Entain Plc

Good morning and thank you for joining us today for our interim results presentation. I'll start with a brief overview touching on the headlines for the half year. Rob will take you through the numbers and guidance and I'll then provide a broader business update focusing on our key objectives to drive shareholder value. However, Before we get to our agenda, let me introduce our chairman, Barry Gitson, to say a few words regarding our progress in resolving the HMRC investigation into legacy issues dating back to pre-2017 that we also announced this morning. So, good morning, Barry. Over to you.

Thank you, Jette. Good morning, and I too would like to welcome you to our half one results presentation. and to reflect on a positive set of results which show clear delivery against our strategic growth ambitions. Alongside our results today, we've provided an update in respect of the HMRC investigation into our former Turkish-facing online betting and gaming business, which we disposed of back in 2017. Whilst negotiations with the CPS remain ongoing, we believe that they have progressed to the point where we are likely to be able to agree a resolution to the investigation, subject to court approval. We have therefore announced today that we have made a provision of £585 million against a potential settlement, which will be payable over a four-year period. We are very pleased indeed to be making good progress towards drawing a line under this historical issue. which relates to a business that was sold by a former management team of the group nearly six years ago. The Entain of today bears no resemblance to the GVC of yesterday, which had a different management team, a different strategy, and to be blunt, different standards. Over the last few years, we've taken very deliberate steps to drive a complete transformation to become a best-in-class, responsible operator with outstanding corporate governance. Every aspect of our business model, strategy and culture has been reviewed, analysed and changed. We've also completely overhauled the board and the leadership team. And I'm now very confident in saying that the culture of the two businesses is worlds apart and Entain today is a very different business I'm pleased that the CPS has recognised our extensive cooperation, which I think is a reflection of who we are today, rather than the culture of old. We now have a very straightforward approach when choosing where in the world we operate. All of our revenue is from regulated or regulating markets, and we're proud to be the only global operator that can make that 100% claim. If a market isn't showing signs of having a clear road to regulation, then we leave. It's as simple as that. More broadly, our philosophy is that the most sustainable business in our industry will be the most successful business in our industry. That drives everything from our long-term growth plans to the way we aim to treat all of our stakeholders, from customers, shareholders, regulators, business partners, and of course our colleagues and the way we reward them. None of this is to say that we're complacent. There's still a huge amount more for us to do, not least in capturing the substantial growth opportunities that we see in front of us. These are exciting times for our industry as the worlds of entertainment, media and gaming converge. So in many ways, we're only just getting started. We are pleased that we're making good progress to move on from this matter and focus entirely on Entain's future, rather than concerning ourselves with legacy issues. I'm sure you can appreciate that there's a limit to what more I can say on the details of the process itself. But I will stay on the line, and if there are any questions on this issue at the end of the presentation, I will try and help. And with that, I'll hand back to Jetta.

Thank you. We made a strong start to the year, continuing to deliver strategically, operationally, and sustainably, which I am pleased to report is evidenced in our financial performance. Our group MGR, including our share of BetMGM, was up 16%. While online NGR on a performer basis was up 1% versus last year, if we exclude the known regulatory headwinds in the UK and Germany, performer online NGR was up 6%. This is important as it shows that our core underlying business remains healthy and the strength of our customer proposition continues to deliver robust top-line growth. Within online, we saw strong performance, in particular in Italy, by Supersport in Croatia, Enlabs in the Baltics, Crystalbed in Georgia, and of course by Ben & Jim in the US. We are pleased to see that regulation has now been passed in Brazil that should allow for licensed operators to commence early next year, subject to a pathway to be proposed by the legislators. And while Latin America has experienced intense competition ahead of regulation, we are now starting to see the benefits of improvements we have made there, including our 365 scores acquisition, supporting a good performance as we start the second half. So we are well-placed to drive further growth in a newly regulated market. Retail continues to perform impressively as our market-winning strategies continue to drive share gains. Reported EBITDA for the group for the first half came in at 499 million pounds, up 6% year-on-year, with online EBITDA up 8%. A good performance and in line with full-year expectation of 1 billion to 1.05 billion pounds for total group EBITDA. What I think best underlines our operational performance is the continued strong growth in online actives, again reaching a new record high, up 23% versus last year. This is the clearest metric, which demonstrates our sustainable growth, and I'll talk more about that later. And as you saw, BetMGM also achieved profitability for the second quarter and is on track for sustainable profitability from the second half onwards, an important milestone. Finally, we have expanded our presence in Central Eastern Europe with the acquisition of STS, as well as making some exciting acquisitions to enhance customer engagement and accelerate our capabilities, particularly for BetMGM. With that, over to you, Rob.

