Entain Plc

Good morning and welcome to Entain's Q3 trading update call. Today's call is for analysts and investors. For those who have dialed in directly rather than via webcast link, please note that the supporting slides are also available in the results center of Entain's website. And I'll pass to Entain's CEO, Gavin Isaacs, to open today's call.

Thank you. Good morning, everyone, and thank you for joining us today. It's great to be speaking to you as Entain's CEO. I'm joined by Rob Wood, our CFO and Deputy CEO, and Davina Hobbs, who heads up our investor relations. I've met a number of you already and look forward to meeting more over the coming months as I settle in and get further stuck in. So let's kick it off. Entain has this clear strategy, which since the start of this year, the entire business has been focused on delivering. That is execution focused on driving growth in both core and US, as well as delivering margin improvement. Importantly, we've been making progress and it is bearing fruit. Our business's improving momentum demonstrated at H1 has continued. We delivered a strong Q3 with performance ahead of our expectations. A UK online business returned to positive year-on-year growth sooner than we had expected. Brazil continues to perform strongly and we are excited about the launch of the licensed market early next year. And BetMGM, where we are seeing encouraging data and trends following our much improved sports product and greater investment in player acquisition. Underpinning all of this is our product roadmap delivery. We continue to strive to provide our customers with great products and smooth, simple journeys. So we have made great strides, but it is really only the start of our tech improvement journey. So before I pass to Rob to go into detail of Q3, as it's my first to obtain results, I wanted to start with my initial thoughts and reflections on the business and its many opportunities ahead. I spent a lot of time in my first seven weeks getting out and about in the business, meeting my colleagues and their teams, walking into lots of our stores, getting onto our training floors, as well as introducing myself to some of our key shareholders. I've been busy observing, listening and learning. So what have I learned? Entain is a very good business operating in a highly attractive global industry and is on the path to becoming a great business. We have strong brands, an enviably diverse global portfolio with the highest quality of earnings in our industry. Our tech and product are good and improving, but we know we need to put a lot of hard work to take them to where they should be. And we will. Entain is bursting with talent, ambition and opportunities. The business has already undergone a strategic reset and that strategy is bearing fruit. Part of that included a review of our assets and the strategic alternatives for our portfolio. Crystal Bet has been singled out. It is an attractive asset, and after assessing the market, we have concluded that the business is more valuable to the group remaining as part of our portfolio. We will continue to assess all our portfolio. We will only sell assets at a proper valuation and if it makes strategic sense. Entain is just at the beginning of its journey. There is a long way for us to go. Our number one priority is operational excellence. Focusing on the product roadmap and delivering improvements to our player offerings. That's absolutely critical. Reinvigorating growth in our core business and getting the execution right with BetMGM. So what does that mean for me? I'll be throwing my full energy into helping drive the business. I'll be relentlessly pursuing those product improvements, breaking down internal silos and barriers, and making sure we have the processes and systems to work together better. In short, ensuring our business has what it needs to be a success. What is abundantly clear is the number of opportunities Entain has ahead, and those opportunities and our real ability to capture them means this is an incredibly exciting time for me to be joining the business. I look forward to talking to you more at our full year results in March, when I'll outline these opportunities more fully. On that note, over to Rob to run through our Q3 performance.

