capital markets day - gvc holdings...1 latest annual revenue figures at 2018 average annual exchange...
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Capital Markets Day 16 May 2019
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2
Disclaimer
3
Introduction
Kenneth Alexander Chief Executive
GVC Holdings PLC | Capital Markets Day | 16 May 2019
Purpose of today:
Provide an understanding of the unique GVC operating model
Update on specific areas of the business
Introduce a selection of key management
Schedule
4 GVC Holdings PLC | Capital Markets Day | 16 May 2019
Topic Presenter Time
Introduction Kenneth Alexander (CEO) 13:30 – 13:45
Integration, Technology and Product Shay Segev (Co-COO) 13:45 – 14:05
GVC Brands Adam Lewis (CMO – GVC Brands)
Stephan Heilmann (Head of bwin Germany) 14:05 – 14:30
UK Online and UK Retail Andy Hornby (Co-COO) 14:30 – 14:55
Break
US Adam Greenblatt (CEO – US)
Matt Prevost (CMO – US) 15:10 – 15:35
Regulation and
Responsible Gambling
Rob Hoskin (Group Director of Legal & Regulation)
Grainne Hurst (Director of Responsible Gambling) 15:35 – 15:55
Australia Jason Scott (CEO – Australia) 15:55 – 16:15
Financials Rob Wood (CFO) 16:15 – 16:20
Wrap-up Kenneth Alexander (CEO) 16:20 – 16:25
Q&A 16:25 – 17:05
Drinks and Canapes
5
Overview
• A global online-led business of scale – operating in over 20 countries
• Operating in high growth markets within a high growth sector
• Highly effective operating model – proprietary technology, cutting-edge marketing,
local execution and entrepreneurial culture
• Well placed for regulatory change
• Committed to leading the industry on safer gambling
• Very strong track record of delivery
• Strong trading year-to-date
• Better than expected TR impact (+£15m improvement in Group EBITDA from 2020
onwards) and synergy phasing acceleration (+£15m improvement in Group EBITDA
in 2020)
A truly global operator in a high growth sector
6 1 FY18 Proforma 3 Excluding corporate costs
2 Based on FY18 Proforma figures adjusted for the fully mature Triennial Review impact 4 Other represents 0.4% of total EBITDA excluding corporate costs
2004 2009 2012/13 2016 2018
IPO of
CasinoClub
Acquisition of
Betboo
Acquisition of
Sportingbet
Acquisition of
bwin.party Acquisition of Ladbrokes
Coral and establishment
of 50/50 JV with MGM
The business now1: Largest online-led sports-betting and gaming business – a global operator
2018 Proforma
Underlying
EBITDA2,3,4
Online
(Worldwide)
UK Retail JV with MGM (from 2019)
European Retail
• NGR £1,915.1m
• EBITDA £485.7m
• Ex-UK NGR 64%
• 19 well established B2C
sports and gaming brands
• NGR £1,328.0m
• EBITDA £251.7m
• #1 operator in UK retail
• Market leading multi-channel
offering
• NGR £278.8m
• EBITDA £65.4m
• Italy #3 retail with strong
multi-channel presence
• Belgium #1 retail
• Ireland #3 retail
• Included in Online division
below EBITDA
72.9% 17.4% 9.3%
GVC Overview
7
Highly effective operating model
VISION
STRATEGIC
IMPERATIVES
GOALS
KEY ENABLERS
VALUES
TO BE THE WORLD’S LARGEST
SPORTS-BETTING AND GAMING BUSINESS
SCALE GEOGRAPHIC
DIVERSIFICATION +
MARKET LEADING
ORGANIC GROWTH M&A +
TECH PRODUCT BRANDS MARKETING PEOPLE +
A PASSION FOR DELIVERING SUPERIOR CUSTOMER
EXPERIENCE AND A TOTAL COMMITMENT TO SOCIAL
RESPONSIBILITY AND SAFER GAMBLING
LOCAL EXECUTION
+ + +
Strategic Overview
8
Operational Structure
1 JV with MGM Resorts
CEO Kenneth Alexander
Ladbrokes Coral Brands Andy Hornby
Technology, Product, Trading and Customer Operations
Shay Segev
Regulation and Responsible Gambling Rob Hoskin
US1 Adam Greenblatt
GVC Brands Adam Lewis
9 1 Latest annual revenue figures at 2018 average annual exchange rates as per Bloomberg: GBP/USD 1.335, GBP/EUR 1.1302, GBP/SEK 11.5948; bet365 YE 31Mar18
2 Revenues on a proforma basis
3 GVC FY18 Proforma NGR adjusted for the fully mature Triennial Review impact is £3.3bn
The largest online-led sports-betting and gaming operator in the world
Scale
2.7
1.9 1.9 1.6
0.9 0.7 0.7
0.5 0.4 0.3
Bet365 GVC Stars Group PPB Kindred Playtech William Hill Betsson 888 Jackpotjoy
2018 Full Year Online Net Revenue1 (£bn, last reported)
2 [2] 2
2.7
1.6
0.7 0.7
0.9
0.5 0.4 0.3
0.3
0.9 0.7
GVC Bet365 Stars Group PPB William Hill Playtech Kindred Betsson 888 Jackpotjoy
2018 Full Year Total Net Revenue1 (£bn, last reported) 3.6
1.9 1.9
1.6 1.4
Retail
1.6
Online
1.9
2,3 2 2
Retail Retail
Retail
Online Online
Online
10 Source: H2GC
Operating in a high growth sector and in high growth markets
High Growth Markets in a High Growth Sector
27.2
29.8
32.9
36.4
40.0
43.5
46.8
2014 2015 2016 2017 2018e 2019e 2020e
Global Online Gross Gaming Revenue Growth (£bn)
11 Source: H2GC
The sector has a very long runway for online growth
High Growth Markets in a High Growth Sector
3% 6% 10% 9%
43%
13% 16% 10%
18% 9% 11%
6% 6% 13%
52%
9%
2018 Estimated Online Penetration %
89.3
64.3
36.8
16.5 15.2 13.9 12.6 10.1 9.3 8.3 7.7
5.0 3.6 2.4 2.0 1.9
US
Chin
a
Ja
pan
Ita
ly
UK
Au
str
alia
Ge
rma
ny
Can
ada
Fra
nce
So
uth
Ko
rea
Sp
ain
Sin
ga
pore
Ph
ilipp
ine
s
Neth
erl
an
ds
Sw
ed
en
Bra
zil
Total 2018 Estimated Market Size – Gross Gaming Revenue (£bn) Land-based and Online
GVC present online
12
Highly diversified global operator with a long history of operating in our territories – we know our markets “inside-out”
Geographic Diversification and Local Execution
1 Crystalbet acquired on 1 April 2018
36%
15% 9%
7%
2018 Online NGR
Years operating online in main markets
UK >20 years
Germany >20 years
Australia >7 years
Italy >10 years
Austria >20 years
Netherlands >10 years
Spain >10 years
Brazil >10 years
Greece >10 years
Georgia >8 years 1
13
Proven track record in delivering value from successful M&A
M&A
Target identification
• Dedicated M&A team
• Global brands and presence create a rich flow of opportunities
• Strategically disciplined
Optimal deal structures
• Highly flexible approach
• Innovative deal structures
• Partnership approach – a platform for entrepreneurial businesses
Successful execution
• Improving growth in acquired businesses • Synergy delivery
• System migration
• Successful integration of people and cultures
• Brand revitalisation
• Retaining top talent
14
Well-established brands increase marketing efficiency and create barriers to entry
Brands
15
Vast majority of online revenues are generated in fast growing, regulated and taxed markets
Quality of Earnings
Source: H2GC
1 Sports-betting and gaming duty or equivalents
% of GVC FY18 Online NGR in countries…
…if taxed,
then are
taxed1 at 15%
or more
…that are
either
regulated,
regulating
and/or taxed
…where the
online market
is growing
>5% pa
…where GVC
is growing
>10% pa
…with online
penetration
currently less
than 20%
(ex UK)
92% 90% 95% 98%
81%
16
Diversification significantly reduces gross win margin volatility
Revenues are well diversified by product, with football revenues spread over multiple leagues and bet type
Group Online NGR Product Splits (2018)
l Casino & Games 45%
l Poker 5%
l Bingo 3%
l Other 3%
l Football Prematch 9%
l Football BiP 12%
l Horse Racing 12%