Thank you, Jetta, and good morning, everyone. As always, I will run through the financial highlights of today's interim results. Given the transactions executed so far this year, I will also outline our M&A track record, as well as touch briefly on the strategic rationale and expected value accretion for our most recent deals. I'll then wrap up with commentary on our FY23 guidance. As I talk through revenue numbers, growth will be in constant currency and pro forma numbers adjust for Super Sport and Bet City, which both had a material positive impact on the half. As always, we have provided more detailed financials in the appendix. So kicking off with key financials for the first half, the group delivered another strong performance. Total group NGR, including our 50% share of BetMGM, was up 16% year-on-year, and ex-US, NGR was up 11% to £2.4 billion. On a pro forma basis, ex-US, NGR was plus 3%. Breaking that down into our key divisions, online NGR was up 12% year-on-year, or plus 1% on a pro forma basis, which was broadly in line with expectations as we faced into known regulatory headwinds. I'll talk through the key moving parts of this online performance in a couple of slides time, but I wanted to reinforce that our online growth continues to be high quality, with record NGR driven by record actives and our broadening recreational payer base. Online actives were up 23%, and while that includes acquisitions, actives were still up 15% on an organic basis. Retail continues to perform strongly, with NGR up 11%, or 8% on a pro forma basis. Moving along the top line of this slide, as Yetta has mentioned, Group EBITDA came out at £499 million for the half, up 6% versus last year, with both online and retail ahead. We reported BetMGM's H1 results a couple of weeks ago with NGR of $944 million. This was up 55% year-on-year, and we are firmly on track for FY23 NGR to be at the upper end of the $1.8 to $2 billion guided range. In Q2, BetMGM also achieved its first EBITDA positive quarter, which is an important affirmation of our business model, delivering profitability through cohort build and maturity. BetMGM remains on track to be EBITDA positive in the second half of the year, and based on current state opening expectations, be self-sustaining thereafter. Our adjusted EPS was 21.6 pence. This is down year on year, principally due to higher interest costs. Excluding rising interest rates, EPS would have been broadly flat year on year, helped by the reduced losses in BetMGM. Underlying cash flow generated was 319 million pounds. Net debt at the half year is of course just a snapshot and it is flattered by cash received from the equity placing whilst the related acquisitions are still to complete in H2. If we adjust out the equity raise and pro forma EBITDA only for completed acquisitions, then leverage would have been 3.1 times at the half year. And finally to dividends. In line with our progressive dividend policy, the Board have confirmed the interim dividend per share will increase by 5% to 8.9 pence. This would give rise to a total full-year dividend for the financial year 2023 of £113 million, including the increase in shares from the equity placings. Now turning to our EBITDA bridge, which walks through the moving parts of our 6% EBITDA growth for the group. You'll see here we have separated out the impact of around £45 million for the known regulatory headwinds that we faced during the half. Excluding regulation, online EBITDA was up £76 million, of which £32 million pro forma growth and the contribution from M&A was 44 million. This 8% pro forma EBITDA growth excluding regulation reflects the underlying performance in online in the half. Retail performed well delivering 151 million pounds of EBITDA in H1. The year-on-year increase of 10 million pounds reflects strength in our organic retail business plus the contribution of £5 million. Remember a watch out here that I flagged before. Please don't take H1 retail EBITDA and double it to get to the full year. H1 performance includes the usual half-on-half seasonality as well as a stronger-than-normal wind margin this year and an Italy outperformance which we don't expect to repeat in H2. Lastly on the bridge, corporate costs were up £12 million reflecting the group's growing scale and ongoing RG and ESG-related investment. I'll now give a little more colour on the various parts of our online performance during H1. Including our 50% of BetMGM's digital revenues, total online NGR grew by 17%. Excluding the US, it was 12% in H1. And on a pro forma basis, growth was 1%, reflecting known regulatory headwinds in the UK and Germany. In the UK, as we exited the half, we started to annualize the more significant affordability measures, and therefore the drag on growth will start to recede. Whilst in Germany, the lack of effective regulatory oversights means the market remains increasingly challenging for compliant licensed operators like us. particularly following implementation of stricter deposit limits. So adjusting for these headwinds, underlying pro forma NGR growth was 6%, which together with our active growth of 15% pro forma, demonstrates the underlying health of our customer base, our business and our growth. I set out here our key geographies and their performance, which hopefully provides you with greater colour as to the various moving parts in our blended online number. UK NGR was down 2% year-on-year. However, adjusting for affordability measures, this performance is approximately 7% growth. What reinforces that 7% growth is our underlying actors were up 22% year-on-year, demonstrating the effectiveness of our broader engagement strategies, driving a more recreational customer base. Put simply, more and more customers in the UK continue to play with us. In Germany, the uneven playing field on regulatory limits has also driven NGR declines with spend per head down materially, as higher-value customers continue to move to non-compliant operators, but actives remain relatively flat. Our performance in Australia is as expected, with H1NGR of minus 2% against tough 2022 comparatives. TAM New Zealand now adds an exciting new market to our Australian business, and we look forward to growing across the region in the years ahead. Italy is growing well in a strong market with NGR up 12% during the half. We continue to see the benefits of our omnichannel offering and online actives were up 17% in the half. In Brazil, the H1 performance reflects the fiercely competitive markets ahead of regulation. NGR was lower than expected, down 14% year on year. However, build our sustainable player base of recreational customers ahead of a licensed regime. And the acquisition of 365 scores is supporting an expected return to growth in the second half of the year. Entane CE continues to perform very strongly, with Supersport maintaining its market lead in Croatia, with NGR up 31% on a pro forma basis for H1. Soon, STS will be a powerful addition to Entain's CEE, delivering further strong growth in the region. BetCity in the Netherlands is performing in line with our expectations. NGR is down year on year, reflecting re-entry of the market leader, but it's still holding on to market share in the high teens. Finally, Enlabs and Crystalbet in Georgia both continue to grow high single digits during H1, with our brands performing well and leading in their markets. Now moving on to actives, and you'll have heard from Yetta previously about our impressive actives growth over the past few years, which reflects our deliberate pivot towards a broader, more diversified and recreational customer base. with actives up 20% on a compound basis over the last three years. I now want to spend some time looking at how that actives growth translates into NGR, both historically and more recently. The table looks at correlation between actives and NGR growth for our large UK brands. Over the longer term, and we use a six-year CAGR here, the two metrics are closely linked. Actives grew 11%, and that translated into NGR growth at 8%. However, you can clearly see the dislocation over the past two years, as actives grew 8% a year, but NGR was down 8%. This shows the impact of both a strategic shift to more recreational customers, but also the effect of very significant regulatory changes, particularly around affordability. Importantly, As the effects of that shift anniversary out, we expect to see NGR growth effectively catch up with the underlying growth in actives, as it has done in the past. Supporting this assertion, the chart on the right-hand side of the slide shows the proportion of our UK brands NGR, which comes from recreational and low spend customers, rising from around 60% in early 2020 to over 95% this July. This not only shows the success we've achieved