Thanks, Gavin. Good morning, everyone. As always, all revenue growth numbers that I quote will be in constant currency. So to Q3 trading, and I'm pleased to report that Entane's recovery continues. We beat our expectations in Q2, and now we've beaten them again in Q3. Online growth is back to being broadly in line with market growth, which of course is where we should be, and I'm pleased that we've got there sooner than expected. Importantly, we're now delivering growth in each of our must-win markets, Brazil, UK, US. In Q3, all of the online markets delivered growth. In aggregate, Group NGR was up 6% on a pro forma basis, or up 7% pro forma, including our half of best MGM. Within that, most significantly, expectations with pro forma NGR growth of plus 9%. As context, let's remember the path to getting here for a moment. Following regulatory changes last summer, pro forma online revenue growth fell into decline, And Q3 and Q4 last year were both minus 6%. Our recovery started in Q1, with NGR improving from minus 6% to minus 2%. Then Q2 saw further improvement to flat, excluding the euros, or plus 5, including the euros. And now Q3 has stepped up to plus 9% growth. So we're back to where we should be, in pro forma growth and earlier than expected. Pleasingly, the 9% online growth was primarily volume driven, although there was a year on year benefit from sports margin too. The principal region driving the step up to plus 9% is the UK, which has swung from being down 9% in H1, excluding the Euros, to up 6% in Q3. So let's start the regional review there. with UK online NGR at plus 6%, marking a return to growth sooner than we had anticipated. The principal driver of the return to online growth is lapping regulatory measures in the prior year. Now that we've lapped those measures and have now fully implemented the new voluntary code, it means we expect that the year-on-year regulatory drag has now passed. Let me just pause on that for a moment. We expect that the year-on-year drag from regulatory intervention is behind us. To find the last time we posted proper growth in UK online, you have to go back to Q2 2021, over three years ago. So growth is long overdue. With no regulatory drag, it now means all the new UK teams' hard work this year on improving the product, improving navigation, improving bet builder, site speeds, and so on, is playing through to NGR. So in addition to actives growth, which has continued throughout, we now see NGR growth too. As well as product enhancements, I'll also call out the success of our new coin economy across Lab Brooks and Coral in the UK, which is helping to drive strong numbers in gaming. A quick comment on retail now, which was down 2% in the UK in Q3. Down 2% reflects an improving trend in line with expectations. The benefit of our new best-in-class Cascada cabinets will be fully felt in Q4 following rollout during Q3. Moving to international now, where online NGR was up 10% year-on-year and retail NGR was flat. Brazil continues to be the headline grabber, where excellent performance carried on into Q3. Following 48% growth in Q2, we saw 48% growth again in Q3. The comps are, however, starting to get harder for Brazil, as we now annualize improving metrics this time last year, and we have new regulation to grapple with from 1st of January. So growth from Brazil in 2025 is likely to be much more moderate. As well as Brazil, Australia also performed well in Q3, delivering a second successive quarter of revenue growth, this time at plus 8%. We expect that means that the market is improving and we're taking a little bit of share, but sports margins also provided a tailwind in the quarter. Italy was a little behind expectation in Q3 with 4% NGR growth, as high single digit volume growth was pulled back by adverse football results. Those adverse football results in Italy also restricted international retail to be only flat NGR despite volume growth. In addition to those three largest markets in international, all our main markets delivered online growth, which is fantastic to see. Particularly pleasing with double-digit growth were the Baltics and Nordics, Georgia, Canada and Spain. N10CE had another strong quarter, up 13% year-on-year in online and up 2% in retail. Supersport in Croatia delivered impressive double-digit NGR growth again. while STS in Poland saw double digit volume growth, but partially offset by a tough quarter of sports margins. Turning to the US now, where BEDMGM's Q3 NGR was up 18% year on year. This acceleration to 18% revenue growth following 3% in Q1 and 9% in Q2 is encouraging as we continue to invest in marketing behind our improving product and player experience. Pleasingly, we're seeing further stabilization in BetMGM's sports and gaming market shares. Most recent data for blended market share actually shows an increase to 15% from 13% previously However, that uplift just reflects seasonality during the quieter sports months. The key message is that we see share stabilisation from which to build in future quarters. Gaming continues to be strong with 22% market share and Q3 was another record for gaming NGR. FDDs were up 70% year on year, supported by our additional but disciplined marketing investment into customer acquisition. and gaming further benefited from improved cross-sell from sports. In sports, although it's early days, we're seeing encouraging momentum as players enjoy our Angstrom enhanced sports betting offering, which now covers MLB, NBA, NFL, and college football. Metrics are improving week by week across important KPIs like retention, engagement measures, parlay mix, and expected win margin. Similarly, it's very early days, but the unlock of Nevada is now complete with full single account, single wallet functionality for players visiting Vegas. The early signs are encouraging with a doubling of FTDs year on year from Nevada and a significant portion of those continuing to bet after returning to their home state. We have been clear that 2024 is a year of investment for BetMGM and we're cautiously optimistic that early indicators show we're gaining momentum. Lastly, from me, our updated outlook for 2024. As a result of stronger than expected Q3 performance and our increased confidence for the balance of the year, we now expect online NGR XUS to grow mid-single digits in pro forma constant currency. That's an upgrade from our previous low single digit positive from August, which itself was an upgrade from the low single digit negative guidance we gave back in March of this year. What does that mean for Group EBITDA? It means we expect EBITDA to land towards the top end of our previously guided range of 1040 to 1090 million pounds, which is a little ahead of where consensus currently sits today. And pleasingly, for the first time this year, it means we now expect Group Organic EBITDA to return to year-on-year growth this year in constant currency, which is, of course, the aim of future years as well. In summary from me, we're pleased with Q3, in particular with both OnlineXUS and with the US as well. Momentum is returning, and that gives us confidence to increase expectations for the full year. With that, I'll hand back to Gavin. Thanks, Rob.