l Tennis Prematch 1%
l Tennis BiP 4%
l Other Sports Prematch 2%
l Other Sports BiP 4%
Gaming
56% Sports
44%
Football by
League
l World Cup 9%
l Premier League 8%
l Spanish La Liga 5%
l UEFA Competitions 5%
l German Bundesliga 4%
l Italian Serie A 3%
Remainder
includes other
leagues
each <3%
Remainder
includes other
bet types
each <3%
l Match Betting 36%
l Number of Goals 34%
l Team Goals 6%
l Double Chance 3%
Football by
Bet Type
Quality of Earnings: Product Diversification
17
Decisive action to improve player protection – we have a plan and are making good progress
Our Approach to Responsible Gambling
Increase in GVC funding for research, education and treatment from 0.2% to 1% of UK GGR
(£4m to £20m) by 2022
Industry-wide ban on UK TV sports-betting adverts (excluding horse racing) at any time of the day
Provide blocking software to customers free of charge
Setting up an independent trust to fund treatment centres across the UK
Working together as an industry Working with regulators Applying learnings across territories
Sustainable and effective player protection framework
GVC call for action in the UK
Changing the narrative
18
Key Messages
GVC is a truly global operator, gaining market share in all major territories
Continued outperformance is driven by operational excellence
The GVC operating model is highly effective and is a sustainable
competitive advantage; we are exceptionally well placed for future growth
19
Integration, Technology & Product Shay Segev Co-COO
GVC Holdings PLC | Capital Markets Day | 16 May 2019
20
Introduction
Picture Shay Segev Co-COO
Agenda - Integration update - Technology - Product development
13 years within
the online
gaming sector
Joined
GVC as COO
in February 2016
Previously
Chief Strategy Officer
Gala Coral
Previous sector roles
include:
• Playtech - COO
• Videobet - CEO
21
Key Messages
Integration progressing well and driving business performance;
accelerated platform migrations will unlock value
Leading product range continuously enhanced and deployed across
brands and territories
Proprietary technology platform is a unique competitive advantage and
growth driver
KEY ENABLERS (Covered in this section)
TECH PRODUCT BRANDS MARKETING PEOPLE +
LOCAL EXECUTION
+ + +
Track record of highly effective integrations using a proven process
22
Proven Integration Approach
Clear Targets Solid Structure Rigorous Execution
Integration always focused on revenue growth and efficiency improvements, not just cost synergies
Delivered multiple successful integrations
Significant experience in delivering technology/platform migrations
– 23 successful platform migrations over last six years
– 20m customers migrated to GVC platform without incident
Holistic integration approach drives performance improvements e.g.
– 2016: bwin.party turnaround delivered £125m synergies while accelerating growth
– 2019: Foxy Bingo migration to GVC platform (Nov 2018) - six months later +40% monthly YoY NGR growth
Proven approach:
Define end-state operating model
Manage by KPIs
Focus on quick wins
Financial transparency
Executive focus
Pragmatic decision making
Strong people
Clear ownership
Lean and effective governance process
Integration progressing well without disrupting growth; accelerated £15m platform migration synergy in 2020
23
Ladbrokes Coral Integration: Status Update
Delivering run-rate of £130m cost synergies and at least £30m capex synergies by 2021
Ladbrokes Coral brands growth boosted by immediate improvements in product, platform and operations
Focus on technology integration and preparation of online business migration; Playtech agreement provides flexibility
Detailed integration plans in place for all other areas
All synergy targets delivered to date; accelerated £15m platform migration synergy in 2020 (2020 total now c£72m)
Main Integration Areas
Technology and Product
Marketing Operations
Corporate (HR, Finance, Facilities, etc.)
24
Significant further opportunity exists across the business
Major opportunity exists from sharing “best-of-both”; quick wins implemented but we have barely scratched the surface
Integration: Immediate Value Drivers
Customer Service
Examples of sharing to date:
• Roll-out of the Coral Digital Marketing Platform to
bwin Germany in Q4 2018
• Enables enhanced customer segmentation and
tailored CRM
• First step in sharing of powerful marketing capability
between GVC and Ladbrokes Coral
Shared Gaming Content
Marketing
Trading
• GVC odds-feed into Ladbrokes Coral – increasing
product range and delivering operational synergies
• Shared trading performance models – driving
improved risk management and increasing margins
• Implementation of GVC agile approach and best
practices to Ladbrokes Coral customer service
• Resulting in significant performance improvements in
customer response times (phone, chat, KYC)
• Ladbrokes Coral in-house content available on GVC
brands; Playtech content to follow from Q2 2019
• GVC content (in-house and third-party games)
increasingly available on Ladbrokes Coral UK brands
25
Faster migration results in accelerated £15m synergies being recognised in 2020
Smart migration approach minimises risk and ensures a smooth user experience and seamless switch over
Integration: Platform Migration
Material cost savings
Improved performance and stability
Improved operational efficiency (best practice implementation, single toolset, unified processes)
Global product platform advantages: build once, deploy multiple times
London
Gibraltar New Jersey Rome/ Milan
Sofia
Tel Aviv
Vienna
Significant
Benefits
Smart
Approach
Phased approach by brands
– Wallet and gaming platform migration to GVC (Gala Spins in April 2019)
– Introduction of price feeds from in-house GVC sports (already started)
– Full migration to GVC in-house sports
Fully co-ordinated with Playtech
Minimal UX changes
Smooth transition for players
Migrated
April 2019
Migration to GVC wallet
Starting Q2 2019 through to H2 2020
26
Ownership of a multi-territory fit for purpose sportsbook is a major differentiator – very difficult for competitors to replicate
Powerful proprietary technology means we are in control of our destiny
Sustainable Competitive Advantage
Growth ready – highly scalable
Quick to market
Rapid deployment of changes
Multi-jurisdiction compliant
Seamless interaction between all components
Highly stable and secure
Cost efficient operation and development
Integrated retail and omni-channel solution
OMNI-CHANNEL DEVICES
API SERVICES
PLAYER MANAGEMENT SYSTEM
Full
product
suite
Fully integrated
proprietary
tech platform
All aspects are
in-house
Cutting-edge
front-end
technology
Fully integrated
acquisition and
CRM
technology
Fully equipped
supporting
tools
2 W
AY
INT
EG
RA
TIO
N S
ER
VIC
ES
Technology: Sustainable Competitive Advantage
SUPPORTING ECO SYSTEM TOOLS
SPORTS CASINO POKER BINGO
In-house technology enables rapid action and deployment
27
Technology: Sustainable Competitive Advantage
Flexible
Significant
Scale
Availability
Resource
Backed
M&A Enabler
Processing (p.a.)