in ensuring the sustainability of our UK business, but also that this shift to a recreational player base is reaching its conclusion now and should therefore have less impact on spend per head going forwards. Therefore, our underlying growth is sustainable and high quality, underpinned by a growing recreational customer base. Moving on to cash flow, and as always, there is a more detailed cash flow in the appendix. Underlying free cash flow remains strong in H1, coming in at £319 million. We continue to invest in our growth strategy, And in the first half, we invested £686 million across both M&A and BetMGM. During the period, we raised £500 million in new debt facilities to support repayments of the £400 million outstanding Ladbrokes bonds. And we raised £600 million in equity to support the acquisition of STS and Angstrom, both of which are expected to complete in the coming month. As a result, net debt at the half year was just under £2.6 billion. But as I said in my introduction, adjusting for the timing of the equity raise, our pro forma leverage on 12 months trailing EBITDA was 3.1 times at the half year. Available cash adjusted for committed acquisition spend in H2 is over £600 million and from which we expect to start payments against the HMRC settlements on a monthly basis later this year, subject to approval by the courts. As ever, we remain disciplined in relation to capital allocation and with strong underlying cash generation, we have a secure and flexible balance sheet to support both the execution of our strategic agenda and delivering returns for shareholders through a progressive dividend whilst also absorbing potential DPA settlement payments. Moving on to M&A, I want to remind people why the transactions we deliver are so compelling from both the financial and strategic point of view. The right-hand side of this slide is a reminder of strategic rationale outlining our notable acquisitions since 2018, which align directly with our M&A strategy. The chart on the left shows the compelling financial rationale. You have heard me say before, on average, we've doubled the value of our acquisitions in just three years of ownership. This graph illustrates the cumulative price paid and the value created, either based on actual year three results or where relevant, based on the latest year three forecasts. Compared to March, it now includes super sports, and BetCity. We've also set out in more detail in the appendix a breakdown of value creation for each deal. Like any portfolio of acquisitions, some outperform others, but in aggregate we see increased value on acquisition of around 1.9 times, which reflects a healthy return on investment on any measure. This multiplier of value on acquisitions is achieved through a combination of being very selective in origination processes, thorough due diligence, being highly disciplined but competitive on price, while also being able to deliver superior EBITDA growth through cost and revenue synergies as we leverage our scale, platform and capabilities. We have an excellent track record of value creation through M&A, and we will continue to be strategic and selective on further opportunities, albeit at a slower pace than the last couple of years. Let me also take this opportunity to remind you on the compelling rationale for our most recent acquisitions. Let's start with TAB New Zealand. TAB New Zealand selected Entain for a 25-year strategic partnership, providing unique and exclusive access to the New Zealand sports betting market. The market is regulated. It has forecasted 15% CAGR growth over the next five years, with further potential boosts from legislation to geo-block the circa 30% of the market, which is currently being lost to offshore operators. TAB New Zealand is well established, but New Zealand wagering per capita is relatively low. We're really excited to combine our expertise and capabilities to reinvigorate the brand and improve the offer to customers. This is a transformational opportunity to unlock the potential of this attractive market. The first 12 to 18 months will be a period of investment, including an expected launch of a complementary digital-only sister brand next year. STS now, and STS is the leading sports betting operation in Poland. and is exactly the reason we created the Entain CEE structure. Building on the acquisition of Supersport, the CEE roll-up strategy with Emma Capital sees us also secure the number one position in Poland, which is a high-growth market in the largest economy in the region. Not included in any of our value accretion calculations was the more medium-term opportunity for the Polish online casino market to liberalize. which would be ideally positioned and add further significant value to our investment. We expect this acquisition to complete this quarter and to be earnings accretive in its first full year of ownership. Shifting to 365 scores, this acquisition is a little different as it aligns with a number of our growth pillars, deepening our presence, broadening our offer and expanding recreational audiences. 365 Scores is a leading live scores app globally with over 18 million monthly active users. This deal expands our audience and customer reach, it adds content to our offer, and it supports our growth, in particular in Brazil. Importantly, it also gives us proprietary data, enabling an improved understanding of user preferences, behaviors, and trends to enhance our existing offerings and improve 365 Scores' own product development, customer acquisition and unit economics. 365 Scores is profitable on a standalone basis while also being synergistic with our Entain business. Our expected EBITDA for 2025 implies a multiple of less than five times purchase price before any synergies. And with 365 scores bringing unique capabilities to our portfolio, it is probably one of our most attractive acquisitions to date. And most recently, Angstrom Sports, which you'll hear more on from Jetta shortly. So just one quick point from me. Angstrom will make us the only U.S. operator with an end-to-end in-house solution for U.S. sports betting. It will enhance our customer experience and increase our win margin, thereby improving unit economics significantly. and ultimately profitability in the largest regulated market in the world. And finally, our usual slide on guidance. Material changes to March are highlighted in bold pink, and I will talk to the changes now, rather than running through everything on the slide. As announced in this morning's statement, we expect 2023 Group E bidder to be in the range of £1 billion to £1.5 billion. This is in line with consensus, which now includes STS and Angstrom acquisitions. For online, there is no change to our low to mid pro forma revenue guidance. However, when reflecting all acquisitions announced, so including STS and Angstrom, we now expect reported online NGR to grow by mid-teens percent. This, of course, plays through to operating cost guidance moving to a high-teens year-on-year increase. on a reported basis. There's no change to our 26% EBITDA margin for the full year. You'll note H1's margin is slightly lower, reflecting our usual seasonality on marketing spend, which is weighted more towards the first half. For retail, we previously flagged the exceptional inflationary cost headwinds, in particular from wages and energy in the UK. which we are currently on track to largely offset through better than expected organic performance and acquisitions. A new addition to this slide is how we will be accounting for TAB New Zealand. The business will be consolidated as with prior acquisitions, but future profit share payments will be treated as contingent consideration and so will not be deducted from EBITDA. The future value of payments is recorded as a liability, with an equivalent intangible asset, which will therefore amortize over the 25 years of the agreement. To help you update your models, please refer to more information in the appendix. The various cash flow items for M&A will be in line with expectations. You'll notice slight increase in capex, reflecting both M&A and ongoing investment in the business. Expected interest costs on debt are increasing to approximately £225 million, reflecting higher market rates for floating debt and recent refinancings. I covered dividends already, and you heard separately from Barry this morning regarding the new accounting provision for the expected DPA settlement. So in summary from me, we are delivering organically and are driving incremental value through our newly acquired businesses, as well as our investment in BetMGM. Our balance sheet is strong and secure, supporting our ongoing delivery, investment in the business, as well as returns for shareholders. With that, I'll hand back to Jetta.