Before we open the Q&A, given the recent headlines, I wanted to comment on the speculation that our sector will be signalled out for excessive tax increases in the forthcoming UK budget. Until the budget is announced, it's all conjecture. We continue to highlight to the Treasury that punitive tax increases would have a materially detrimental impact on the economic contribution of the wider industry, putting at risk thousands of jobs, funding for sports and racing, as well as benefiting the black market. With that, I'll hand the call over to our operator who will open this up for Q&A. Thank you.

Thank you. If you would like to ask a question, please press star followed by one on your telephone keypad. If you would like to withdraw your question, please press star followed by two. When preparing to ask your question, please ensure your device is unmuted locally. Our first question comes from Ed Young with Morgan Stanley. Your line is open. Please go ahead.

Good morning. I've got three questions, if that's okay. The first is for Gavin. Congratulations. This feels like this is a business where the course has been set by your predecessor, who's now chair, and is showing organic growth and is currently performing in the UK and Brazil, which are the first two big areas of focus. And it sounds from your commentary there that you think the strategy is right. So how much of your focus is internally on the online and retail businesses, XUS, and how much of it is towards the US? And if you could perhaps comment at this stage, what's the biggest single thing, do you think, if anything, that needs to change? The second question is on Crystal Bet Georgia, which I get, sorry, I should go one at a time. No, no, hit them all off. Okay. Sure. Okay. Second one, Christopher, Georgia, I guess it's back to being core again. Was there any change in your attitude towards price or the impetus to sell that business? Or was there any change in demand given the political context there or any other factors? And are you open minded about the sale of other assets, providing the valuation was correct? And then finally, do you have any view on UK market growth in the quarter? and where you sit versus the competition. I just note that Rank had very strong UK numbers this morning, so I was wondering if your bingo and soft gaming brands were outperformers within your mix. Thanks.

