Profits are falling for online bookmakers

Profits for Australia’s biggest online bookmakers are plunging as higher taxes and big marketing spends combine with softening consumer spending to hit their bottom lines.

Financial accounts for the foreign owners of the popular Sportsbet, Ladbrokes and Neds brands show the cost of doing business for bookies in Australia has increased dramatically in just two years.

The accounts, recently lodged with the corporate regulator, show Entain Group, the owners of Ladbrokes and Neds, sliding to a statutory loss of almost $40m in the year to December 2023 after a $106m expense for winning the right to run the TAB in New Zealand was included.

While that loss was due to upfront costs in New Zealand, Entain’s Australian result was still down from the previous year amid a general softening in market conditions.

Entain’s net gaming revenue in Australia, the amount it won from its customers, fell from $831m in 2022 to $763m. It had net gaming revenue of $168m in New Zealand.

Meanwhile, Sportsbet parent Paddy Power Australia made a net profit of $186m in the same period, down 41 per cent from $316m in the previous 12 months. Sportsbet’s Australian revenue fell from $2.25bn in 2022 to $2.18bn.

Sportsbet’s net profit has now almost halved from the $369m result it recorded two years ago in the full 2021 financial year as tax increases and falling revenue bite.

Its global parent company Flutter Entertainment has forecast its Australian earnings to decline further in 2024.