Thank you, Rob. As I mentioned earlier, I'll spend a few minutes providing an update on how we are positioning Entain to deliver long-term growth and value for our shareholders. Firstly, how our operational focus delivers long-term sustainable organic growth, including how we are improving our capabilities and processes to ensure we remain at the forefront of our industry. This will deliver better operational leverage, in turn driving higher margins, cash flow generation, and shareholder value creation. Secondly, how we are well positioned to capitalize on the huge opportunity in the U.S., particularly giving the operational and product improvements we are delivering, as well as how Angstrom will accelerate this. Finally, I'll also touch on capital allocation. After a busy period of strategic M&A, which has seen us take advantage of attractive and value-creating opportunities to drive diversification and consolidation, we expect a slower pace of activity ahead. While we always look for strategic M&A opportunities, we remain disciplined and selective. We are focusing on investing in our business to integrate operations, drive operational performance, and top-line organic growth. We have a clear operational focus on organic growth and ensuring that this organic growth is sustainable over the longer term. Key to that is broadening our appeal to a wider, more recreational customer base through broader customer acquisition, superior engagement, and higher retention. As you know, We are leaders in terms of data and analytics. With over 180 million customer profiles and over 400 terabytes of data, we not only acquire customers more efficiently, but we are able to identify their preferences, giving them a more personalized experience and driving increased engagement and retention. Our in-house game production is a cornerstone for our organic growth as we provide customers with wide variety of choice and games exclusive to us. Using our data analytics, we also focus our game development where the highest ROI can be achieved. We also use this analysis when working with third-party suppliers to secure exclusivity of the best products and offers. In this context, the acquisition of Armstrong brings another capability in-house. In this case, simulation, risk analysis, and pricing around more complex products such as parlays and in-play products, which are more recreational customer type products. We also continue to deepen our engagement by giving customers unique experiences that drive loyalty. For example, the chance to part-own a racehorse through the Coal Racing Club, which now has 123,000 members. A similar club has now been launched by Ladbrokes in Australia with both horses and greyhounds, and we are receiving great feedback so far. Another great example is our recently launched Ladbrokes Live initiative, which provides access to concert tickets, boxes at the O2, and other experiences around music events. Both initiatives drive engagement and loyalty with a broader customer audience, as well as firmly reinforcing the entertainment nature of our brands and who we are as a business. Our addition of 365 Scores is a recent significant strategic move into driving broader customer engagement. 365 Scores is a world-leading sports app, not just stats and scores app, but sports app. It has over 18 million subscribers, the number one sports app in Brazil, number three across LATAM, and top five globally. These initiatives, among other, support ongoing growth in actives, particularly for more recreational customers. As Rob showed, almost 95% of our customers in the UK now are recreational. As we transition our customer base to be more and more recreational, spend per head reflects that, and hence NGR growth will lag slightly during transition. However, as we work through this transition, top-line growth will increasingly align with active growth. As we look ahead, our markets, excluding the U.S., are set to grow around 6% to 8% compound over the next five years. Now, that is obviously a mix with larger markets like the U.K. set to grow at middle single digits and newer markets such as LATAM as mid to high teens growth. Our acquisition of two of the leading players in Central Eastern Europe have unlocked access to a highly attractive US$8.6 billion market with a compound growth rate of over 10% over the next few years. We're also delighted to have won the agreement to partner exclusively with TAP New Zealand for the next 25 years, where the overall New Zealand market totals 600 million New Zealand dollars and is expected to grow 35% over the next five years. And of course, the U.S. is expected to continue to grow at double-digit rates for many years to come. This strong growth across all our markets is driven by a number of factors, including offline to online migration, continued online market growth, increasing engagement across a broader customer base, as well as steady convergence of gaming and entertainment. So hopefully it is clear that through our strategy and the capabilities of our platform, we can grow our top line across our markets by high single-digit to double-digit compound over the years ahead. Sustainability of earnings also comes through responsibility, which in turn feeds into higher quality of earnings. We made further progress in rolling ARP out into more of our markets. And in the UK, we've now seen over 7.5 million interactions so far with impressive statistics and better player protection. For example, 41% of medium to high-risk customers moved to low or no risk following an intervention, with 95% remaining at de-escalated level, and over 90% of high-risk customers set gambling controls following an intervention. Through ARK, we provide a safe and enjoyable environment for our customers, as well as a healthier and more sustainable and growing revenue base. An important part of our approach to regulation is working closely with regulators. We must understand their focus whilst also helping them understand the benefits of well-structured, supervised, regulated markets. Our approach of being the only global operator exclusively in regulated and regulating markets, implementing ARK and driving a more recreational customer base are not just the right things to do as a responsible operator, but they also diversify our revenues as well as mitigate the impacts of regulatory changes such as affordability and player protection measures that we see increasingly being implemented across our markets. Having a more sustainable business ensures higher quality earnings, which is good for all our stakeholders, from protecting customers to shareholder value. We have a number of top-line drivers, both market drivers as well as internal drivers in our control. We are also focusing on how, thanks to our operating model and scale, we can drive operational leverage that supports growth in profitability and in cash generation. We are leaning into all of the levers across the Entain platform to drive margin expansion going forward. For example, platform integration, agile structures, improved processes, and ways of working. We continue to invest in our technology to ensure it remains state-of-the-art, fit and ready for the exciting future for our business and our customers. We have over 4,000 technologists around the world working on our technology, and our new quant teams will further enhance our capabilities. To give you an example of how we can unlock further benefits is that over time, we'll integrate more of our businesses onto our platform. And as we do so, we can unlock mid-single-digit percentage of margin improvements on the NGR related to each business. Following years of rapid growth and M&A, we've reviewed our structures and processes end-to-end. By adjusting our operating model, we'll be able to work faster, make our business stronger, and unlock efficiencies both operationally and financially. Plus, we have further opportunity for greater operational leverage as we continue to integrate our operations across our acquired businesses, as just mentioned. This structure sees us operate around regions. with the operating model defined by businesses that are currently on the Intane tech stack and those that are yet to be but use their own in-house advanced technology. As an example, our largest segment on Intane technology includes the UK, Ireland, Western Europe and Canada. These markets benefit from more efficient centralized operational capabilities, such as marketing, data and analytics, amongst other areas, enabling us to maximize ROI across our markets. Another example is Central Eastern Europe. Through Intane CE, we are pursuing a roll-up strategy in the region that will benefit from independent in-house technology. And as a joint venture, it has its own operational capabilities focused on the CEE markets and will drive operational efficiencies into the region. We have very clear priorities for our tech and operations, and they currently prioritize our development and delivery in the U.S. alongside other specific capabilities for organic growth in other markets. As we have mentioned before, where acquired businesses have their own advanced in-house technology, we plan to migrate these onto our platform over time in a non-disruptive manner. This operating model enables us to leverage core platform capabilities while strengthening our local go-to-market expertise. The improvements we are making to our capabilities, the efficiencies from an improved operational structure and our ongoing improvements in our technology that we can leverage across more of our businesses over time, provide us with a number of internal improvements opportunities, which will enable us to improve our velocity in technology and development and support margin expansion. The US is a top focused market. and a key operational priority for us. As you heard from BetMGM two weeks ago, we remain on target in the U.S. We are firmly established as a top free operator with an 18% share in a 37 billion U.S. dollar potential total addressable market that increasingly looks like it will be dominated by free top players. We remain firm leaders in iGaming, with 27% market share in the markets where we operate. Across the U.S., we have one of the broadest market accesses, reaching approximately 48% of the adult population. In the first half of the year, BetMGM delivered revenues of 944 million U.S. dollars. up 55% year-on-year, as well as a significant milestone of profitability in the second quarter. We are firmly on track to be at the upper end of our previously guided full year-end yard target of 1.8 to 2.0 billion U.S. dollar and to be EBITDA positive in the second half and financially self-sustaining thereafter based on current state rollouts. Going forward, we see a lot of upside as BetMGM will deliver superior profitability thanks to the structural cost advantages from the parent relationships. Compared to other operators, BetMGM enjoys customer acquisition and retention cost advantages through MGM Resorts International brand and entained technology and analytics capabilities. Furthermore, BetMGM benefits from lower revenue share and royalties thanks to MGM Resorts' international market access and Intane in-house games library and studios. Last and probably the most material contribution is that BetMGM is powered by the Intane platform, enabling superior delivery coupled with material software cost savings. Our cohort of retained customers drives positive contribution in excess of the acquisition cost of new customers and natural benefit of being a scaled operator and a key step in delivering sustainable profitability. In fact, all cohorts from 2022 and earlier are contribution positive. Our bonus optimization program is delivering a cleaner revenue base with much stronger GGR to NGR conversion metrics. Also, we've seen sports margin improve 300 basis points year on year and improve quality of customer spend with revenue per player up 65% for those acquired in 2021. With more efficient revenue from retained customers, we'll be able to focus more of our spend on acquisitions rather than retention to drive market share. This half, we've had two important product focus areas, single account, single wallet, and acceleration of online sports betting products such as parlay and in-game parlay products. We're making good progress on single account, single wallet being rolled out. Having rolled out six further states last week, we now have single account, single wallet in 14 states, and we expect to have all states live, excluding Nevada and Kentucky, in time for the NFL season. This means that we can unlock the omni-channel opportunity, in particular for customers traveling intra-states to visit MGM Resorts properties online. an important, significant, and unique customer acquisition funnel for BedMDM. Angstrom will accelerate our delivery of a full in-house capability for parlay products. Let me speak a bit more to our acquisition of Angstrom. This is a highly strategic move in accelerating our U.S. strategy and we are excited to be bringing key capabilities in-house, making us the only operator with full end-to-end capabilities for risk analysis and pricing across all forms of U.S. sports betting products. It also accelerates our ability to offer more tailored and personalized products for customers while optimizing margins through risk management and pricing. We're already working with the team ahead of completing the acquisition to accelerate the rollout of new products in U.S., and we believe it will become a key differentiator for us. With this in-house analytics and pricing, coupled with single account, single wallet, we are ideally positioned to drive BetMGM forward and deliver on our target market share of 20% to 25%. In the U.S., we are building a business with industry-leading and differentiated capabilities, which will enable us to drive market shares by leveraging BetMGM. full in-house capabilities across product offerings, including end-to-end analysis, risk, and pricing capabilities, improved use of data and analytics driving customer engagement and bonusing, omnichannel offering with differentiated personalization, and best-in-class game development capabilities combined with the largest jackpots. We are highly cash-generative, which will only increase as BetMGM delivers sustainable profitability and returns cash. We carefully evaluate the best deployment of capital and continue to remain flexible and disciplined in its allocation with a single-minded goal of creating long-term value for shareholders. Firstly, we ensure that we continue to deliver organic growth through ongoing investment in our platform and customer propositions to drive top-line growth and synergies across the business. We have and will continue to invest to support accelerating growth and profitability in the US. However, we expect capital to flow back from BetMGM as it becomes financially self-sustaining and grows profitably. Over recent years, our industry has seen enormous change through consolidation. We have taken advantage of attractive and value-accretive opportunities to position us as a leading global player, both in terms of new market entry as more markets regulate, but also through opportunities that have deepened our presence to deliver leading positions in our existing markets. Our acquisitions are performing well. we've demonstrated our ability to drive significant value through M&A, on average doubling their value by year three of full ownership, and we are confident that we'll continue to do so. Over the near term, we are focused on deriving value from our acquisitions and delivering organic growth. We'll continue to explore strategic acquisition opportunities, and having had a busy period of M&A, we expect a relatively slower pace going forward. Finally, with regards to capital returns, we are committed to our progressive dividend policies that we announced last year and have increased the interim dividend per share by 5%. As we continue to deliver our strategy, we remain disciplined in optimizing our capital allocation to drive shareholder value. So, to sum up, our growth strategy is focused on two key areas. A priority to deliver sustainable organic growth by focusing on our operations and ongoing development optimization of our platform to ensure we remain the go-to player in our markets whilst delivering operational leverage, margin improvements, and strong cash flows, and a focus on capitalizing on our huge growth opportunity in the U.S. through operational and product improvements. With this strategy and a capital allocation framework, which is aligned with these areas of focus, we are confident that we can deliver sustained value for our shareholders. With that, I would like to open the call for questions.