Okay, thanks, Ed. I'll take the first two. I'll ask Rob to answer the last. Okay, so, you know, the course was set by Stella when she came in, which was to focus on organic growth, particularly the UK and Brazil. And, you know, for this year, I think that's exactly the right thing to do. From what I've seen so far, continuous improvement and working the businesses and getting them better performing is the key to our success in the short term. You asked me how much I'm focused US versus ex-US. The core central platform covers both or many of our markets, most of our markets to be exact. So my focus has really been looking at that core platform and supporting Sati and his teams to take us into the future with a much more efficient, quicker platform which enables our teams in the field ultimately to have more control over their front ends and also over their local trading, which is the goal. And progress has been made on that, and it continues to be made on that, but that's been my focus. So it really does cover both US and ex-US. Biggest change or biggest – what was your actual part of – what was the biggest concern or change or focus? It's definitely on the product. I've been working through that and trying to understand the exact product plan, just like other companies that I've been involved with in the past. Getting the product right is the key to ultimate success. We must improve the player interface, the player journey. As we do that, we'll improve with the strength of our brands, our people. and our offerings will continue to improve our performance, and that's the way I see it. You know, there'll be some fine-tuning for next year's strategy, and I hope to release that to our team internally towards the end of this year, and I can assure you that continuous focus or focus on our product and continuous improvement will be part of that. In relation to CrystalBet, You know, frankly, you know, for what we were seeing as the offers, we just decided that it was not worth selling at those prices and we decided to keep it. It's a good performing business and it's very low maintenance. It is on its own platform. You know, if in the future people come along with offers for parts of our portfolio, we will assess those. We will not give them away. If there are proper valuations and they strategically make sense for us, we will contemplate dispositions. But right now, our main focus is getting the organic growth firing up. With that, Rob, the UK market growth.

performing well to the UK. So the answer to your question directly, Ed, is no, I don't have a feel for what market growth has been in Q3 yet. We'll wait to see all the operators report their numbers. It's also true to say there are so many different drivers impacting the UK business right now, it's hard to unpick them all. So market growth is one, lapping prior year measures, as I spoke about, is a big one. We now have the voluntary code, which is benefiting of the playing field across the marketplace. Plus, our teams have been working incredibly hard on app enhancements, so bet slip, app speed, things like the coin economy that I mentioned, product improvements, bet builder, and so on. So to unpick all of that is really tough. My expectation, at least, is that the market in the UK continues to show at least mid-single digits of growth, and we'd expect that to continue into next year as well.

Okay, thank you. We now turn to Monique Pollard with Citigroup. Your line is open, please go ahead.

Hi, good morning everyone. Three questions from me as well, if I can. The first question is just about the sports margins in the quarter. And the online sports margins were a benefit up 40 basis points. But the retail was down 50 basis points, particularly weaker in international CE. Just trying to understand the difference in the dynamics between the sports margins online and retail. Why that is, is it mixed effect and the sort of weighting of, I don't know, for instance, in the UK, racing versus football retail online or something else going on there in terms of the margins? The second question is obviously Nevada, the single app, single wallet. As you say, it's very early days, so not expecting anything concrete, but just wondered if you could give us a sense of the potential upside from this. So whether it's, you know, number of customers that you have going to Nevada and then going back who aren't signed up yet or any sort of sense of scale of the opportunity from that Nevada single app, single wallet would be super useful for some context. And then Brazil, obviously another quarter now of 48% constant currency growth. I understand the points that, you know, the comps get harder as we go into 2025 and you've got the regulatory overhangs. But just if you could call out some wins that you've had in that market this quarter and last quarter in particular would be great.

I'll let Rob take the first question about sports margin.

Okay, let me do that now. Morning, Monique. So the answer is geographic mix. So most markets for online were up year on year in the quarter, but there were some that were down. The ones that were down included Italy, Belgium and Poland, all of which have retail estates. So that's the. the positive side, Australia was the strongest margin year-on-year, and that's online only, of course. So the answer to the question is geographic mix.

In relation to Nevada single account, single wallet, I don't think we can give you specific numbers and information you're looking for, but you can think of it more generally that the strong point for MGM's portfolio is And, you know, so when players come in and they open an account and take that account with them back to the markets, for us, one of the things that we were the key tenants of the whole original proposal. So, you know, we're excited by the opportunity, put it that way.

