Annual Report & Accounts 2016 - Performance of divisions
Following the acquisition of bwin.party the Group adopted a new reporting structure with the B2C operations
split between Sports Labels and Games Labels, with our other divisions being B2B and Non-core. It is worth
noting that revenues within Sports Labels are not limited purely to sports wagers but include revenues derived
from other gaming activities conducted on any of our Sports Label brands. Similarly, though to a lesser extent,
Games Labels include sports wagers made through any of our Games Label brands.
Sports wagers 4,488.3 4,312.6 4 7 4,272.3 1,683.0
Sports margin % 9.6 8.6 9.6 9.2
Sports NGR 333.2 304.5 9 11 315.9 113.9
Gaming/other NGR 320.8 271.1 18 21 304.8 101.2
NGR 653.9 575.7 14 16 620.7 215.1
EU VAT (15.0) (11.0) (13.9) (0.5)
Revenue 638.9 564.7 13 16 606.8 214.6
Contribution 362.0 318.9 14 342.5 113.6
Contribution margin % 55 55 55 53
Betboo was established in
2005 to provide online bingo,
sportsbook, casino and poker
access to South American
customers. It was acquired by
the GVC Group in July 2009.
Gamebookers is a full-service
sportsbook which is particularly
popular in east and central
European markets. It offers up
to 30,000 bets daily on more
than 90 sports.
Sportingbet is a leading
provider of sports betting,
casinos, games and poker
online and on mobile. It was
established over 15 years ago
in 1998 and acquired by GVC
in March 2013.
bwin is one of Europe's leading
online betting brands and is
synonymous with sports. It has
leading positions in several
markets including Germany,
Belgium, France, Italy and
Spain. bwin also offers casino,
poker as well as bingo on
mobile and web, all through
a single account.
GVC owns a number of sports betting brands including bwin, Sportingbet,
Betboo and Gamebookers. bwin was a pioneer in online sports betting and
remains one of the best known brands across Continental Europe. However,
it is fair to say that the brand had lost market share in a number of core territories in
recent years. Therefore, the performance of the business in 2016 was particularly
encouraging. Not only did our existing customers spend more with us but also we
were successful in adding new customers.
Overall sports wagers grew 4% to €4,488m for the pro forma 12 months, whilst an
improvement in the gross win margin to 9.6% (2015: 8.6%) helped to drive sports
NGR 9% higher to €333.2m. In constant currency, wagers rose 7% and sports
NGR by 11%. The higher gross win margin was largely due to the improvements we
made at bwin, particularly in the area of risk management which led to a significant
reduction in low margin turnover. The year also benefited from the UEFA Euro 2016
tournament, during which we took €162m of wagers and achieved a gross win
margin of 18.3%.
During the year we significantly expanded our gaming offer to our sports customers.
Over 17 deals were signed with leading suppliers, including NetEnt, Evolution,
MicroGaming, IGT, NYX and Edict Gaming to name but a few. In total, this gives us
access to over 650 new games/products across mobile and desktop. Together with
improved cross-sell at the acquired businesses, this helped pro forma gaming NGR
rise 18% to €320.8m in 2016 (+21% in constant currency).
Total NGR from Sports Labels increased 14% (16% in constant currency) to
€653.9m, with revenue 13% higher at €638.9m. Meanwhile, the pro forma
contribution was €362.0m (2015: €318.9m), reflecting a maintained margin at 55%.
In 2016, marketing spend as a proportion of Sports Labels NGR was c17%, this is
well below our peers where spend is typically 25-30% of NGR. It was a deliberate
strategy in 2016 to curtail marketing spend in the acquired businesses that
achieved either low returns on investment or returns that could not be accurately
measured. Therefore, to deliver strong growth on relatively low marketing spend is
both pleasing and a recognition of the strength of the brands we own. The current
year will see marketing spend increase to more normalised levels, 23-25% of NGR,
with the focus being on the larger core geographic markets.
Revenue from mobile grew strongly in 2016, and now represents 50% of divisional
gross gaming revenue against 34% in 2015. This is still below many of our peers
and represents an area of real opportunity for the Group.
In addition to increased marketing investment, 2017 will see us continue to expand
the product offering as well as further improvements to the overall customer
experience. CRM is key to generating positive returns from marketing and we have
made a number of key senior appointments in this area.