Thank you. If you would like to register a question, please press star followed by 1 on your telephone keypad and ensure you are unmuted locally. If you would like to withdraw your question, please press star followed by 2. Or if you joined us, please. Our first question today comes from Ed Young from Morgan Stanley. Ed, please go ahead. Your line is open.

Good morning. I've got three questions, if that's okay. The first one is on the performance in online. Q2 saw a deceleration on an underlying basis. I was wondering if you could perhaps comment a little bit on what got tougher quarter on quarter, and perhaps more importantly, looking forward, can you highlight the key timings where you are, lapping issues, or areas you touched on Brazil, in both your commentary, where you're seeing underlying improvement as you sort of close the gap, as you say, between actives and revenue growth, or put another way, close the gap between the adjusted or underlying figures you're presenting and what we might see in the reported numbers.

Good morning, Ed. Should we start by the underlying online and then I can touch upon Russell? Rob, do you want to kick off?

Yeah, let me do that. Good morning, Ed. So basically Q2 was very similar to Q1. Q1 pro forma was plus one. Q2 was plus two rounds to plus one for the half. In terms of how the second half We would expect to be more favourable. Key drivers, you really touched on it, the regulatory impacts that we're seeing, receiving. So in particular, in the UK, as we've talked about previously, we made some pretty significant changes last summer. We're therefore... annualising against those now, although I have cautioned before it's not an immediate movement in the numbers because of the lag effects in things like deposit limits. So we expect that to gradually ease through the second half of the year. Germany, it's a slightly different situation there. On the one hand, we have just lapped the introduction of sports limits from last summer. but we have now implemented cross-operator limits. So there's continued drag, but nonetheless, we would hope that the second half of the year will be less of a decline than the first half of the year. So some regulatory aspects there. I'll leave Brazil to Yetta in a moment. The Netherlands is another area, of course, where we knew that we would see some decline as the market leader re-entered the market last summer. that decline recede over the second half of the year as well. And then there's Brazil. So, Jetta, do you want to touch on Brazil?

Yeah, let me touch on Brazil. So, lots going on in Brazil. As I'm sure you've seen, Lula re-signed the legislation or the bill going in here in July. So, We're waiting for that. It becomes effective immediately, but it needs to be approved by Congress within 120 days. So still very much optimistic in terms of Brazil coming online beginning of next year. Now, what we've done and what you see in the trading numbers is actors continue to grow. However, we reset our marketing approach during H1, really with a focus on improving ROI and also a more sustainable customer base. But that curve should now start to turn in H2, not least with the integration that we are doing with 365 scores, which is going really well, which means that we're able to customize our offering based on the data there. But as you know, Latin America has experienced intense competition, and there's a lot of noise in the market still. But we do expect that the second half of the year the curve should turn for us, and then we are ready for the market going live, hopefully beginning of next year.

Very useful. The second was on the U.S. You're clearly very positive about Angstrom and it looks like single apps, single wallets very much on track for the NFL season. You spoke yesterday about getting back into the 20 to 25 percent market share target range. When you think about bridging that, you know, what are the most important drivers? And perhaps as part of that, you could comment on what's the timeline for Angstrom in terms of completion, integration, and potentially getting in sort of material improvements to the product that you outlined during the presentation?

Yeah, let me talk a little bit about that. So in terms of market share, overall our market share is 18% if you exclude New York where we've taken a deliberate different approach. On iGaming alone, it's 27%, and that will remain stable over the month. So from these 18%, we feel that there's a clear path to hit our 20% to 25% ambition for market share. And a lot of that has to do with improving our U.S. sports products. So you mentioned Angstrom. We're really excited about our integration with Angstrom, which will close later this year. So we've already started working together with Angstrom. We're launching our first products together this week, so new player props. For the NFL season kickoff, we have significantly improved our whole betting journey, and we've also introduced initial single-game parlay plus product. Not with Angstrom, though. And then we're going to launch NFL player and driver props with Angstrom as NFL goes along. But really what we are looking at is us having an in-house full SGP experience by Super Bowl March Madness next year, fully launched. But we're not waiting for that. We'll continue to launch both new markets, new products during the NFL season, but the full experience should be with Super Bowl March Madness. And why is this so important? Well, Angstrom's approach to forecasting and pricing is basically going to allow us to produce a broader and more exciting product for the customers. So the approach to pricing will allow us to redefine both in-play but also single-game parlay. And we believe that we'll be able to become a market leader in this area. So Angstrom is unique in terms of its predicting capabilities. The simulation is based on play-by-play level, so not simply generating sports betting markets and pricing based on historic data. And that will basically mean that we have a unique simulation-based pricing model which will enable us to innovate ongoingly going forward. So it's not only about Super Bowl and March Madness, but it's also our capabilities going forward. And then, of course, we'll be the only global operator to have all these pricing capabilities in-house, and that's what I said in my presentation, that I believe that's going to be a key differentiator. So a lot to do with Angstrom, but in general improving our sports products that we believe will drive market share and see us into that 2025 range. Single account, single wallet is also important. I think the team talked about that we've now launched in 14 states. We have another six, seven states coming later this month. So we should be ready for the kickoff of the NFL season. Nevada is going to come a little bit later, but that's not due to the launch. That's due to regulatory approval. And that means that, for example, for Kentucky, which, albeit being a small state, but it's surrounded by states that already have launched, will be able to lean into single account, single wallet, which basically means that the customer will have a seamless one account wallet, each individual player across states, so they can cross the border, use one single login, consolidate their wallets and balances, and obtain their status. register in one state, use the product seamlessly in another state. And this is the functionality that we haven't had and our competitors have due to their fantasy background. Plus, it's bringing CRM functionalities, basically means we only have to market and bonus one time for a new customer. So a lot of upside. Really excited about it, and we believe that this will change the curve for our sports market share going forward. Back to you, Ed.