For Brazil, let me do that. We've heard a lot from Samir over the last couple of results, presentations on all the changes being made. And really, it's the combination of all these things that's driving the turnaround. Nothing new, particularly in Q3. But just as a reminder for everyone new to the story, firstly, and perhaps most importantly, we have a brand new team in place on the ground in Brazil. having no doubt a huge impact. But also you'll have heard Samir talk about things like sorting payments out, getting some withdrawals, improving content and making sure we have popular local games available like the Aviator game. The front end has improved significantly, benefiting from BetMGM developments. We've refreshed the brand. We have 365 scores. to the growth as well. So add all those things together. That's what's driving the turnaround. And we expect the numbers to continue to improve. But on a year-on-year basis, of course, the growth starts to slow from this quarter on.

Great. Just coming back to Nevada then, one follow-up. Obviously, the main other operator that could look to do this sort of single app, single wallet would be Caesars. Do you see them coming with something like this relatively soon, or do you think you've got a decent period of time where it would just be you with that ability to offer the single app, single wallet in Nevada?

I'll take that, Monique. Last I heard, Caesars are working on single account, single wallet, and it was due in 2025, but I haven't seen an update for a little while.

Got it. Thank you.

We now turn to Estelle Wingrod with JP Morgan. Your line is open. Please go ahead.

Hey, everyone. I just have three questions as well, please. I mean, I've got a first one on Australia, which contributed nicely to your good performance this quarter. Could you provide more color on this one? We'd like to understand a bit better the key underlying drivers. Also one on Brazil again. Does it make sense for us to assume further investment there as it legalizes in January and as some more competitors might decide to accelerate investment in player acquisition. And just the last one on the UK, I mean, I know Rob, you mentioned it's difficult to strip out all the comps there. Any way you can help us understanding the impact from the lapping of prior year regulatory implementations, just want to understand a bit better what the underlying performance is. And also, how long are these easy comms related to that lapping going for? I guess up until Q2 next year. Thank you.

Well, Australia, Rob, do you want to? I think it's...

Yeah, I'll talk to him. So we need to wait, of course, to see our competitor numbers. But we know for us that we've gone from plus five in Q2 to plus eight in Q3. My sense is the market is improving and we've analysed through things like BetStop, which had an impact from last summer. Our expectation is we've probably taken a little bit of share there. over the last couple of quarters. But we'll see from our own side, there's been a huge amount of work on things like improving pricing, generosity to drive improved net win margin, really focusing on the customer profile. And that's having an impact on margin, albeit sacrificing some handle as a consequence of that. But as I said in my opening remarks, we did also see favourable results, we think, in Q3 as well. So there's likely to be a little bit of margin benefit playing through from that. Brazil. So talk about Brazil now. Further investment. So we are in budget season right now. So we're looking at what the right level of marketing budget should be. And no doubt it'll be up on 2024. You mentioned new entrants. We do expect one or two. material new entrants or increased marketing budgets from existing larger players. That said, there will be a long tail of exits from the market as well. Just really hard to quantify what the net impact of that is. There's no existing regulation. There's no record of how much of the market the long tail has. So we'll wait to see. But clearly, Brazil is a really important market for us. The paybacks are strong in Brazil, and that's led to us increasing marketing investment this year as well. So it's a market we want to play in and be successful in. On to the UK now. To quantify lapping the... After three years, it's cost us around 10 percentage points. That's now washing through. So we're back in line with market growth. Your point is is correct. Around H1 of next year, we'll have slightly softer comparatives. But the real H1 versus H2 noise came in 2021. is the first half of next year. And before the voluntary code was implemented, it should be slightly better than the second half of next year. But overall, the drag is gone. And therefore, we've got an opportunity to at least be back in line with market growth and perhaps even outperform a little bit.

Okay, thank you very much.

We now turn to David Browen with Goodbody. Your line is open. Please go ahead.

Morning, guys. Three questions for me. Firstly, would you be able to provide the STS-NGR growth number? I think, Rob, you said it was negative, but just if you could provide that number, it would be really helpful. And then two questions on FedMGM. Firstly, could you give any colour on the drivers of growth between OSB and iGaming, even just in kind of very high level terms? And then secondly, any colour on how promotional intensity has developed over the three quarters year to date, given the trajectory of NGR growth over the year? Thank you.