>350m sports bets
>10bn casino spins
>1bn poker hands
Currently supports:
66+ front-ends
33 languages
42 currencies
99.93% service availability
65+ changes deployed per day
1100+ IT staff
Core locations in Hyderabad and Vienna
Rapid deployment and synergy creation
Case Study 1:
2018 integration of GVC sports and gaming into Crystalbet
11 April
Acquisition
complete
30 April
Integration
commences
14 May
Integrated GVC’s sports
feed into Crystalbet’s sports
platform
28 May
300+ games added
2 weeks
4 weeks
4 weeks
Case Study 2:
20 Aug
Integration
commences
20 Sept
Stadium sports-betting
app fully integrated
with GVC platform
2018 integration of Stadium sports-betting platform into GVC platform
28
Platform migration will further enhance the ‘develop once, deploy multiple times’ principle
Extensive product development capability ensures a strong pipeline of new product and customer UX enhancements
Product Development Capability
Product
Development
Third-party Games and Live Casino
Sports In-house Games, Bingo and Poker
Customer interface and user experience
Industry-leading expertise across all domains
Common product development approach
Global, scalable products
Fast roll-out
High local market relevance
London
Gibraltar New Jersey Rome/ Milan
Sofia
Tel Aviv
Vienna
Hyderabad
Brisbane
Global product development organisation co-located
with regional marketing teams
Tbilisi
29
Continual improvements to product offering and customer user experience
Recent Product Development
video
30
Going Forward
Deliver integration with platform migrations from H2 2019
Proprietary technology driving significant benefits across the Group
Accelerate growth and step-up “best-of-both” sharing into 2020
31 GVC Holdings PLC | Capital Markets Day | 16 May 2019
GVC Brands
Adam Lewis CMO – GVC Brands
32
Introduction
Adam Lewis CMO – GVC Brands
Agenda - Marketing strategy - bwin Germany - partypoker - Crystalbet
Joined
GVC as CMO
in January 2013
18 years within
the online
gaming sector
26 years
International marketing
experience
Led the marketing
turnaround
of Sportingbet (2013) and
bwin.party (2016)
33
Key Messages
Highly effective operating model driving market share gains
Deep local expertise enabling deployment of territory-specific operating
models
Sophisticated marketing techniques applied across territories
KEY ENABLERS (Covered in this section)
TECH PRODUCT BRANDS MARKETING PEOPLE +
LOCAL EXECUTION
+ + +
Diverse brand portfolio across wide geographical footprint
34
Brands and Scale
• Operates in over 20
countries
• Delivers £1.0bn NGR
• 51% of Group Online NGR
Highly effective operating model delivering sustained outperformance
35
Performance
3-Yr Growth
+62% 2018 vs 2015
2016 2017 2018
+11%
+20%
+22%
Q1 2019 NGR
+21% Year-on-year
NGR1
1 Constant currency
To
tal N
GR
€m
36
Genuine player engagement is driving long-term revenue growth
Eight specific marketing strategic pillars driving increased player engagement; growth underpinned by data and analytics
Marketing Strategy and Structure
Marketing strategic pillars
Each headed by a Divisional Director
Dedicated budget
Delivers cutting-edge practice across all regions and all brands
Player engagement
CRM
Customer
Experience
Analytics
and Insight
Brand and
Creative
Digital
Marketing
Regional
Sports
Poker
Casino
Specialist divisions
Revenue divisions
Data and Analytics
Analytics and insight are the most influential enablers of sustained player engagement and growth
37
Analytics and Insight
Next Best Action The right message, bonus, contact or
strategy for each individual customer
at any stage of lifetime
Personalisation Present the most relevant content at the
right time, for CRM, onsite and offsite
Real-time Targeting Increase customer engagement through
real-time communication and offers pre-
match and in-play
Optimised Acquisition Budget optimisation through data-driven
targeted advertising
Customer DNA
Sophisticated infrastructure drives optimal customer engagement
38
Analytics and Insight
Additional text here
Data Layer
Transactional
Web
Customer Services
Social & App
Survey
…Third Party
Customer DNA Analytics Layer
Marketing Mix
Modelling
Predictive
Modelling
• Churn
• ALV
• CLV
• Bonus Opt
• VIP models
• RG
• X-sell
Real Time Triggers
Attribution
Recommend.
Engine
Intelligence Layer
Next Best Action
Return on
Marketing
Investment
(ROMI)
Personalisation
Engine
Application Layer
Targeted Comms
Biddable Platforms
AdServing
CRM orchestration
AlwaysON
DMP
Measurement Layer…
• Customer Data
• Propensities
• Customer
Movements
• Feedback Loop
• External data
Marketing analytics delivering tangible benefits in sector specific trials – wider deployment planned from H2 2019 onwards
Analytics and Insight
Digital
Marketing (Player Acquisition)
CRM
Casino
Marketing
• New customer first-3-months NGR +28%1
• Data Marketing Platform implementation delivered 8% improvement in CPA2
• New player deposit limit changes and payment type removals driving NGR growth
• Bonus per active cost improved by 7%3
• Player frequency +11% and churn 8%2 improvement
• Increased customer insight enables greater customer protection
• Average games per player increased by 10% driving +15% NGR4
• Record 35%5 of sports customers cross sold to Casino in their first month
• Cost per acquisition (CPA) decreased 47% whilst one year player value increased by 38%4
26 ongoing digital marketing analytics and insight projects
1 bwin Spain Q1 2019 YoY 4 partycasino Q1 2019 YoY
2 bwin Germany Q1 2019 YoY 5 All GVC sports brands Dec 2018
3 bwin and Sportingbet Greece Q1 2019 YoY
39
Consistently exceeding player expectations
40
Making Customer Experience a Key Differentiator
2019 2020+
Customer rich data insight Constantly listening to drive
change
Persistent and consistent Brilliant basics from a single voice
Customer Satisfaction Introduce CX metrics and focus
Purposely designed E2E Journeys Live, seamless and in control
Intentionally designed experiences Across all touchpoints
Active listening Manage both the reality and
perception through cognitive science
Beyond satisfaction Cultivate loyalty, not just
satisfaction
Relevant and valued Memorable peaks that
strengthen engagement
The customer
at the heart of
everything
we do
A breakthrough campaign delivering a Hollywood-style adrenaline
fuelled car chase, allowing the audience to predict the outcome of the chase
250,000
predictions made
on the result
of The Race
YoY 78% increase in new
customers
35% increase
in NGR
32% increase in
unique active
players
41
Brand & Creative: 2017 Bringing bwin Back to Life
Campaign delivered an epic heist of the most famous football trophy in the world, with the four
protagonists each hatching their plans across four separate adverts, with the campaign crescendo at the start of
the tournament revealing…“Who Stole the Cup”
41% increase in new
customers
44% increase in NGR
25% increase in unique
active players
If you want to be the best then work with the best!
11.8m views on social media
42
World Cup: 2018 One Campaign - Global Appeal
A pan-European brand campaign leveraging bwin’s sponsorship of football giants Borussia
Dortmund, Valencia, Inter Milan and Atletico Madrid, creating an emotional and aspirational
connection with fans, welcoming them to bwin and to the ‘BIG League’
‘Welcome to the BIG League’
43
2019: Leverage Our Key Assets Globally
DAS IST UNSER SPIEL “This is our game” – grassroots campaign setting bwin apart from the competition