Very useful, Carla. Thank you. No, that's very clear. Appreciate that, Carla. The final one is on your capital allocation M&A slide in the appendix. Of those 11 deals, it looks like only two of them are sort of based on actuals. The rest are sort of based on forecasts, I think, if that's right. I guess my question more broadly was, If you look at the spread across those, there are a few in there where the value is sort of small and even negative in one example, and then there's obviously a low where it's very, very positive. Amongst those at the lower end, what's been the driver behind that? Has that been regulated disruption? Is that where you've acquired more than the 10 times that you're using in your sort of gross up, or are there any other kind of, lessons that you've learned from those examples that you've then been able to apply to current and future acquisitions? Thanks.

Yeah, that's a really good question. And you hit on the main reason. So very often it's related to regulation. So regulation coming later than we assumed when we did the acquisition. And that's very much what drives the acquisition. the valuation or the lower valuation. But there are also operational things that obviously we learn from from time to time. And a key part of that is that when we go forward, we always make sure that we look for a very strong management team. No surprise there, but that's absolutely key. And also the technology, because it gives us time if the timetable changes around regulations, for example, that if they are already on a very strong technology platform, preferably in-house, we don't need to migrate them as soon as we would otherwise have done. So those are some of the lessons, but very often, unfortunately, it relates to regulation having come through or change in regulation.

Okay, thank you.

Malcolm, you're started. Thanks. Thank you. Our next question is from Kiranjot Growal from Bank of America. Kiranjot, please go ahead. Your line is open.

Hey, hey. Good morning, guys. Just a couple from me. It's good to hear that you're really focusing on organic growth. As part of that, would you consider entering new markets organically as well? So I'm really thinking about whether it would be possible to leverage some of your strong businesses already developed in Eastern Europe, Brazil, to move into adjacent markets, or are you going to be focusing simply on your existing markets? Also, I think in the U.S., we've got the single wallet, single app coming ahead of NFL. Earlier this year, you know, that was a bit of a headwind, the lack of that, and also you tweaked your bonusing. As we enter into H2, do you think you might step up on investment for customer capture and Any thoughts on the competitive backdrop in the U.S.? We've, of course, heard about new entrants coming into the market this week. Thank you.

Thank you, Tunja, and good morning. Let me take on those two. So organic growth and new markets, yeah, we are doing this organically from time to time. So, for example, Colombia is an example of that. What I would say is that it's new markets opening up with a very attractive, growth prospects, very often the fastest way into the market, not least because we prefer to have a podium position as we talk about so much because this is a scale game. Very often the fastest way in is to acquire one of the top brands is when it comes with a strong team and a strong platform. So But for CE as well, I know the teams there are also evaluating what the opportunities are to roll out existing brands into new markets. It's really a case-by-case basis, but we do want to, if we can possibly, get a podium position, and that's sometimes just the easiest way to do it through M&A. In terms of the U.S., and let me take bonusing first. So there's no doubt that the single account, single wallet, and getting single-game poly products and in-game play products or in-game products into the market is something that the team has been looking forward to. But I would say that the burnishing strategy that we've gone about is a deliberate move, and it's working out really well for us. But in any case, the team has, you know, full authority to look at state-by-state basis and look at the strategy around CRM and marketing that makes sense for the market. And if we're having the new products in the markets that they think they want to tweak their go-to-market approach, I'm sure they will do that. So it's not set in stone, but we are really happy with the results we have seen around our bonus and strategy. And then in terms of new competitors coming into the market, Yeah, I think if you allude to the news from yesterday, I would just repeat what I've said before. It really looks, and I said it in my presentation as well, the market is becoming more and more consolidated. The top three players now have 79% market share, and it's been sitting around that level for several years now. So it's becoming more and more difficult at this point. to build a meaningful market share, at least if you want to build a sustainable business with profits in the market where skills matter. And no one has really successfully been breaking into even the plus 10% market share from behind. And the reason for that, in my mind, is that we're seeing more and more that it's all about technology and products and having an organization and experience and muscles to continue to invest in and improve your technology and product capabilities. So while it's exciting what's going on, this is not going to change, you know, the trajectory for Bed and Gem. We remain confident and we're really focused on our new products coming into markets as well as continuing to invest into our iGaming products.

Amazing. Thank you. Thanks, Ginger.

Thank you. Our next question is from James Rowland-Clark from Berkeley. James, please go ahead. Your line is open.

Hi. Good morning, everyone. My first question is on Angstrom. I wondered if you would be willing to put some numbers behind the trajectory of sports win margin improvement that you would expect for best MGM given by bringing Angstrom's technology capabilities in-house. Also, a follow-up on Angstrom. Is it relevant to any non-US markets? Is there anything you can learn from it and apply to the rest of your online group? My second question is on online share games. So you've outlined that in Australia you have taken share in the first half, but I don't see much reference to share gains or losses in other divisions or other geographies. So I wondered if you wouldn't mind walking us through what you're seeing in some of the rest of your core markets there. And then third and final questions on the regulatory drag. So you outlined the EBITDA drag as 45 million in the first half for the online division. I know you talked around the lapping certain regulatory measures in the second half for the growth profile. But in terms of EBITDA, what's the regulatory drag we should expect in online for the second half, please? Thank you.

Sure. Hey, good morning, James. Let me talk about Angstrom and I'll hand you over to Rob for market shares outside of Australia as well as regulatory drag going forward. So on Angstrom, I mean, there is no doubt that part of the advantages that we're seeing with bringing Angstrom in-house is that of margin improvements. We haven't set out any specific targets so far. Our margins right now, I think the last numbers were just around or just below 9%, so we should be able to improve that for sure, but we haven't really set out the targets. We just started working together, but we already see the opportunities here. So that is a key benefit for us. And for sure, we are going to also leverage Enstrom's capabilities and expertise outside of the U.S. But for now, the key focus is, for obvious reasons, the U.S. So we're really leaning into focusing the team on the U.S. And we have sat down with the BetAmGem team. We together have a very detailed pipeline on what it is that we want to achieve with our eye on specifically Super Bowl and March Madness next year. But there will be more to do over the next 12 to 24 months going forward. But the focus right now is fully on U.S. Rob, can I hand over to you to go through market share and the regulatory draft going forward, please?

Absolutely. Morning, James. So let's go through some of the larger territories one by one, shall we? So in the UK, comparatives are quite challenging at the moment, given different timings and strength of implementation of affordability measures in particular, as we all know. So it's hard to judge right now, but we are as confident as we can be that we've implemented as strict a regime as is possible. And therefore, once we get through to into 2024, we'll have a better idea of how market shares moved over the last couple of years. But our actives growth suggests to us that on an underlying basis, we are continuing to gain share. Australia, we've had a good quarter. Very good. In fact, a couple of years of market share gains, I would say, across H1, much more neutral at NGR level. Slightly different strategy from different operators there. You'll have seen yesterday Sportsbet really leaning into the challenge from Becker, for instance, and investing more in marketing year on year, whereas we have consciously reflected points of consumption tax going in, coming in, and pull back on marketing. But nonetheless, revenue numbers broadly similar, but a more favourable contribution performance from ourselves. Italy, Online, Eurobet was flat in online across the half, up in retail in terms of market share gains, but pretty much flat. Online, where else do we have data? Those are the main ones I would say. Netherlands. When we acquired BetCity, it was just over 20% market share. On last measure, we think it's high teens. So to have therefore only, in inverted commas, lost a few points of share following the re-entry of Unibet, which was fully anticipated and reflected in the deal structure. I'm pretty pleased with that performance. Other territories, of course, it's a bit more patchy in terms of market share data. In terms of regulatory impacts, H1 into H2, I do expect that the three drivers that make up that 45 million drag in H1 should all recede in the second half of the year. But I don't expect them all to go away. So we spoke about UK affordability starting to ease in the second half of the year. Germany, I mentioned that whilst we now have annualized against the introduction of sports deposit limits, we are still having an impact from cross-operator limits on sports and gaming. So that will continue, but hopefully to a lower degree. And, of course, once enforcement comes, then really we'll start to see the benefit of an even playing field and, therefore, our active performance, which is flat, should at the very least be reflective of where we go from there. And then the last component is the increase in point of consumption tax in Australia. We have annualised against some of that increase now, but Queensland, I think it was, was late in 2022. So there is further Aussie POC increase to come in the second half of the year, but not as much as the first half.