Okay. Okay, that's enough. We'll start with the SPF.

Yeah, let me do that. So we were up 4% in Poland in Q3. Handel was much stronger. Handel was up 15%, I think. Remember, there's no gaming at this stage anyway. No gaming in Poland, so it's all about sports. Handel up 15%, but adverse margins, which is almost entirely football-driven, brought it back to plus 4%. I can talk a little bit about the US difference between iGaming and OSB. Both up good double digits in Q3, particularly OSB was significantly stronger. Some favourable margin tailwinds in September, albeit August was soft with the baseball results going against us. So not much of a margin story across the full quarter as we look forward. Double digit growth on both sides. And that's that's the aim. In terms of promotional intensity, nothing's really standing out so far with the new season. I would say it's much more of the same. As people observing the market will note, we're down to really just a handful of operators who are really fighting hard for OSB layer acquisition. So that's that's helpful. And obviously, now that we have Angstrom enhanced markets across all of our main and the main four, Parlay mix, tick up, theoretical, GGR margin, tick up week by week, our engagements improving. So things like active player days are up in both gaming and sports. Bets per active is up double digits in sports, which is really pleased with and potentially an action effect playing through there. Parlay mix is up one or two points. I mentioned cross-sell earlier. So pleased with the metrics that we're seeing and We want to see it carry on. Perfect.

That's really helpful. Thanks, Rob.

We now turn to Joe Thomas from HSBC. Your line is open. Please go ahead.

Good morning, Gavin. Good morning, Rob. Yes, my questions, please. First thing, just on retail, down 2% despite the new cabinets being rolled out. I think you said, Rob, that... I think you said it's getting better. Can you just sort of give us an idea about what the exit rate is and what you'd be expecting on the retail outlook? Secondly, US market share. You were sort of quite keen to downplay that as being the improvement as being a result of seasonality. Just wondering if you can give us any anecdotes on the early part of the NFL season and what your expectations are generally on market share, now that you're spending more on marketing and have improved the product mix. On Australia, back on Australia, are there any different trends in sports versus racing? I think you've called them out in the past, and it would just be quite helpful to know. Thank you very much.

right yeah should i take that so um yeah we've seen sort of sequential quarterly improvements in the year-on-years in uk retail was a little bit soggy but we we had that reported back across the market october's better so i don't think there's anything to come in cabinets we're seeing the gap growth i hate the the growth that those shops are seeing relative to the control group is playing through just as it So, you know, optimistic that Q4 will see a little bit of an improvement relative to Q3. US, do you want to do that?

Well, I think the market shares, I mean, from what we're seeing in the NFL season, they're about the same. We're not losing, which is the key. And, you know, the whole idea for this season was to get better performance, get our Angstrom, our LA engines better performance. out there working they seem to be they're holding up and over time now as we can build upon that success we can improve upon the player interface we can improve on the player experience and we begin to use some of the strength of our brands over there so I think we're quietly encouraged by the current performance I think that's right and just to repeat I know I made a point around the seasonality but it is material it does move the dial so I

on the upward trajectory that's not the case not yet but we do have stability and that's the most you know that's step one just holding market share after after clearly a long period of seeing it slip away so we can hold market share and if we stay at 13 14 15 percent in the world's largest market with the most growth in front of it that's uh markets quite right um that's that's a good starting point let's say step one is all about stabilization and that's the key message than the Australian difference between sports and racing. Yeah, nothing really to report back. I think we're not the operator who's consistently pointing out the difference between the two. We are mostly racing, so our trends really are largely race trends.

Thanks a lot. Okay. We now turn to Jack Cummings with Berenberg. Your line is open. Please go ahead.