Building an emotional connection between bwin and authentic football by leveraging players and real fans
including Borussia Dortmund, Koln, St Pauli, Dynamo Dresden, Union Berlin and the 3rd Bundesliga
‘This is our game’
44
2019: German Regional Campaign
45
Introduction
Stephan Heilmann Head of bwin Germany
Joined as
Head of bwin Germany in
January 2016
11 years within
the German Online
gaming sector
15 years
marketing
experience
Market leading performance
46
Germany: Performance
NGR1
2016 2017 2018
+18%
+26%
+23%
Q1 2019 NGR
+26% Year-on-year
+83% NGR growth
since acquisition
1 Constant currency
To
tal N
GR
€m
Making the bwin brand authentic and passionate
47
Germany: 2018 Brand Positioning
Artificial
Authentic
Humorous
Passionate
Factual
Making bwin the standout No.1 sportsbook in Germany
48
Germany: Current and Future Strategy
2017 2020…2021…2022 2018 2019
‘Welcome to the Big League’
49
Strong brand
recognition:
sportingbet, bwin
and partypoker
Considering LATAM
expansion options
Proven & highly
competent
regional team
Q1 19 Growth
+48%
LATAM double digit growth for the
last five years
LATAM
49
partypoker
50
Significant market share gains driven by leading live event offerings and continued UX enhancements
Live
Events
Geographical
Expansion
Recent: Sweden
and Spain
Future: Italy and
Greece
Ecology
Prevention of
third-party tools
My game - poker
Live Events
Largest
Global Tour
PPL Dollars
Partnerships
Recreational
Player Acquisition
Spins
Team Online
ATL Spend
Social Media
Increase ROI
Improve
Marketing
Capabilities
Recreational
Player Retention
Gamify Poker
Offering
Optimove
Cycles
NGR GROWTH +128%1
2018 vs 2015 14%
41% 42%
2016 2017 2018
Product
Enhancements
Recent: New
lobbies and new
tables
Future: Mobile
and gamification
Cash Games
FastForward
animations
Short deck
Real name
Multi-table
Tournaments
and Festivals
Powerfest
KO Series
Monster Series
YoY
gro
wth
%
1 Constant currency
Crystalbet: Effective M&A
51
Crystalbet performance demonstrates our effective M&A model – local expertise while leveraging Group assets
Existing
Crystalbet
management
team combined
with GVC assets
Enhanced casino
product
338 games added
New sports feeds
8000 additional
markets daily
Group BI, CRM and
acquisition
technology
increasing player
acquisition & LTVs
NGR1
+58% Q1 2019 vs Q1 2018
+79% +61%
+41%
Q1 2018 Q2 2018 Q3 2018 Q4 2018
1 Constant currency
+76%
Tota
l N
GR
GE
Lm
52
Going Forward
Rigorous focus on analytics, driving marketing efficiency
Continue to leverage our extensive local expertise to drive market leading performance
Next phase in the radical evolution of the bwin brand
53
UK Online
Andy Hornby Co-COO
GVC Holdings PLC | Capital Markets Day | 16 May 2019
54
Introduction
GVC Co-COO
since the 2018 acquisition
of Ladbrokes Coral
Previous sector roles
include:
• Ladbrokes Coral Group
– COO
• Gala Coral Group –
Chief Exec Coral
8 years within
the gaming sector
Previous roles include:
• Alliance Boots
• Halifax/HBOS
• ASDA
Andy Hornby Co-COO
Agenda UK Online:
- Market - Operating model - Marketing - Brands
UK Retail: - Triennial Review update - Fit for the future
55
Key Messages
The UK market is a well-regulated high growth market
Multi-brand strategy presents further growth opportunity
Market leading CRM and acquisition capability driving outperformance
KEY ENABLERS (Covered in this section)
TECH PRODUCT BRAND MARKETING PEOPLE +
LOCAL EXECUTION
+ + +
UK market is still a high growth, well-regulated market dominated by scale operators with significant barriers to entry
56
UK Online Market
Source: Gambling Compliance FY17 estimates
0%
2%
4%
6%
8%
10%
12%
14%
16%
18%
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
2012 2013 2014 2015 2016 2017 2018E 2019E 2020E
YoY
Gro
wth
NG
R (
£m
)
Total NGR YoY Growth
UK Online NGR Forecast Growth Total Online NGR (FY17)
Online Gaming NGR (FY17) Online Sports NGR (FY17)
l bet365 13.0%
l TSG 12.6%
l PPBF 12.5%
l GVC 12.2%
l WH 9.0%
l Jackpotjoy 3.4%
l 888 2.6%
l Kindred 2.0%
l Rank 1.8%
l Others 30.9%
l GVC 13.6%
l TSG 9.6%
l William Hill 7.2%
l Jackpotjoy 6.1%
l PPBF 5.9%
l bet365 3.8%
l 888 3.8%
l Rank 3.2%
l Stride 2.5%
l Kindred 2.5%
l Tombola 2.2%
l Others 39.6%
l bet365 24.9%
l PPBF 21.2%
l TSG 16.4%
l William Hill 11.4%
l GVC 10.0%
l Others 16.1%
High single-
digit growth
12.2%
10.0%
13.6%
Market leading growth in 2018
57
Driving High Growth
1 Excludes acquisitions
14%
6% 5%
3%
11%
7%
0%
-20%
Lad/Coral Skybet PPBF WH Galabingo Rank JPJ
2018 Year-on-year Online NGR growth
Sports-led brands Gaming-led brands
Competitor 1 Competitor 2 Competitor 3 Competitor 4 Competitor 5 Competitor 6
Outperformance continuing into 2019
58
Driving High Growth
1 Excludes acquisitions
8%
-12%
-1%
15%
-7%
Q1 2019 Year-on-year Online NGR growth
Sports-led brands Gaming-led brands
Competitor 1 Competitor 2
Competitor 3 Competitor 4
Competitor 5
Competitor 6
No
t re
po
rted
No
t re
po
rted
Rep
ort
ed
on
a
dif
fere
nt
tim
e p
eri
od
59
These models are unique IP – driving efficient and effective marketing
Scalable real-time marketing engine delivering unique experience to each customer
Marketing Tools
Bespoke predictive models include:
• pNGR: predicts 12 month player value
• pVIP: predicts propensity for customer to become high value
• pChurn: predicts propensity of a customer to churn
Predictive
analytics
models
Behaviour
Segmentation
models
Macro and micro segmentations defining player cohorts:
• Lifestage – e.g. early life, retained, churned
• Preference – e.g Sports / Football / Horse Racing
• Socio-demographic
Next Best
Offer
Models
Real-time decisions defining next best offers:
• Rules/activity based – e.g. Half Time market settles –>
promote second market
• Browsing Behavior – e.g. Browse Rugby content –> change
banner offer to Rugby
• Machine Learning/AI based models – suggest next best bet
Models are highly accurate
Organic FTDs – Adj R2 97%
Week 1 Week 52
Active
s
Existing Active Customers – Adj R2 89%
Week 1 Week 52
Active
s
Reactivated Customers – Adj R2 94%
Actual Model prediction
Week 1 Week 52
Active
s
60
Highly relevant personalised CRM drives increased customer retention
Advanced marketing capabilities enable unique interaction with every customer
Marketing: Leading Real-time CRM
Friday - Activation Saturday – Cross-sell and up-sell
15:00 Customer A sees
an ad on Racingpost.com that
was purchased using
programmatic techniques. We
do not buy ads on this site for
non-horse racing customers
17:00: Customer A
receives an incentivised offer to
place a bet on the Saturday
15:00 kick-off football match.
This offer is restricted to
“churning medium value”
customers
19:00 Customer A sees an
ad on their Facebook feed for
“1-2-Free” free-play games at
Ladbrokes
20:00 Customer A sees
an ad on Racingpost.com that
was purchased using
programmatic techniques. We
do not buy ads on this site for
non-horse racing customers
16:10 Post half-time
Customer A receives an
offer for a second-half
bet on the Manchester
derby
15:00 Customer A places
a bet on the Manchester
football derby
12:00 Customer A
receives a bespoke Odds
Boost as part of an anti-
churn campaign. Mobile
app is configured to
promote this after they
receive the push
notification
13:00 Customer A
bet on Spurs last week –
The real-time engine
sends a push notification
about the Spurs game
this week
14:00 Customer A
logs-in and browses the
rugby page. The on-site
banner is immediately
changed to “Rugby Offer”
20:10: Real-time betting
engine predicts that
Customer A will be
interested in El Classico.