Thank you. That's very helpful.

Thank you. Our next question is from Monique Pollard from Citi. Monique, please go ahead. Your line is open.

Hi. Morning, everyone. Just a couple of questions from me, if I can, both centered around the US. Firstly, just on the US iGaming market share, obviously, a lot of talk about how Angstrom is going to help you with pricing, win margins, parlay products. But on iGaming, what more can be done to enhance your position there? As we're seeing material market share gains in iGaming from DraftKings and FanDuel. So if you could just talk to some product enhancements you might have coming over the next few quarters. And then secondly, on Angstrom, I guess we know from Flutter that their 2025 target on gross wind margins is 12%. It seems they can get there quicker. Iesta, you mentioned your numbers are around nine. Is it reasonable to model you getting, given you're going to have best-in-class product, to a 12% gross wind margin by the end of 1Q next year? And then on that wind margin point, I guess when we're thinking about how the win margin will flow through, whether that flows through or whether that's reinvested in whole or in part for generosity. How should we think about you keeping that benefit versus reinvesting it into generosity?

Very good. And good morning to you, Monique. So on the iGaming, let me start with that. Yes, we know that we have competition. But we never focus on one competitor. And when I look at the numbers for our iGaming market share, I take comfort in the fact that it's actually been pretty stable the last many months where we've seen more competition come into the market. And we are surely not standing still. You've seen that we've launched a number of new products, whether it's games, exclusive games, or the big new lotteries that we are launching. And then I would also say that Bed & Gem is constantly benefiting from what Intane is doing. So Intane now has 10,860 games on our platform that Bed & Gem can pick from. We had 5,760 game releases just in the first half of the year. So it just tells you a little bit about the iGaming operation that we have within Intane that BetMGM, of course, will benefit from. And then we are doing a number of innovative things in terms of new games, live games in casino, leveraging the omni-channel opportunity there. So market share is stable. We are not standing still, but we are not focused on any competitor here. In terms of Angstrom and wind margins, listen, we are, as hopefully you can hear from my introduction of Angstrom, we are really ambitious when it comes to Angstrom and what it can do for our U.S. business and really excited about it. But it's going to take some time, so I'm not going to give you a prediction for Q1 next year. But, yeah, as I said to an earlier question, wind margin and expansion of wind margin is, of course, part of it. of the benefits that we expect to see from Angstrom. And remember, the products that Angstrom will help us bring to market is also going to help us lean even more into a recreational audience. And whether the team wants to reinvest that into customer acquisitions I'm sure they will do that to the best of, let's say, what the models tell them to do. We are really confident in our models and where the team sees us having opportunity to lean into that and reinvest into acquisition. And we have new states coming up, of course, small state, but Kentucky is coming live later this year. They will do that. We really want to take opportunity of that day one launch when we have it. So, up to the team, they will leverage the CRM and the predictive models that they have, but that is certainly an opportunity, yes.

Thank you.

Thank you. Thank you. Our next question is from Simon Davies from Deutsche Bank. Simon, please go ahead. Your line is open.

Yeah, morning. Three from me, please. Firstly, on Brazil. What are your expectations in terms of iGaming in the aftermath of betting regulation? Do you think it's going to legalize and decourse? I know you're going to have to pull out of your iGaming product for a period after the launch of legal betting. Secondly, any signs of an impact of consumer weakness in the U.K.? ? And how confident are you that the reductions in spend per customer are down to the recreational shift in the business as opposed to the slightly gloomier macro backdrop? And lastly, just on the HMRC agreement, that £585 million figure, is that the actual amount you expect to pay or is that discounted back in terms of the four-year payment period? Yes.

Thank you, Simon. Good morning to you as well. Why don't we start with your HMRC question, and then we can return to interim. And let me just say up front, you know, as you know, this relates to previous management team and before my time. And I just want to stress that we lead a very different business today. And as you can probably appreciate, there is very little that we can add to what we've said publicly at this stage. But I know that Barry is on the line, and Barry, do you want to add or make any additional comments to Simon's questions which related to the 585 and whether that was the actual number?

The actual number is made up of two or three elements. There are costs involved, and there's the actual fine. It's not a fine. It's a regulatory settlement. So it's not a fine. It's a regulatory settlement. and effectively the NPV of that with the four-year period, 585 we think covers all of those costs. So it's on an actual as opposed to an adjusted basis. It's to take the present value because we're going to be taking the four-year period to pay the whole thing? Right.

Yeah. Okay. Okay. Perhaps I could just build on that, Simon, and I've done the accounting for it. That number also represents the expected settlement, but to Barry's point, there are some extra costs that we expect to also endure, and really that offsets the discounting effect that you would get with the provision. So think of 585 as the number.

Yeah, okay, perfect. And, of course, it's just important to remind everyone that this is still subject to the the middle period of October. But it's very well advanced and that's why we're now in a position to be able to make this provision in the way we have done.

Good. Thank you, Barry. Moving back to the insurance, your question, Simon, around Bristol and iGaming. So while we are progressing towards the licensed sports betting machine, we are still awaiting clarity regarding the regulation on iGaming. So the iGaming bill was actually approved by the lower Congress last year, if you remember, and it still hasn't moved to the Senate. So this really remains a 2024 regulation story. In terms of whether we would have to stop offering products in the market, we will really have to wait and see what is decided in the end. But you could say that there is a risk of that, but we're waiting to see how it all falls out. And just to remind you, in Kane, as an operator in the market, we have a somewhat lower gaming mix versus the peers. But if turned off, of course, there will be an impact. But we're following this closely, and we don't know yet how it will fall out.

In terms of... Roughly, what is the split between betting and gaming in Brazil?

Approximately three-fourths... Sports betting and one-fourth, 25%. 70-30.

Okay. Perfect.

Thank you very much. Consumer weaknesses and the U.K. I mean, you heard us talk a lot about more active, really impressive growth in active. And with the affordability and the change to our base, being more and more recreational. As I said in the presentation, 95% of NGR now comes from recreational low spenders. That is the driver behind spent per head. None of our markets are calling out anything around consumer weaknesses. So we're quite confident that it's the move in our base, as well as, of course, the affordability impact from measures that – that we put in place, mostly over last year, but, you know, we continue to put measures in place there. So, nothing really to call out otherwise.

Great. Thank you very much.

Anything else, Simon? Good. Thank you.