Morning, Rob. Morning, Gavin. Two questions, please. Rob, I think you mentioned parlay mix was up by one or two points, but could you maybe just add a little bit of colour as to how Angstrom's driving the hold rates since the product has been rolled out? And then secondly, just on the Netherlands, I think it was down 13% in half one. Was that backing growth in Q3? And how do you think about the Netherlands going forward? Is this still a core market for you? Thanks. I'll let Rob take both those.

in the Netherlands. So the core market is probably a bit of a stretch, it's about 3% of the online mix. So it was actually in growth in Q3, probably surprised us as well. The key story there is annualising early introduction of lower player deposits from the prior summer. So therefore, a drag that we saw in the second half of last year, first half of this year washing out. But let's be clear, though, the new changes which saw a further lowering of deposit limits kicked in on the 1st of October. So therefore, we fully expect Q4 and indeed the next 12 months to see NGR decline in the Netherlands. On to parlay mix and the benefit of Angstrom. like the increased availability of bets, the increased combinability of bets, the ability to build parlays from anywhere in the product, which you couldn't do before. These are all reasons why your parlay mix, especially same game parlay and same game parlay plus, are going up. And more bets per active, more legs per bet, all leads to higher theoretical GGR margin as well. But I would stress it's, We're seeing sequential improvement, but there's a way to go. And I'm sure when Adam and Gary next present in Q1, they'll share more trends and more data for you on that.

Perfect. Thank you. We now turn to Ben Shelley with UBS. Your line is open. Please go ahead.

Thank you. Well, good morning and congratulations on the new gig, Gavin. Three questions from me, if I may. One, how do you view best MGM profitability into next year and what will you prioritise between top line and bottom line? Two, in your Q3 deck last year, you spoke to medium term 7% growth rate in online. Is this what your medium term online margin guidance is anchored to? And three, could you talk a bit about consolidation in the Italian market? Would you view yourselves more of a seller or a natural buyer of assets in this country? Thank you.

All right. Well, thanks, Ben. BetMGM profitability going forward. I think the strategy for BetMGM is a bit like the strategy that I've sort of started telling people internally, which is, you know, this year we want to make our numbers higher. Next year we will make market growth and make those numbers, which will be a much bigger stretch than we're doing at the moment. And then we want to start really growing. So from a profitability perspective, both top and bottom line, I would like to see them grow in the BED MGM side. Rob, is there any other aspect of that?

Yeah, a reminder of how we thought about it at the interims. It's worth recognising that this year we, give or take, plan to spend around 750 million dollars in new player acquisition and therefore on an underlying basis are about 500 million EBITDA positive this year. The point of saying that is the key question as to what EBITDA will be next year depends entirely on what we do with that 750. Does it go up? Does it go down? And whether it goes up or down and how much what that number is depends on the returns that we're seeing on marketing. And all the while that those metrics are improving that I mentioned earlier, leading to improved player values. That means that the payback periods are improving and that might encourage us to invest more. So I think the short answer is too early to say. But just to give you the context, it's really that 750 that will dictate what MGM profitability will be next year.

And obviously working on that money more effectively and efficiently, that's a huge focus for the business.

And in terms of medium-term outlook for ex-US markets, so you're right, 7% was the expected outcome. I think just the one watch out as you're thinking about 2025 is to remember that we'll be lapping a year that had... So perhaps slightly down from 7% in 2025. But nonetheless, the medium term trajectory, that still remains our expectation.

And so when it comes to Italy, you know, obviously it's a very strong market and, you know, we have a strong presence there where, you know, the consolidation has meant that the first and second players certainly pulled away in size from us. But I think we're currently in line with our peers in relation to growth. It's something that we're definitely looking at. I can't tell you right now whether we're a buyer or seller, but as I said, it's an important market. We have to assess that right now, which is what we're doing.

And perhaps the near-term focus is the which is still scheduled to come in in Q4, which should see an opportunity for a little bit of consolidation of the longer tail. You know, we expect the number of concessionaires to reduce probably by half and the number of websites will be down very significantly. So that might lead to a little bit of share or consolidation and share gain opportunity for all of the larger players.