Customer A receives a
push notification
Media
Email/
SMS
Social
Media
Offer
Banner
Push
Push
Push
Customer Profile
• Customer A bets £100 per
week
• Has opted-in to all
communications
• VIP flag is set to medium
• Flagged as favouring
football, but with a high
propensity to horses and
occasionally bets on rugby
• ‘Bonus abuse’ flag is low
• Clean Responsible
Gambling score – no
previous problem gambling
triggers
• pChurn model indicates
likely to churn
15:02 Customer A
receives a push
notification advertising
“1-2-Free” free-play
game
Push
Example customer interaction:
61
Advanced marketing capabilities are a competitive advantage
Marketing: Real-time CRM
62
Brand differentiation reinforced through new campaigns
Marketing: Brand
‘Where the nation plays’
‘Don’t bet silly, bet savvy’
The on-going turnaround of the Ladbrokes online brand in the UK presents a significant opportunity
63
Ladbrokes.com: Improving Profitability
-9%
38%
21%
-5% -6%
33%
-6%
21%
5%
36%
-7%
23%
29%
18%
13% 11%
2015 2016 2017 2018
Year-on-year quarterly NGR growth rate
Q1 Q2 Q3 Q4
Ladbrokes at merger completion (Nov 2016)
• Tired brand
• High levels of marketing to reinvigorate brand
• Poor ROI
• Over dependence on affiliates
• Inefficient marketing channels & conversion
• Low gaming cross-sell
Corrective actions:
Plugged in marketing models and real-time CRM
Marketing mix changes
New brand marketing launched ahead of the
World Cup
Team realignment to focus on separate brands
Poor
Performance Inefficient reinvestment of marketing Corrective actions Recovery
Improved profitability
Merger completion
Poor profitability
Annual
marketing /
NGR %
35% 32% 26% 26%
Rigorous CRM and acquisition marketing driving material improvements in marketing ROI
64
Marketing Efficiency
Data Orchestration
Segmentation Execution
Driving higher marketing ROI
Impact on ROI of applying these models
to Ladbrokes.com
Channel
Improvement
in ROI1
TV 1.3x
Branded PPC 2.2x
Non-branded PPC 1.1x
Display 2.7x
Print 1.0x
Affiliate 3.1x
Sponsorship 2.3x
+ +
1 Comparisons of market spend return
on investment 2016 vs 2018
Coral.co.uk has consistently outperformed the market
65
Coral.co.uk: Consistent Outperformance
Growth driven by market leading CRM and continued improvements to user journeys and product offering
2014 • Launch of Coral Connect
• Cash-out launched
• Launch of Coral Football Jackpot
• Innovative value offers eg: ‘Brazil to
Wear Yellow’
65%
54%
21%
8%
84%
33%
10%
17%
40%
30%
13%
29%
61%
13%
31%
13%
2015 2016 2017 2018
Year-on-year quarterly NGR growth rate
Q1 Q2 Q3 Q4
2016 • Migration to in-house mobile front-
end
• Increased range of exclusive in-
house games
• Multi-channel loyalty ‘Bet and Get
Club’ launched
2018 • Real-time CRM capability deployed
• Exclusive ‘Build-Your-Bet’ product
launched
• Coral Live Casino studio launched
• Mobile app reskinned
Very high marketing ROI driving sustained growth
66
Galabingo.com: Leading Growth
41%
17%
-8%
11%
23%
10% 8%
0%
18%
10% 9% 12% 14%
6% 2%
21%
2015 2016 2017 2018
Year-on-year quarterly NGR growth rate
Q1 Q2 Q3 Q4
2018 year-on-year Online NGR growth
Foxy brand awareness remains very high; turnaround plan underway
67
Foxy Bingo: Turnaround
• New TV campaign focusing on ‘The Foxy Fabulous’ with new brand positioning and Foxy as the lead
• Key partnership with exclusive products, bespoke TV and C5 sponsorship
• New brand team managed from Gibraltar
• Relaunch of VIP scheme
• New GVC back-end enables richer promotional plan
• One brand, two worlds – Foxy Casino (rebranded Foxy Games) will re-embrace the Foxy character to lead the brand
• 40% YoY NGR growth in April 2019
JOIN THE FOXY FABULOUS.
68
Going Forward
Further enhance real-time CRM capability to drive growth
Continued turnaround opportunity for Ladbrokes.com and Foxy Bingo
Leverage the benefits of operating on single Group technology platform
69
UK Retail
Andy Hornby Co-COO
GVC Holdings PLC | Capital Markets Day | 16 May 2019
Six weeks trading since implementation of £2 stakes
70
Triennial Review Update
1. B3 Migration - Some >£2 play will migrate to slots
2. OTC Migration - Some displaced machines spend will migrate OTC
3. Online Migration - Some displaced machines spend will migrate online
4. Shop Closures - Losses will be capped by closing loss making units
Key Model Assumptions First six weeks vs model
expectations
In-line
Positive
In-line
No update yet
• Previous guidance was £120m fully mature EBITDA impact
• Now expect to beat that guidance by c£15m from FY20 onwards
Investment in machines, SSBTs, shop fabric and a new proprietary EPOS system leaves the business well positioned
71
Fit for the Future: OTC / SSBTs / Machines
Machines
• 6,800 Equinox machines rolled
out across 1,700 shops
• Slots games launches continue
at pace
− 29 games launched in Q1
− 24 games planned in Q2
Q1 2019 LFL Machines
NGR growth: +4%
SSBTs
• UK terminal density-per-shop to
increase by 30%
• New wide-screen terminals are
delivering strong double-digit
growth
• “Bringing the app experience
in-shop”
Q1 2019 LFL SSBT
NGR growth: +14%
OTC
• Market leading Best-Price-
Guarantee (BPG) all-day every-
day
• Multi-channel sign-ups >150%
ahead YoY since launch of BPG
• Multi-channel sign-ups >100%
ahead YoY across both brands
during Grand National
Q1 2019 LFL OTC wagers
growth: improved to flat1
1 Includes SSBTs
72
Competitive advantages in the battle for market share
Leading offer on the high street
Fit for the Future
1 Source: Betscope Q1 FY18 to Q4 FY18
2 Customers who have a Grid/Connect account who have registered/deposited in shop
Post Triennial (2022 onwards):
• Cash generation >£100m p.a.
• Steady OTC NGR decline partly
offset by SSBT and slots growth
• Rigorous focus on cost control
Highly Cash Generative Driving Online Growth
• Market leading multi-channel
offering is a material competitive
advantage
• 2m+ Retail customers signed up
to Connect and Grid
• Multi-channel customers2
contributed 14% of
ladbrokes.com and 20% of
coral.co.uk NGR
Reinforcing Brand Recognition
• Retail presence key in driving
overall brand recognition
• Increasingly relevant post TV
advertising restrictions
80% 79% 78%
74% 72%
70% 69%
Ladbrokes WilliamHill
PaddyPower
Coral Bet365 Betfair Sky Bet
Total awareness of Online brands1
Retail brands
73
Key Messages
Triennial Review impact £15m better than expected from 2020 onwards
A right-sized UK Retail estate is a core asset – driving online growth
through unique multi-channel offerings and delivering cash
Well-placed for market share gains
GVC Holdings PLC | Capital Markets Day | 16 May 2019 74
Break
15 minutes
75
US
Adam Greenblatt CEO – ROAR Digital (US JV)
GVC Holdings PLC | Capital Markets Day | 16 May 2019
76
Introduction
Previous roles include:
• Rothschild - Gaming
Practice
Previous sector roles
include:
• Ladbrokes Coral –
Director of Corporate
Development and
Strategy
• Stadium Technology –
President
16 years within
the gaming sector
CEO – US JV
since October 2018
Adam Greenblatt CEO – ROAR Digital (US JV)
Agenda - The opportunity - The JV - Progress to date - Technology and product
77
Key Messages
The US is undoubtedly the largest sports-betting opportunity to emerge in
the last 20 years
Clear JV roadmap exists
Established brands, proprietary technology and market access will create
a leading position in the US
KEY ENABLERS (Covered in this section)
TECH PRODUCT BRANDS MARKETING PEOPLE +
LOCAL EXECUTION
+ + +
US is expected to be an online-led market worth at least $6bn GGR by 2023; Roll-out is likely to be gradual, state-by-state and retail-first in some states
78
The Opportunity
Source: Eilers & Krejcik – April 2019
WA
OR
CA
MT
ID
NV
AZ
UT
WY
CO
NM
TX
OK
KS
NE
SD
ND
MN
IA
MO
AR
LA
MS AL GA
FL
SC TN
NC
IL
WI MI
OH IN
KY
WV VA
PA
NY
ME
VT
NH
NJ
DE
MD
D.C.
MA
CT
RI
AK
HI
Legend – legal sports betting:
l Live in 2018 (8 states) l Live in 2019-2020 (11 states + DC) l Live in 2021-2022 (11 states)
l Live after 2022 (16 states) l Unlikely to legalise (4 states)
Currently c10% of the US population can bet on sports through retail outlets and only c4% online
79
The Opportunity: Live States
Source: Eilers & Krejcik – April 2019
1 Poker only
l Sports-betting operational l Sports-betting legal but not yet operational l Enabling bill(s) pending
State Population (m) % of US population Retail betting Online betting Online casino
Pennsylvania 12.8 3.9% l l l
New Jersey 8.9 2.7% l l l
Nevada 3.0 0.9% l l l
Mississippi 3.0 0.9% l
New Mexico 2.1 0.6% l
West Virginia 1.8 0.6% l l l
Rhode Island 1.1 0.3% l l
Delaware 1.0 0.3% l l l
Total 33.7 10.3%
1
1
Additional 11 states + DC, (c23% of population) expected to be regulated by 2021
80
The Opportunity: Regulatory Roadmap to 2021
Source: Eilers & Krejcik – April 2019
State Population (m) % of US population Retail betting Online betting Online casino
New York 19.5 6.0% l l l
Illinois 12.7 3.9% l l
Michigan 10.0 3.1% l l l
Massachusetts 6.9 2.1% l l
Indiana 6.7 2.0% l l
Oregon 4.2 1.3% l l
Connecticut 3.6 1.1% l l l
Iowa 3.2 1.0% l l
Arkansas 3.0 0.9% l l
Kansas 2.9 0.9% l l
New Hampshire 1.4 0.4% l l
District of Columbia 0.7 0.2% l l
Total 74.8 22.9%
Total by 2021 108.4 33.1%
l Sports-betting operational l Sports-betting legal but not yet operational l Enabling bill(s) pending
Combination of established brands, proprietary technology and market access will create a leading position in the US
81
The JV: A Winning Combination
Established brands
Proprietary technology
Market access
Efficient financial
model
Online: GVC Technology Retail: GVC Stadium Technology
19 states; expect to access all markets that regulate where commercially viable
Proprietary technology + efficient marketing + market access = efficient cost model
Target EBITDA margin of 30%
• 50/50 JV
• 25 year agreement
• All existing and future sportsbooks transferred to JV – current run rate NGR >$100m
• Access to 32 million M Life members
The JV is well-placed with current access to 19 states; expect to enter every regulating state where commercially viable
82
Market Access
Source: Eilers & Krejcik – April 2019
Market access, technology and brand awareness are major barriers to entry. We expect the market to be dominated by a small number of scale operators
WA
OR
CA
MT
ID
NV
AZ
UT
WY
CO
NM
TX
OK
KS
NE
SD
ND
MN
IA
MO
AR
LA
MS AL
FL
SC TN
NC
IL
WI MI
OH IN
KY
WV VA
PA
NY
ME
VT NH
MD
D.C.
