eGaming
This year we have successfully delivered 20% net gaming revenue growth through our enhanced customer acquisition investment initiatives.
John P O'ReillyManaging Director,
Remote Betting and Gaming
Industry fact file
With the growth of the internet, and in particular home internet access, the opportunities in the online betting space are vast.
In the UK it is estimated that online betting and gaming currently engages circa 9% of the adult population, with 4% betting at least once a month. In the UK there is scope to reach a greater audience and in Europe, regulation permitting, the potential is even higher for Ladbrokes.
According to recent analysis by H2 Gambling Capital it is estimated that between 2007 and 2012 the global gross gambling yield will increase at the following compounded annual growth rates:
| Sportsbook | 12.7% |
| Casino | 17.6% |
| Poker | 10.2% |
| Bingo | 18.7% |
Home internet users (m)
Source: H2 Gambling Capital.
eGaming continues to grow in line with our expectations with net revenue increasing by 20.0% to £172.2 million, unique active players up 20.8% to 726,000 and new customer sign-ups growing by 21.5% in the year.
The new Sportsbook was launched in the second half of the year, together with significant additional live streaming of events to our UK, Irish and Nordic customers. Sportsbook net revenue rose by 18.2% to £61.7 million with a gross win margin of 7.8%, 0.6 percentage points ahead of last year. Supported by our additional live streaming, betting-in-play continues to be a key growth area for the Sportsbook business with amounts staked up more than 37% compared to 2007. Sportsbook active customers have grown 15.2% to 485,000 with the yield per unique active player up 2.4% to £127. Our Polish language and currency site was launched in December 2008, with further new languages to be launched during 2009.
On the back of successful television advertising campaigns, Casino net revenue increased 23.2% to £53.1 million with active customers growing by 63.8% to 172,000. As anticipated, the yield per unique active player fell to £308 (2007: £411) due to the flow of new players. The roll-out of high quality slot content, both on the download and flash platforms, continued to support the development of the Casino business. Particular highlights in the second half of the year included the launch of "Tomb Raider Secret of the Sword" and the unique "My Slot" where Ladbrokes' customers can use their chosen image and sound files to build their own slot games.
Poker net revenue fell 6.5% to £29.0 million with the competitive environment continuing to affect both player numbers and yield. Active customers fell by 3.3% to 146,000 and yield per unique active player fell 3.4% to £198, though as poker is currently played in US dollars, this was helped by the US dollar strengthening over the period. Following our announcement at the half year we have now merged our player liquidity into the Microgaming network.
Supported by our latest "Go Bingo!" TV advertising campaign in the UK, we saw good growth in Bingo with overall Games net revenue of £28.4 million, a 65.1% increase compared to 2007, active customers up 38.5% to 205,000 and yield improving 19.8% to £139. In the second half of the year, significant product developments in Bingo included new mini games, an enhanced lobby and website as well as linked jackpots and "Laddies Lucky Loft" (a room exclusive to Ladbrokes that rewards players who come within one number of winning the full house prize). In addition, within Games we launched a "Who Wants to be a Millionaire?" quiz and scratchcard, Virtual Football and a Nordic specific scratchcard.
Operating costs of £107.7 million increased by £27.1 million (33.6%), with net revenue growth driving levy and software costs, increased staff costs to support business expansion and, most significantly, increased investment in player acquisition. Advertising and promotional costs were up £15.9 million to 20.9% of net revenue, with new customer sign ups growing 21.5% to 373,000 and adjusted customer acquisition costs of £101 (2007: £86).
Operating profit of £55.1 million was in line with our expectations, with the conversion rate of 32.0% reflecting the increased pace of customer acquisition.
| Year ended 31 December 2008 £m |
Year ended 31 December 2007 £m |
Year on year change % |
|
|---|---|---|---|
| Net revenue | 172.2 | 143.5 | 20.0 |
| - Sportsbook | 61.7 | 52.2 | 18.2 |
| - Casino | 53.1 | 43.1 | 23.2 |
| - Poker | 29.0 | 31.0 | (6.5) |
| - Games | 28.4 | 17.2 | 65.1 |
| Profit from operations* | 55.1 | 55.0 | 0.2 |
*Before non-trading items.
Ladbrokes PLC 2009