Entain's Brazilian online betting revenue fell 36 per cent in the third quarter as the company pulled back on promotional activity ahead of an immediate gambling ban that began in September. Total net gaming revenue rose 2 per cent, supported by UK and Ireland, according to Entain's trading update. JPMorgan has lowered its share price target for the FTSE 250 business to £9.65 from £10.50 while keeping an overweight rating, pointing to the risk of a complete loss in Brazil.
Brazil ban prompts marketing pullback
Entain reported that international net gaming revenue fell 4 per cent, with the Brazilian market accounting for most of that decline. The operator had reduced marketing and player engagement before the country imposed an immediate online gambling prohibition in September. Elsewhere, Australia delivered 1 per cent online growth, and New Zealand, Spain and Canada each posted double-digit increases. Italy declined 6 per cent because customer-friendly football results cut into sports margins.
UK and Ireland offset international weakness
Group online net gaming revenue rose 3 per cent, or 5 per cent if Brazil is stripped out. The UK and Ireland division recorded an 8 per cent increase in net gaming revenue: online revenue grew 14 per cent, gaming rose 17 per cent, sports revenue edged up 3 per cent and online volumes were 15 per cent higher. Overall gaming revenue was 8 per cent higher. This strengthened performance allowed the company to keep its full-year forecast unchanged.
Full-year guidance remains unchanged
Entain kept its projection that 2026 online net gaming revenue will increase by 4 to 6 per cent at constant currencies. Excluding Brazil, growth is expected to be at the top end of the 5 to 7 per cent range. Underlying earnings before interest, tax, depreciation and amortisation are expected to land near the lower end of £910 million to £960 million, with the online margin near the lower end of 21 to 22 per cent. BetMGM also maintained its annual net revenue projection of US$2.9 billion to US$3.1 billion and adjusted EBITDA guidance of US$300 million to US$350 million, both likely to come in towards the lower ends.
JPMorgan cuts target but stays overweight
According to JPMorgan's analysis reported by SBC News, the bank trimmed its target to £9.65 from £10.50, with a possible wipeout in Brazil contributing to the reduction. The bank repeated an overweight rating and called the share price decline "unjustified 45% share price decline this year despite improving fundamentals". With the shares around £4.31, the revised target still implies an increase of more than 120 per cent, JPMorgan said. The broker also stated that a lower target still left scope for significant upside as operational momentum improves and deleveraging becomes more visible.
UK tax risk and balance sheet support
JPMorgan believes Entain can manage if Machine Games Duty rises in the UK Autumn Budget. The duty is rumoured to be doubled to 40 per cent, potentially raising more than £300 million, according to the report. Chief executive Stella David warned that a doubling would force Entain to be part of 1,500 sector-wide shop closures, as calculated by EY. She also urged the UK Government to avoid further gambling tax increases, saying higher taxes could threaten betting shops, jobs and livelihoods. Entain's balance sheet may strengthen from the sale of Entain CEE to EMMA Capital at £1.9 billion, helping to reduce corporate debt of £3.6 billion.