CT
RI
AK
HI
MA
DE
NJ
l Live in 2018 (8 states) l Live in 2019-2020 (11 states + DC) l Live in 2021-2022 (11 states)
l Live after 2022 (16 states) l Unlikely to legalise (4 states) l JV market access (19 states)
Legend – legal sports betting:
GA
83
Flexible model that is fully customisable state-by-state
NGR run-rate of over $100m across Retail, Online and B2B
Operating Model
Technology and product: proprietary, flexible, omni-channel sports and gaming platform
SPORTS Trading: 600 traders globally, dedicated US-based team, proprietary trading models
Marketing and BI: leveraging leading retail, online and omni-channel expertise
Brands and assets: powerful brands and partnerships, well-invested retail assets, far-reaching customer database
Responsibility: leading the way in Responsible Gambling
B2B ONLINE RETAIL
Putting an optimal structure in place to capitalise on the long-term opportunity
84
Progress Since JV Formation
• Management team now in place: CEO, CMO, CTO, CHRO
• Head office established in Exchange Place Jersey City, minutes from Manhattan
• Hiring progressing well – current 70 FTEs
• Dedicated technology delivery team in place; H2 2019 roadmap agreed
• Over 40 developers ring-fenced to focus on US requirements, in addition to the 1,100+ IT
heads within GVC supporting the platform and shared elements
• New Jersey launch in both retail and online (with limited marketing to date)
• Market access commitments signed in California and Montana
• Strategic partnerships with multiple sports leagues secured
• Build-out of MGM retail sportsbooks progressing well
Powerful proprietary technology is resource backed and provides operating leverage
85
Technology
US Online sports offering migrated to the GVC technology sports platform in H2 2019
OMNI-CHANNEL DEVICES
IOT MOBILE TABLET
API SERVICES
PLAYER MANAGEMENT SYSTEM
2 W
AY
INT
EG
RA
TIO
N S
ER
VIC
ES
SUPPORTING ECO SYSTEM TOOLS
Stadium Sports Technology
Fully integrated into the GVC technology platform Default US Retail solution – used by over 80% of sportsbook operators in Nevada Provides a ‘light’ online solution – current basis for JV offering in New Jersey Migration of online sports offering to the main GVC sportsbook in H2 2019
US Retail US Online (light)
STADIUM
SPORTS
SPORTS
Full US Online: H219
CASINO
US Online US Online
POKER BINGO
US Online
Full product range available to customers ahead of the new NFL season
86
Roadmap: Product
Launch on the GVC technology platform in H2 2019 will significantly enhance offering
87
Technology and Product Milestones
MGM NJ Retail
sportsbook migrated
to GVC platform
2019
US core platform
upgraded to the
global version
Sports affiliates
platform deployment
MGM MS Retail
sportsbooks migration
to GVC platform
Additional
payment methods
30+ new casino
games exclusive
for the US market
MGM NV Retail
sportsbooks migration
to GVC platform
Full GVC
online sports
platform deployment
GVC marketing and
BI tools deployment
Borgata Sports on
mobile and desktop
New sports-betting mobile
and desktop front-end
Online sports-
betting on desktop
In-play sports-betting on
mobile and desktop
Start of
NFL
Season
(September)
88
US Marketing
Matt Prevost CMO – ROAR Digital (US JV)
GVC Holdings PLC | Capital Markets Day | 16 May 2019
89
Introduction
Previous roles include:
• Cerberus
• Avon - Chief Digital
Officer
• McKinsey & Co.
Previous sector roles
include:
• Coral Interactive – CMO
CMO – US JV
since January 2019
6 years within
the gaming sector
Matt Prevost CMO – ROAR Digital (US JV)
Agenda - Marketing strategy - 2019 roadmap
Building the foundation for growth; ready for the start of the 2019 NFL season
90
Marketing Strategy
Leverage powerful
MGM brand
Extend MGM’s investment
in sports partnerships
Develop data-driven
marketing approach
Build omni-channel
experience
50+ marketing deals including MLB, NBA, NHL and MLS
Leverage experience and tactics developed in the wider Group; predictive
analytics and real-time CRM
Connect land-based and online experiences; 7m+ annual guests at MGM
properties
Highest awareness of Las Vegas resort operators at c90%
Very high awareness of the MGM brand enables higher ROI acquisition spend
91
Leverage Powerful MGM Brand
• Highest awareness among the Las Vegas resort operators (c90%)
• Operates 8 of the top 12 brands in Las Vegas
• Significant regional properties in key markets
“To Entertain the Human Race”
• 32m+ M Life Rewards members
• 7m+ annual guests at MGM properties
Very high awareness of the MGM brand enables higher ROI acquisition spend
92
Leverage Powerful MGM Brand
Video
Driving awareness and loyalty through sports partnerships
93
MGM: Significant Commitment to Sports
Billions of advertising impressions annually
National Regional Las Vegas
Stanley Cup UFC Pac 12 The Match Canelo vs. GGG NBA Summer League
• A proud heritage: e.g. Tyson vs Holyfield, NBA All-Star, Mayweather vs Pacquiao
• Wide range of sports in MGM properties: 35 live entertainment venues, 8,000+ events, 8m+ tickets sold annually
Hosted-events provide opportunities for VIP engagement as well as new player acquisition
94
Efficient player acquisition and retention
Building an Unmatched Omni-Channel Experience
Omni-channel customers at Borgata are 2.5x more valuable than online-only customers
MGM Guest Reservation
Online sports-betting introduced pre-arrival (Awareness)
MGM Guest Arrival
Incentives to trial retail and online experience (Conversion)
MGM On-property Experience
Personalised experience from welcome to VIP host (Retention)
MGM Guest Checkout
Online extension of on-property experience (Retention)
Return to Home State
Sign-up with home state offering, extension of Vegas experience (Retention)
Customer Journey (Las Vegas example):
7m+ annual MGM
guests
MGM Guest
Reservation
1
2
3 4
5
MGM
Guest
Arrival
MGM On-
property
Experience
MGM Guest
Checkout
Return to
Home State
1
2
3
4
5
Activity will ramp-up considerably with product and retail sportsbook development
95
Marketing Roadmap: Early Focus
• Borgata
• Launch Retail sportsbook; market-leading in Atlantic City
• Launch Borgata Online sports; integrated casino and sports
• Launch repositioned MGM online brand
• Invest in team development; continue to leverage GVC capabilities
• Integrate marketing efforts with MGM marketing campaigns
• Build-out M Life points integration
• Launch new mobile app in market and increase marketing efforts
• Expand off-strip deposit points and access for locals
• Develop omni-channel experience; focus on tourist market and MGM’s 45,000+
rooms
• Build-out retail sportsbook operation and marketing
• Leverage Beau Rivage’s premium brand
• Commence online and omni-channel advertising
Capability
Development
New Jersey
Nevada
Mississippi
96
Going Forward
Technology launched ahead of the NFL season, providing the full GVC product offering
Further develop and capitalise on the omni-channel opportunity
Full marketing deployment in H2 2019, leveraging Group expertise
97
Regulation and Responsible Gambling Rob Hoskin - Group Director of Legal and Regulation Grainne Hurst - Director of Responsible Gambling GVC Holdings PLC | Capital Markets Day | 16 May 2019
98
Introduction
Group Director of Legal
and Regulation since
February 2016: previously
held similar roles at
bwin.party and
PartyGaming
Picture
Rob Hoskin Group Director of Legal and Regulation
14 years within
the gaming sector
Picture
Grainne Hurst Director of Responsible Gambling
Previous sector roles
include:
• Ladbrokes Coral –
Director Corporate
Affairs
• Former Special Advisor
in the David Cameron
Government
Director of Responsible
Gambling
since the 2018 acquisition
of Ladbrokes Coral
99
Key Messages
Regulatory agenda is broad; regulation can benefit scale operators with
established brands
Positive direction of travel on German regulation
Decisive action being taken by GVC on Responsible Gambling initiatives
Scale, diversification and multi-channel offerings are advantages in new markets and markets where regulation is increasing
