New Subsidiaries Continue to Drive Revenue Up for Allwyn
Author:
Muhammad Gregory
Global lottery leader and online gambling company Allwyn has recently recorded a massive increase in revenue in the third quarter of this year. The €2-billion mark was surpassed in Q3 2023, indicating a massive 98 percent year-on-year (YoY) increase, primarily driven by the Camelot acquisitions that were completed earlier this year. Almost half of the total consolidated revenue came from the new subsidiaries, and without that influx, Allwyn’s total revenue would have dropped by a very slender margin.
Allwyn has recorded a massive 98 percent increase in revenue.
?Jungwoo Hong/Unsplash
Allwyn is one of the biggest and most popular brands in the world of lotteries. Primarily focusing on that segment, the Switzerland-based company has grown exponentially over the years. Earlier this year, the group achieved one of their biggest targets after acquiring Camelot Lottery in the United States and the United Kingdom. In January this year, a month before Allwyn confirmed the commencement of the acquisition of Camelot UK, the Swiss operator completed the takeover of Camelot Lottery Solutions Group in the US. Allwyn secured a collaborative loan worth over €1.5 billion to complete the two key acquisitions. The agreement with the former owners of Camelot Lottery Solutions Group US, Ontario Teachers, was easier compared to the one that took place in the UK. Camelot UK had commenced legal proceedings against Allwyn in a bid to fight the takeover. However, the case was eventually dropped after a long and bitter legal battle, and the acquisition was completed in February this year. Shortly after the takeover, Allwyn earned the Fourth National Lottery license in the UK and became the first gambling operator to snatch the permit away from its new subsidiary Camelot UK.
The prestigious Fourth National Lottery license of Allwyn will be valid from February 2024. Till then, Camelot UK will run the nation’s official lottery. The two acquisitions have been extremely crucial for the Swiss lottery operator, whose total revenue has grown by 94 percent between 2019 and 2022. Last year, the company generated total revenue of €4 billion. This year, courtesy of the two major acquisitions, the annual revenue is expected to record a substantial year-on-year spike, setting a new record for Allwyn. The operator has made a significant impact in several regulated gambling jurisdictions worldwide. In Austria, Allwyn has held the exclusive lotteries license since 1986 and offers lotto via more than ten brands like Osterreichische Lotterien, Casinos Austria, and more. In the Czech Republic, the operator is currently the market leader in both segments of the lottery sector – numerical and instant, holding 94 percent market share in the former and 85 percent in the latter. There are nine active Allwyn-owned brands in the jurisdiction, including Sportka Sazka, Euro Jackpot, and more. Allwyn was previously known as Sazka before it was rebranded two years ago.
Cyprus and Greece have been high-revenue-generating jurisdictions for Allwyn in recent years. The operator is a licensed lottery operator in Cyprus and is the market leader in the non-exclusive online sports betting segment. Meanwhile, in Greece, Allwyn is the exclusive provider for multiple online gambling segments and has held that role since 1958. It holds a market share of 100 percent in lotteries and virtual slots and a 70 percent share in other iGaming services. The renowned operator OPAP is a subsidiary of Allwyn alongside other brands like Kino, Stoiximan, and more. Since 1993, Allwyn has held an exclusive license for fixed-odds numerical lotteries in Italy’s regulated gambling market. A little over seven years ago, the Swiss operator also acquired a 32.5 percent stake in LottoItalia. Including that joint venture, Allwyn has four brands active in Italy. The Camelot UK acquisition has aided Allwyn’s promising growth across the European continent. Apart from holding the exclusive lottery license in the UK, Allwyn will likely focus on other brands to acquire in the United Kingdom Gambling Commission’s (UKGC) jurisdiction.
The effects of the Camelot acquisitions have been evident in almost all the quarterly financial reports this year. Recently, the Swiss operator published its financial report for the third quarter of this year and confirmed a 98 percent YoY increase as the total revenue touched €2.01 billion. Without considering the revenue generated from the Camelot subsidiaries, Allwyn generated €1.01 billion, recording a one percent YoY decrease. Adjusted EBITDA soared 16 percent YoY and reached €368 million with a margin of almost 42 percent. According to Allwyn, large payouts in the sports betting segments and unfavorable jackpot cycles made a huge impact on the company’s performance in the quarter. The gross gaming revenue (GGR) was also up 98 percent, rising from €969 million in Q3 2022 to €1.9 billion in Q3 2023. Net revenue spiked 38 percent and reached €883 million, while the operating EBITDA remained steady at €311 million. At the end of last year, Allwyn generated revenue worth €4 million. At the end of a nine-month period in 2023, ending in September, the operator has already generated €5.7 billion. The operator will certainly set a new annual revenue record at the end of this year.
The CEO of Allwyn, Robert Chvatal, was delighted after seeing significant growth in the third quarter of this year.
“I am pleased to report that Allwyn delivered another quarter of solid financial performance and strategic progress, notwithstanding headwinds from customer-friendly sports results (which impacted the sports betting sector in general) as well as less favourable jackpot cycles. Total Revenue increased by 98% year-on-year in Q3 2023, reflecting a steady performance in our existing geographies in addition to the significant contribution from the Camelot Acquisitions that we completed in the first quarter. The steady performance in our existing geographies was underpinned by continued progress in digital, where we see the benefits of our ongoing focus on product development and the customer proposition. Alongside this, we continue to successfully roll out of a number of important game innovations, including new launches in the exciting annuity category in Austria, the Czech Republic, and Greece and Cyprus. In doing so, we remain focused on our responsibilities to all our stakeholders, including our relentless focus on safe play.”
Allwyn Started the New Year on The Front Foot
Expectations were sky-high from Allwyn in 2023 after the company generated annual revenue of €4 million in 2020. In addition, the announcements of the Camelot takeovers in the US and UK were made, confirming that the Swiss operator had big plans for 2023. However, with a little help from its new subsidiaries, Allwyn generated a consolidated total revenue of €1.65 billion in the opening quarter of FY2023. The revenue marked a massive 80 percent YoY increase as profits went through the roof. In the same quarter last year, Allwyn had recorded an impressive 25 percent increase, confirming an ever-growing positive trajectory.
The GGR soared by 81 percent, going from €876 million in Q1 2022 to €1.6 billion in the opening quarter of this year. Net revenue also recorded a 40 percent YoY spike, as numbers increased from €579 million to €811 million. The operating EBITDA figures were up by 23 percent, increasing from €267 million in Q1 2022 to €329 million in Q1 2023. Adjusted free cash flow also increased by 23 percent, reaching €322 million from €251 million. The growth was impressive as the revenue was only partially affected by the revenue generated from the Camelot subsidiaries.
Record High Revenues Were Projected After H1 2023 Report
The true effect of the Camelot acquisitions was seen in the second quarter of this year after the accumulation of revenue was more than double of what it was in the second quarter of 2022. The quarterly revenue reached the €2-billion mark for the first time in its history. The GGR was up by around 115 percent YoY, reaching €1.96 billion.
The revenue spurt was huge because of the new subsidiaries, but even without them, Allwyn’s total consolidated revenue of the second quarter of 2023 would have marked a seven percent YoY increase with a total revenue generation of €1.02 billion. Camelot UK made the biggest contribution in Q2 2023, as it made up half of the quarter’s GGR.
