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Bet365 finally nail Australian market

2017-08-08 11:36:39

In the UK and Ireland, Bet365's revenues have long been in the green. In 2016, Bet365 posted a whopping $1.65 billion in revenue over 12 months - a massive increase on the year before. However, not all markets perform as strongly as its European core.

Aussie market launched five years ago

In 2012, Bet365 launched its brands to the Australian consumer. Given Australians' fondness of pokies and sports, one would have assumed an easy game. While Bet365 didn't perform badly per se, the company - unlike in Europe - had to establish its brand first.

Luckily, the Australian division of Bet365 was able to borrow funds from its parent company. Bet365 Australia still owes its parent company A$133 million, and it is only in light of Monday's news that Bet365 Australia can seriously consider paying back its loan.

Bet365 breaks even for the first time since 2012

On Monday, Bet365 reported to the Australian Securities and Investments Commission. For the first time in five years, Bet365 Australia showed a plus. The pre-tax profit of A$1.2m (US $960k) in the 12 months ending March 26 may be minuscule compared to its parent company, yet the pre-tax profits surpass the company's previous results.

In 2015 and 2014, the net losses of Bet365's Australian branch stood at A$10.9 million and A$41 million, respectively. Senior management concluded that “the company will remain profitable” and directors are “committed to maintaining the present level of operations to support that aim.”

Though competition on the Australian market

UK rival Paddy Power Betfair are Bet365's strongest competition on the Australian market. With Bet365 generating merely a fifth of what the recently merged gambling giant Paddy Power Betfair generated, Bet365 will have to continue to pursue the Australian market ferociously. Otherwise, Bet365 is running the danger of losing out on the huge market that the country poses.

Like all other gambling operators, Bet365 will face challenges in the coming year. The Australian government is introducing stricter regulation on television advertising of gambling. The new ban will only apply to live sports events and the advertising of gambling during these events. Given the importance of such advertising, the ban is likely to have negative effects on all operators in the Aussie market.

Furthermore, the Australian government has introduced state-level online sports betting point-of-consumption taxes (POCT). This tax amounts to 15% of all wagering revenue and kicked in a month ago, on 1 July.

The future looks bright

Bet365, however, should not be badly affected by the new legislation. Unlike other companies, struggling to find their foot in foreign markets, Bet365 kept its marketing costs at reasonable A$24 million. Its customer numbers are steadily increasing, showing a trend of organic growth within Bet365's Australian operations.

If Bet365 can increase its already rather big share of the online gambling market in Australia - namely, 17% - profits will soar in the coming years.

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