100
Regulation Summary
We are supportive of well-regulated markets
• Key themes:
• As a global operator we have a broad regulatory agenda (we operate licences granted in more
than 20 countries)
• GVC has unparalleled regulatory expertise, staying at the fore-front of developments
• Regulation can be an opportunity
• New markets opening up – e.g. US
• Markets regulating – e.g. Brazil
• Tighter regulations create barriers to entry, benefiting large established operators
• Greater revenue stream certainty
Regulating
Markets
Advertising
Restrictions UK
Responsible
Gambling Germany
Over 90% of Group revenues are derived from taxed or regulated markets
101
Regulated Markets Drive Growth
Regulation provides significant growth opportunities in Brazil and Netherlands
Market growth
Increased marketing ROI
Increased player protection
Increased barriers to entry
− Brand
− Compliance
− Tax cost
Revenue stream certainty
The Group’s largest unregulated1 markets are
Netherlands and Brazil, both of which are
expected to regulate in the next 2 years
Brazil
• The Brazilian Parliament has authorised the Brazilian
Government to legislate online and retail sports-betting
• sportingbet is the dominant player
• Expensive free-to-play marketing would be replaced by
direct customer acquisition driving market growth
Netherlands
• Gambling law approved
• Licensing expected by 2021
• Direct marketing will be permitted driving market growth
Advantages of regulated markets
1 Excluding Germany which is taxed and regulating
We are already well-taxed in all major regulated territories
102
Regulated Markets: Tax
Top 10 Online Countries
Group
Online
NGR Share
Sports
Tax Rate
Gaming
Tax Rate
UK 36% 15% GGR 21% GGR
Germany 15% 5% stakes 16% GGR
Australia 9% 17%-24% GGR n/a
Italy 7% 24% GGR 25% GGR
Austria 2-3% 2% stakes 40% GGR
Netherlands 2-3% Regulating Regulating
Spain 2-3% 20% GGR 20% GGR
Brazil 2-3% Regulating n/a
Greece 2-3% 35% GGR 35% GGR
Georgia 2-3% 7% stakes Fixed licence fees
Expected to
regulate by 2021
Key
30%+
GGR
15% - 29.99%
GGR
0% - 14.99%
GGR
Advertising restrictions are a growing theme
103
Advertising Restrictions
Well-established online and retail brands and market leading multi-channel offerings will drive market share gains
Italy
Australia
UK
Whistle-to-whistle live sport TV advertising ban (August 2019)
• High street signage and well-established multi-channel offering are a competitive advantage
• Voluntary industry collaborative initiative
Whistle-to-whistle live sport TV advertising ban (March 2018)
• No discernible impact on market growth
• Reinforcing barriers to entry - online sports-betting market dominated by five operators
Full advertising ban – all channels (1 July 2019)
• Established brands and the Eurobet multi-channel offering will help drive market share gains
• Creates very high barriers to entry
• One-time negative impact on online market growth – expected reduction in the number of
operators
Major Responsible Gambling changes have already been implemented in our UK businesses over the last three years
104
UK – The Landscape Has Already Changed
UK business is still growing strongly despite these changes
Step-change in customer affordability, source of funds, and responsible gambling intervention
% increase from 2016
Compliance (source of funds) interactions +330%
Responsible Gambling interactions +387%
Self-excluded and excluded customers +551%
Compliance and Responsible Gambling headcount +468%
Identification of problem gambling behaviour and effective intervention
105
Our Approach to RG – Changing for the Bettor
CHANGING
FOR THE
BETTOR
Aim to be the most trusted and enjoyable betting operator in the world
Markers of harm triggers will identify problem gambling behaviour driving effective intervention
Supported by affordability checks where appropriate
Ongoing development of monitoring tools
1. Understand
the problem and
best solutions
Tailored to individual markets
7. Drive cultural
change within
our business
6. Champion
responsible
product design
4. Empower
customers
5. Fund treatment
for those in need
3. Promote
responsible
attitudes
2. Educate our
key stakeholders
106
Decisive action being taken to improve player protection – we have a plan and are making good progress
Our Approach to Responsible Gambling
Increase in GVC funding for research, education and treatment from 0.2% to 1% of UK GGR
(£4m to £20m) by 2022
Industry-wide ban on UK TV sports-betting adverts (excluding horse racing) at any time of the day
Provide blocking software to customers free of charge
Setting up an independent trust to fund treatment centres across the UK
Working together as an industry
• Minimum industry standard
for markers of harm by Q2 2019
• Creation of a new trade body
for the retail and online
gambling industry – Q3 2019
• Whistle-to-whistle TV advert
ban – Aug 2019
Working with regulators
• Affordability trials – working
with UKGC and the industry
• Use of credit cards – UKGC
decision likely by in Q3 2019
Applying learnings across
territories
• Implementing player awareness
systems outside the UK
• Applying Responsible Gambling
learnings in US
Sustainable and effective player protection framework
GVC call for action in the UK
Changing the narrative
German regulatory framework is complex, but the direction of travel is positive
107
Germany: Overview
bwin has over 20 years experience of operating a successful business model in this complex regulatory environment
• German regulation is set by the 16 Lander (states)
• GVC and other operators offer both online sports-betting and online gaming on the basis of
• EU law
• Being one of the original successful sports-betting licence candidates
• Schleswig-Holstein licences
• Regulation is currently defined by the amended 2012 interstate treaty:
• Online sports-betting licences now due to be issued in early 2020
• Online gaming remains prohibited, but legal defences remain
• A seismic shift toward online gaming in the last two years, several influential Lander pushing for some form of
online gaming regulation rather than prohibition
• The Lander have committed to re-regulating the German market by mid 2021; GVC expects this regulation to
include online gaming regulation
• GVC expects to continue to offer online sports-betting and online gaming into Germany
The Lander vote on 21 March 2019 sets a clear pathway to regulation
108
Germany: Roadmap to 2021
Key expected regulatory developments:
Developments following Landers’ vote on 21/3/19
SH licences, including casino licence extended
Gaming prohibition remains, and may be a condition
of the new licences
Sports-betting licences to finally be issued 1/1/2020,
based on 2012 state treaty regulation – potential BiP
restrictions and stake caps
Landers committed to a new interstate treaty in 2021
GVC interpretation
Positive
Ban is in breach of EU law; appetite for
enforcement appears low
Positive development as regulatory certainty
increased; restrictions can be relaxed
Positive – influential Lander pushing for regulation of
online sports and gaming
21 March 2019: Prime Ministers
agree to abolish limitation to 20
licences by agreeing on
amendments to the current State
Treaty. Hesse shall (again) be the
issuing Lander
6 June 2019: Prime
Ministers to commence
discussions on future
legislation after mid-2021
1 January 2020:
State Treaty
amendments
scheduled to
enter into force
30 June 2021:
Current State Treaty
expires; new state
treaty expected to
enter into force
April 2019: Schleswig-Holstein
initiates legislative process to
continue regulated online casino
market (bwin licensed)
Q1 2020: Hesse
expected to issue
sports-betting
licences
Q3 2019: Hesse expected to
provide details of sports-betting
licence procedure
A
B
C
D
A C
B D
109
Going Forward
Decisive actions on Responsible Gambling
Finalising and implementing plans for a regulating Germany
Collaborative approach to working with regulators
