outstanding CEO, Jette Nygaard-Andersen, has now been in the role for over a year and, as we had hoped, her background in fast-growing disruptive next generation digital entertainment companies has added fresh perspective and impetus to Entain’s strategic direction. On behalf of the Board, I would like to congratulate Jette on a hugely successful first year in charge.
After the significant changes of 2020, this has been a year of consolidation for the Board, although we were delighted to be joined by Mark Gregory as an independent Non-Executive Director in March. Mark is now Chair of the Remuneration Committee and a member of the Audit and Nomination Committees. He has more than 35 years’ experience in a wide variety of senior leadership roles across both the financial services and retail sectors.
Last year we announced that Sandeep Tiku would be joining the Board as an Executive Director following his relocation to Gibraltar. Following ill health due to Covid-19, Sandeep’s relocation was delayed and he has notified the Company that he no longer intends to relocate to Gibraltar and will therefore not join the Board.
We recognise the value of having an inclusive and diverse Board and following Sandeep’s decision we will not meet shareholder expectations and our own Board Diversity Policy with respect to membership of a Director from an ethnic minority background. The Nomination Committee is undertaking an active search to find an appropriate candidate.
Rewarding our outstanding global team
As ever, the hard work, dedication and innovation of our teams across the globe has been awe-inspiring to see, and on behalf of the Board I would like to thank all of our colleagues for another year of outstanding commitment and outperformance.
In recognition of their extraordinary contribution, we were delighted to launch a Group-wide employee share ownership plan in April to give our UK and international colleagues the opportunity to share in the success and growth of the business.
Looking ahead: 2022 and beyond
As we look ahead to the coming year, the UK Government’s review of the 2005 Gambling Act will be a key milestone for our industry. We are in full support of the review, and have been engaging openly, proactively and transparently with all aspects of the process. We are hopeful that it will be a step towards creating the highest possible regulatory standards, and that any revised legislation is not draconian; we have seen in other markets that imposing arbitrarily low and disproportionate blanket thresholds will have the unintended consequence of driving customers to the black market, where the small minority of players who are at risk of harm will have none of the protection offered by established, regulated operators.
When we think about the future more broadly, it is clear that the worlds of media, entertainment, technology and gaming are rapidly coming together, and that Entain sits at the very heart of that convergence. This provides us with a great opportunity to redefine our industry, and also to meet the changing demands of customers who now want a richer and more engaging experience, with more content, social interaction, analytics, data, and live statistics. In simple terms, we are now able to use our outstandingly strong platform to give our customers even more reasons to engage with and stay with us. As a result, we are more excited than ever before about the exciting opportunities ahead of us that will drive Entain’s growth for many years to come.
Our goal is to provide the most trusted environment for betting and gaming in the world.