Thank you, team. As a reminder, if you'd like to ask a question, please press star 1 on your telephone keypad now. Our next question comes from Simon Davies with Deutsche Bank. Good morning. Just one left from me.

On Brazil, there seems to be a lot more negative rhetoric coming out from the politicians and there's a commission investigating potential financial impacts from the proposed betting regime. Do you have any concerns that there are going to be any delays in terms of the introduction of regulation or indeed that it could get torpedoed politically?

We don't think that it's going to get torpedoed politically and we don't expect there to be a delay, but we do. We encourage regulation. You know, we are fully regulated. That's we want to be. And that's what we operate best in. And so I think that would be something that they're looking at and may end up being an advantage to us.

And some of the measures that are being looked at will seem sensible from our perspective. Banning of credit cards, use of social benefits, advertising, or ensuring that advertising has a sufficient allocation towards responsible gambling, messaging, all those things seem relatively straightforward.

Great, thank you. Our final question comes from James Rowland-Clark with Barclays. Your line is open. Please go ahead.

Hi, good morning, all. Two questions, please, just online. You mentioned that you think you're probably growing in line with the market at mid-single digits. But with iGaming, you're obviously outperforming the market and wagering at flat growth. It looks like it's probably underperforming. So I just wondered if you could just outline... your confidence about whether the wagering business could return to in line with the market and by when you think that could happen. And then secondly, just on looking to next year, your UK and Brazil businesses have returned to faster and earlier growth than you expected in the second half. So you're carrying a bigger business into next year. Any comments you have about online profitability into 2025? Thank you.

Just to be clear, James, you're talking about the UK in the first comments?

Yes, absolutely, UK.

I'm not sure what else we could say about the retail and the iGame here.

I mean, perhaps I'll just on profitability. So for online EBITDA margin, towards the top end of the guided range from back in March, and that's partly because the business is larger, of course, with the NGR outperformance. When I think ahead to online EBITDA margins next year, we'll guide properly in March. But just to give you a flavour, I would expect something broadly similar year on year on the basis that whilst we do have the introduction of and therefore the new taxes, we do have rate of benefits playing through as well as an expectation of operating leverage benefiting margin as well. So if that helps with your question, we'd expect profitability to set similar levels of online EBITDA margin to continue into next year, despite the introduction of Brazil taxes.

Yeah, that's helpful. And I guess my first question really on the online sports betting business in the UK about when you think it can grow back in line with the market.

I think my goal for the company is to get back to growth and market growth across the board next year. Whether or not that's achievable, I mean, we're doing the budgeting like coming up in two weeks. But, you know, that's sort of a guideline we would like to walk towards.

Yeah, and let's remember the UK product, sports product in particular, is improving all the time. There's a way to go. There was a significant lull. As you all know, this is new news of product development for us, UK sports business, whilst the US was the priority. heard from sati in march again in august around the improvements that we're making to the uk clubs but there's a lot more to do so can we get back into market level of growth on sports as well as do well in gaming of course that's the aim but perhaps we'll we need a little longer to get the product to parity thank you very much all right this concludes our q a

I'll now hand back to Gavin Isaacs, CEO, for any final remarks.

Well, thank you, and thank you all for listening and for your questions. I hope the next time around I'm a lot more knowledgeable about the business and can help Rob out with some of the finer details. We really appreciate your time and your interest. I think that the key message is across the business we are starting to make good progress in improving our performance, our operational performance, but this is just the beginning. We have a long way to go. But we are focused. We have plans in place to improve our core products. We're executing towards those plans. Alongside of them, we have plans in place to improve our player interfaces and our player journeys, and that's going to be very exciting. So I'm certainly excited about the opportunities ahead. I'm also very confident in the continued delivery of our plan, and that will drive value for all our stakeholders. So I appreciate you making time for us today. If you have any other questions, please get in touch with the IR team. Thank you. And for those I haven't met, I look forward to meeting you and farewell and goodbye. Thank you.