GVC Holdings PLC | Capital Markets Day | 16 May 2019 110
Australia
Jason Scott CEO - Australia
111
Introduction
CEO Australia
since the 2017 15 years within
the gaming sector
Picture
Previously
ladbrokes.com.au
trading director
Previous sector roles
include:
• Tatts Group
• Humbleton Pty Ltd
Jason Scott CEO - Australia
Agenda - Overview - Australian Market - People - Technology - Product - Marketing
112
Key Messages
Australia is a core, profitable market for the Group with potential long-term
regulatory upside
Neds acquisition provides greater scale, dual brands,
best-of-both management and improved technology
Market-leading product innovation and marketing is driving
outperformance
KEY ENABLERS (Covered in this section)
TECH PRODUCT BRANDS MARKETING PEOPLE +
LOCAL EXECUTION
+ + +
Ladbrokes.com.au NGR has grown 166% since 2015, significantly outperforming the market
113
Growing Market Share
2012 2013 2014 2015 2016 2017 2018 2019
Launched as
Bookmaker.com.au
Acquisition by
Ladbrokes plc Acquisition
of Neds
0%
5%
10%
15%
20%
0
50
100
150
200
250
300
350
400
2015 2016 2017 2018
Ladbrokes.com.au Neds Online market share
• Consideration of c£37m (max. c£52m)
• Revenue multiple of 0.7x for the fastest growing operator in
the market
Provides scale and growth opportunity
• Greater scale – combined market share of c19%
• Dual brand strategy
• Best-of-both businesses to be retained
• Leading technology platform
• Synergies of c£9m, to be fully realised in 2021
Acquired
Betstar
Launched
exclusive Cash-
In product
First to market
with OddsBoost
product
Historic NGR and market share1
A$m
NG
R
1 Source: Market share stakes based on management estimates
Mark
et
Share
Sta
kes
Australian market is high growth with long-term regulatory upside
114
Australian Market
1 Source: Online only staking. Management estimates
2 Source: Australian Racing Fact Book 2017/18
Australia is a profitable division for GVC with the market dominated by scale operators
High Growth Online Market Recent Regulatory Developments
Horse Racing Led, Sports Growing Long-term Potential Upside
• Credit betting ban
• TV advertising restrictions
• POCT commenced in all states
• National Consumer Protection Framework
implemented from May 2019
• Bet-in-Play
• Online Poker
• Online Gaming
• Licence processes underway in WA, VC and
New Zealand
0
5
10
15
20
25
30
2015 2016 2017 2018
A$bn
Thoroughbreds 55%
Greyhound 9%
Harness 5%
Sports 31%
2
1
Market is competitive, but expect POCT mitigation through price
115
Australia Market: Post POCT
1 Source: Internal data
2 Source: Taylor Collison. Based on average market percentage across top 7 operators on consistent race weeks in March 2018 and March 2019
• Point of Consumption tax now introduced in all major states
• Average effective rate: 11.5% of GGR
• Including POCT, total taxes paid to Government and horse racing is now c35% of GGR – highlights importance of
scale and increases barriers to entry
• Mitigation - consistent evidence of price mitigation by all operators expected to continue
117%
120%
2018 2019
x
113%114%115%116%117%118%119%120%121%122%123%
Ja
n-1
8
Fe
b-1
8
Ma
r-1
8
Ap
r-1
8
Ma
y-1
8
Ju
n-1
8
Ju
l-1
8
Au
g-1
8
Sep
-18
Oc
t-1
8
No
v-1
8
De
c-1
8
Ja
n-1
9
Fe
b-1
9
Ma
r-1
9
x
Thoroughbred Harness Greyhound
POCT in
Queensland
effective 1Oct18
POCT in NSW /
Victoria / WA
effective 1Jan19
Average overround % of major operators2 Average market percentage 1
116
People: Australia Team
CEO
Jason Scott
Chief Marketing Officer
James Burnett
Chief Product Officer
Mick Horne
Chief Digital Officer
Chris Ward
Trading
David Horne
Chief Operations Officer
Gary Shannon
Chief Technology Officer
Drew Wareham
Chief Financial Officer
Lachlan Murray
Acquisition of Neds enables refresh of the Ladbrokes.com.au technology platform
117
Technology Platform
The Neds platform is a scalable, modern, cloud-first architecture:
• Mobile-first single codebase allows for highly efficient single execution of product
delivery, ensuring rapid speed to market for new products
• Capacity to scale to >20x current volumes
• End-to-end development team and delivery model – low cost
• Customisable admin system provides a single view for operators and trading teams
• Powerful promotional marketing engine
Platform migrations to Neds platform:
• Bookmaker.com and Betstar migration completed to Neds April 2019 – no issues
• Ladbrokes.com.au planned for H2 2019
Ladbrokes.com.au and Neds have a track record of leading product innovation
118
Product Innovation
Ladbrokes.com.au and Neds have a track record of leading product innovation
119
Product Innovation
• >9.5m Odds Boosts used by customers in 2018
• Available on racing, sports and multis, further
variants planned
• In-depth customer profiling driving reduced cost
Ladbrokes Odds Boost
• Personalised bucket of “value” for customers to
use as they like
• Ability to tailor offerings to individual customers
• Key driver of Neds strong growth since launch
Neds Toolbox
Video
Legends Boost is the latest example of product innovation to be released in the market
120
Product Innovation
Standout marketing has firmly established Ladbrokes as part of the Australian betting culture
121
Marketing: Strategy
Neds acquisition provides the benefits of a dual-brand strategy
122
Marketing: Brand
All rounder app
fun, fast and innovative
New technology innovation and
novelty
Impulsive
”Refunds”
Well established brand with
substance and integrity
Trusted, reliable service
Considered and looking for value
“Win More”
Brand Snapshot
Customer Needs
Customer Type
Default Promo Type
Best-of-both CRM approaches adopted as part of Neds integration; also leveraging Group capability
123
Marketing: CRM
• Personalisation based on customer preferences
• Digital marketing excellence
• Timely reminders of previous successes
• Highly scalable reactivation techniques
• Leveraging Group capability
124
Going Forward
Deliver benefits of a dual-brand strategy
Leverage benefits of the Neds technology platform and wider Group capabilities
Rigorous focus on CRM and product development
GVC Holdings PLC | Capital Markets Day | 16 May 2019 125
Financials
Rob Wood CFO
126
Upgrade to synergy and triennial review guidance
Guidance Updates
• Acceleration of Ladbrokes Coral synergy recognition due to earlier platform migrations:
• £15m additional cost synergy recognised in 2020
• No change to overall quantum of £130m
• Triennial Review impact is better than expected:
• £15m EBITDA benefit from 2020 onwards
• Strong trading continued since last update (1 April 2019)
• Full year 2019 EBITDA in-line with expectations1
1 Bloomberg FY19 EBITDA consensus £646m as at 15May2019
127
Double-digit Online NGR growth delivering sustainable long-term profit growth and cash generation
Long-term Profit Growth
• Longer-term commitment to double-digit Online NGR growth, providing platform for strong EBITDA
growth
• Strengthening Online EBITDA margin, rising to 30% over time
• Strong cash conversion1 targeting c33% (after dividends) post Ladbrokes Coral integration
• Reaffirming minimum double-digit annual dividend growth
This is pre-US – which is a significant opportunity on top…
• US market size of at least $6bn, could be up to $10bn
• Expect top-three operators to have 60% share of the market – JV is targeting no 1 position
• JV has an efficient operating model – expected EBITDA margin of c30%
1 Cashflow conversion is defined as net cash-flow after all outflows (including dividends) / EBITDA
128
Wrap-up
Kenneth Alexander Chief Executive
GVC Holdings PLC | Capital Markets Day | 16 May 2019
129
Key Messages
GVC is a truly global operator, gaining market share in all major territories
Continued outperformance is driven by operational excellence
The GVC operating model is highly effective and is a sustainable
competitive advantage; we are exceptionally well placed for future growth
130
Q&A
GVC Holdings PLC | Capital Markets Day | 16 May 2019