Thank you. Our next question is from Estelle Wingard from JP Morgan. Estelle, please go ahead. Your line is open.

Hi, good morning. I have three questions. The first question is also on the 585 million provision. I just wanted to understand how this is typically determined. I mean, I understand this is a result of some negotiation and there is perhaps no straightforward answer, but is it like a calculation based on the profits made in the years pre-2017? I mean, any color here would be helpful as initial expectations were for lower amounts. Second question, on online margins, You mentioned during the call that you were still looking to achieve the 26% mark for the full year. I just wanted to understand what you budgeted here for the Netherlands. I think you initially budgeted some reinvestments there following the license potentially being issued ahead of H2. Can you just give us an update? And the third question, it's a very basic question just on the single wallet app for BetMGM. I understand it is going to be rolled out fully by the beginning of the football season next to Nevada. How do we make sure this is working in line with expectations? I mean, basically, how do we measure the success of the rollout? Thank you.

Hey, good morning, Estelle. Let's deal with the HMRC question again. I suspect this will be a little bit of a double show again with Barry and Rob, but Barry, let's start with you, please, if you have any comments.

Hi, Estelle. It seems such a large figure because it dealt with a long period of time from a business that made a lot of profit during that period. That's why the number ends up being so large. It's really important, though, to recognize that the discussions have been held in a very constructive and open and straightforward way. We have been given full credit, if you like, by the CPS for the way that we've handled all of these discussions and negotiations. It's a complex formula. More of it will become apparent when it comes out in the mid-October period, because eventually there will be a statement of facts which will be laid before a court, and they will become effectively public. But fundamentally, the reason the number is so large, it's about a large business for a long period of time.

Thank you, Barry. Rob, anything to add in terms of... the provision and payment itself and how it splits?

No, but what shall I touch on the online EBITDA margin and the question of the impact on the Netherlands?

Yeah, and I can take the single account, single wallet.

Okay, great. We did have in our initial guidance from March an assumption around re-entries into the Netherlands that would have had a small positive impact on NGR and a small negative impact on EBITDA margin, which I think is the point that you're alluding to. Clearly, that's less likely to happen now. Nonetheless, we're sticking to guidance. And that positive impact on EBITDA margin has largely been offset by territory mix. So, for example, our Italy business has outperformed that expectation. That's typically a little lower margin, whereas conversely, Brazil is high margin and underperforming. So really, there's moving parts as always, but we're happy to reiterate the 26% guidance for the full year.

Thank you, Rob. And let me touch on single account, single wallet. I think you had really two questions in there. So the first is, how will we make sure it works? And obviously, we're testing this. So we're doing this in batches. So hopefully, actually, the technical functionality will work. And the first three batches of the launches have gone really well. And we now have the fourth one. I just wanted to... To mention one thing, you said all states will be rolled out ahead of NFL. That's correct. But as I said, we do need regulatory approval in Nevada, which is obviously one of the larger states when it comes to the opportunity for single account, single wallet with people traveling to Las Vegas. So that will come later as we await regulatory approval there. And thinking about whether it has the impact that we expect, well, we will definitely – track that, but I also think of this as something that our main competitors in the markets have had, and therefore it's really important for us that we now get this functionality due to the fantasy background FanDuel and DraftKings already had their players in a single database where we were state-based. So that's the big upside here for us. for the customers, but also the upside in terms of CRM functionality going forward and not having to bonus new customers several times. So really excited about it, and the launches and the rollout is going really well.

Okay, thank you very much.

Thank you. Our next question is from David Bruhan from Good Buddy. David, please go ahead. Your line is open.

Morning, guys. Just two questions for me. Firstly, one of your peers talked yesterday about weakness in the Australian market and particularly on the racing side. Just wondering if you've seen a similar trend and how should we think about top-line growth in Australia in the second half of the year? And then secondly, just on the Netherlands, just wondering if you have an active growth number for the Netherlands just to help us frame the impact from the market leader reentering there alongside the NGO number which you've raised, I suppose. Thank you.

Morning, David. Let me kick off with Australia and then ask Rob to talk about the Netherlands. So nothing specific to call out on racing in Australia. I mean, from our side, Our Australian business has seen extremely strong growth for many, many quarters, and we are lapping very strong growth rates in the first half of 2022, which was 20%. But looking at the market as such, we do expect it to have been down probably more than 5%, but nothing specifically to call out on raising from our side in the market. And we are continuing. to invest into product innovation and partnerships with racing, where we have a really strong relationship in that market. And, of course, leaning into New Zealand, which is another strong racing market. Rob, Netherlands, comments?

Yes, very strong active growth in the first half of the year. I know we haven't published the number, but very strongly double-digit growth. So, again, pleased with how that business is performing and the minus eight is really just a reflection of the anticipated reentry. So, comfortable that we're performing where we hope to be with that business. Perfect. Thanks, Bob.

Thank you. Our last question today is from Richard Stubber from Numis. Richard, please go ahead. Your line is open.

Good morning. Just two questions for me. Firstly, on the U.S., the single account, single wallet, could you say what uplift you've seen in the markets that you've rolled out so far, either in terms of spend per head or increased cross-sell from sports to casino? And the second question on the U.S., when would you expect to receive your first dividends to be paid up from BetMGM, and what do you expect the dividend policy to be? And then the final question is just on the HMRC settlement. I think you said it's going to be over the next four years. Just to confirm, will it be for the equal monthly installments over the period? And is your current expectation those installments will start this November? Thank you.

Hey, Richard.

Good morning. Should I follow my procedure and start with the HMRC question? So this is really about the monthly installments. Rob, is that one you want to take?

Yeah, I'm happy to take that.

Okay, let's take Rob.

Okay. Yes, we do expect monthly, equal monthly repayments over a four-year period. Whether or not the first one lands in this calendar year or not, we'll wait and see. But for modeling purposes, probably easier to assume. It starts in January 24.

Thank you. On single account, single wallets, It's a little bit too early to report on what we've seen in spent per head and cross. Remember, these rollouts have happened over literally the last couple of months, and the summer period, as you know, is low season when it comes to that. And I would also say where we will see the first big results will be new states coming on, which will be really interesting. And now Kentucky is a small state, but it is bordered with, I think, four or five states that already have sports dating launched. And then, of course, when we start having the visitors, that goes to Nevada, and we have them in the database. But just being live in a few states for one or two months, it's too early to talk about what we have seen. Dividends, Rob, maybe that's one for you as well. A few words.

Yeah, I'm happy to say a few words. So I think the first thing to say is that we don't expect to make any further investments after the final $50 million in the second half of this year, between the parents, that is. Whether or not dividends will be returned to parents, That's not something that we've landed on yet. We'll review as a BetMGM board the forecasts later this year. And I would anticipate that at the Capital Markets Day, which is planned for around the turn of the year for BetMGM, we'll share more colour on what 2024 looks like and indeed what that might look like in terms of returns to dividends. I can confirm that they will be tax-free for Entain when they come through. But on precise timing and quantum is still to be determined. That's great. Thank you very much.

Thank you. This is all the questions we have today. So I'd like to hand back to the management team for any closing remarks.

Thank you very much, Stacey. So to everyone, thank you for listening in today. And as always, we look forward to seeing as many of you on the road in the coming weeks. And, of course, if you have any other questions in the meantime, please do get in touch with David and the IR team. But thank you and goodbye for now.