LottoStar was purchased in 2022 for £184m and contributed up to £134m of revenue and £41m of net profit during the 2023 financial year.
Topline success
The UK-headquartered operator also noted its retail business grew 3.5% during the period to £577m, its annual returns filed at Companies House show. EBITDA before exceptional charges was up a significant amount to £117m, from £67.8m in the previous period.
Overall turnover came in at £908m, an increase of 26% year-on-year.
A Regulus Partners note praised the firm for transforming itself from “a highly traditional UK landbased betting company to a successful omnichannel business in the UK, with over 20% of revenue generated from elsewhere, overwhelmingly South Africa”.
“UK landbased cash flow has also been used to make big bets on proprietary technology capability, South Africa and the US,” the Regulus note said.
US and retail charges hit hard
Although both revenue and EBITDA have increased, the filing highlighted a significant loss of £71.7m in 2023 driven in part by various impairments in the US business, including a precautionary £40m provision “relating to overseas businesses which have not been as profitable as expected and the future profitability is uncertain,” the first said.
The operator has hinted at struggles for Betfred’s US business, noting: “Unsurprisingly the USA has been less successful” and was the subject of £60m of charges, listed under exceptional items.
“So far, only one of [Betfred’s] big bets has failed, but Betfred is in good company for trying,” Regulus Partners wrote.
An additional lease provision of £11m was reported, “in relation to loss-making outlets within the group shop portfolio”.
Four new US states were launched during the year, although its Maryland operations were shuttered in June this year as the brand has struggled to gain traction.
In September 2023, Betfred ushered in a new US CEO in ex-Hard Rock Digital SVP Kresimir Spajic. Of the appointment, Betfred founder Fred Done said: “It’s an important and exciting time for our US business and Kresimir is the ideal person to further push and expand the Betfred brand in America.”
Exceptional charges for the year came to a total of £60.9m. It also spent £337,000 on closing a foreign subsidiary during the period.
Platform development costs equalled £65.4m, compared to 2022 when the group spent £47.9m. Overall net assets decreased from £305m to £164m.
No dividend for 2023
The board of directors recommended against paying shareholders a final dividend for 2023. There was also no interim dividend paid during the reported timeframe, while in the equivalent 2022 period, the dividend came to £50.8m.
The firm closed 77 betting shops during the period, as it noted loss making venues are frequently reviewed and closed where the business feels necessary.
The report noted that Betfred entered into an agreement for a loan facility of £4.3m with Palsar Capital Holdings. The report said Done, or a close family member, had a beneficial interest in the company.
It also changed its name in 2023, from Betfred Group to Betfred Group Holdings to “better align its branding” the company report said.