Raising brand awareness in global markets and the hiring of more staff resulted in the profits of a company owned by a Betchton entrepreneur falling by £270m as it burned through cash in expanding, its annual report has said.
Bet365, formed by Denise Coates and still owned by the Coates family, said in its latest annual report that administration expenses saw a year-on-year increase of £319.5m, driven by “significant costs” associated with raising brand awareness in new markets alongside continued investment in IT infrastructure and technology.
Staff costs also increased, with 6,092 staff in 2033 compared to 5,443 the year before employed by the Festival Park-based company.
The sports and gaming segment of the group also made substantial charitable donations, which continued in 2022 with a total of £100m being donated to the Denise Coates Foundation, a registered charity.
As a result of all this, operating profit decreased year-on-year to £15.4m, down from £285.5m the year before.
The report said that around the world, sports and gaming operations continued to adapt to changes as jurisdictions “evolved their regulatory regimes”. Bet365 holds licences in territories including Argentina, Australia, Bulgaria, Cyprus, Denmark, Estonia, Germany, Gibraltar, Great Britain, Greece, Ireland, Italy, Malta, New Jersey, Spain, Sweden, The Netherlands and most recently Ontario and Colorado.
During the year, the key principal decisions taken by the group’s operating boards centred around the preparation for new regulatory launches and changes, resulting in the continuation of the group’s long-standing policy of pursuing licences in markets with commercially viable regulation.
During the period “significant development resource” was committed in preparation for launching into new markets and to support changes in countries where the existing regulatory framework was being amended.
During the year, the group’s operating entities were awarded licences in the Netherlands and Buenos Aires, where Bet365 is now live, while further resources were devoted to expanding its footprint in North and South America.
Revenue from the sports and gaming segment of the group increased by 2% to £2.8bn, up from £2.7bn, as a reduction in the sports margin percentage offset the impact of wagering growth, resulting in sports revenue falling 2%. This decline was “more than countered” by an increase in gaming revenues of 25% as the company’s gaming product offering improved. The period also saw the number of active customers rise by 48%.
Go on, Stoke
During the year, the company purchased both the Bet365 football stadium and Clayton Wood Training Ground from Stoke City (Property) Limited.
Stoke City competed in the English Football League’s Championship, and the company said it “showcased its continued commitment” by waiving £120m of historic intercompany loans, as well as completing a £40m debt for equity swap during the financial period.
The club and its related facilities and operations company incurred a loss before taxation of £26m, although this was half the 2021 loss of £55.8m, on turnover of £21.8m (2021: £29.3m). The principal reason for the decline in turnover was the reduction in the club’s parachute receipts from the Premier League following its relegation in 2018; 2020/21 was the final season in which the club received the money.
The group’s profit was £76m (2021: £525.1m) from its gambling operations and a loss of £26m from the football club, resulting in a combined group profit before taxation for the period of £49.8m.
The report said the group would continue to invest in IT infrastructure and technology around the world and encourage innovation in its products, both by improving existing products and introducing new opportunities.
The company also said it was committed to “delivering a safe environment” for its customers and continued to invest in this area. Improvements were made to the group’s early risk detection system, which allows it to identify and interact with customers at risk of, or experiencing, harm. The group has continued to work with regulators and industry colleagues, both in the UK and internationally, to demonstrate best practice in safer gambling.
Bet365 is also a co-signatory of the Betting and Gaming Council’s Safer Gambling Commitments.
Developments during the period included website enhancements to support the delayed Euro 2020 tournament; the introduction of a new golf product and upgraded visuals within the virtual sports offering; development of Bet Builder to introduce rugby league, American Football and Australian Rules, and an improved single balance system aimed at “simplifying the customer experience”.
The company employed 600 managers and supervisors, 5,197 operations and service support staff, 219 operations staff in the football group and 69 full-time playing staff and scholars in the year.
In addition, it employed an average of 163 match-day staff.
It pays out £606m in wages and salaries.
(Photo: Vasile Bobirnac / Dreamstime).