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Betfred generated a 26% year-on-year revenue increase to £908m in the 12 months ending 1 October 2023.

The operator’s EBITDA also saw substantial growth, rising by 72% year-on-year to £117m.

A significant contributor to Betfred’s growth was its acquisition of a 51% stake in Lottostar, a leading South African online betting business.

The acquisition, valued at £184m, contributed £134m in revenue and £42m in net profit during the period.

Betfred had already established a presence in South Africa with 53 shops and an existing online business following previous acquisitions of Betting World and Sepels Sportsbet, which generated £2m in revenue in 2023.

Meanwhile in the UK, Betfred’s land-based gambling revenue increased by 3% year-on-year to £577m.

This growth was primarily driven by gaming machines and strong performance in the horse racing segment, which delivered an 8% revenue increase.

Betfred’s land-based revenue outside the UK grew 13% to £17m.

The group’s online gambling division showed substantial year-on-year growth, increasing by 100% to £331m, largely due to the Lottostar acquisition.

Underlying growth in the online sector was also strong, rising by 19% to £197m.

However, unlike in financial year 2022, Betfred reported an overall loss of nearly £72m for the year, mainly due to exceptional costs linked to its US venture.

Beating major operators

Commenting on Betfred’s performance, Regulus Partners analyst Paul Leyland highlighted the company’s competitive position in the UK market, noting its strong revenue per shop compared to other major operators.

“Betfred now generates more revenue from GB betting shops than Evoke’s William Hill (£535m) and is of comparable size in terms of shop estate to both William Hill and Ladbrokes (the brand, ex Coral).

“Betfred also now has the strongest revenue per shop of any major operator other than Flutter (Paddy Power),” Leyland said.

He added that while the future of betting shops remains challenging, privately-owned Betfred “is likely to continue to push most of the pain onto listed competitors.”

Positioned for growth

Leyland believes that Betfred is now “strongly established as a tier two operator and may see significant further growth depending upon platform and product execution.”

However, he also pointed out that the firm has been “less successful” in the US and was the subject of £46m in write-offs and write-downs.

Nonetheless, Leyland commended the operator for having “transformed itself from a highly traditional UK land-based betting company to a successful omni-channel business in the UK with over 20% of revenue generated from elsewhere, overwhelmingly South Africa.

“The group has used lockdown and regulatory dislocation in the UK land-based betting sector, combined with a lack of land-based focus from major competitors, to deliver growth as well as resilience in its core brand and cash flow base.  

“UK land-based cash flow has also been used to make big bets on proprietary technology capability, South Africa, and the US. So far, only one of these big bets has failed, but Betfred is in good company for trying.

“Few would have expected Betfred to be in such a strong position in 2024 just five years ago,” Leyland concluded.

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