Capital Markets Day
16 May 2019
Capital Markets Day 16 May 2019 Disclaimer NOT FOR PUBLICATION OR - - PowerPoint PPT Presentation
Capital Markets Day 16 May 2019 Disclaimer NOT FOR PUBLICATION OR DISTRIBUTION IN WHOLE OR IN PART IN, INTO OR FROM ANY JURISDICTION WHERE TO DO SO WOULD CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OR REGULATIONS OF THAT JURISDICTION. This
16 May 2019
NOT FOR PUBLICATION OR DISTRIBUTION IN WHOLE OR IN PART IN, INTO OR FROM ANY JURISDICTION WHERE TO DO SO WOULD CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OR REGULATIONS OF THAT JURISDICTION. This presentation has been prepared by GVC Holdings PLC (“GVC”). This presentation includes statements that are, or may be deemed to be, “forward-looking statements”. These forward-looking statements can be identified by the use of forward-looking terminology, including the terms "believes", "estimates", "anticipates", "expects", "intends", "plans", "goal", "target", "aim", "may", "will", "would", "could" or "should" or, in each case, their negative or other variations or comparable terminology. These forward-looking statements include all matters that are not historical facts. By their nature, forward-looking statements involve risks and uncertainties because they relate to events and depend on circumstances that may or may not occur in the future and may be beyond GVC’s ability to control or predict, and future events and circumstances can cause results and developments to differ materially from those anticipated. Nothing in this presentation should be construed as a profit forecast. Forward-looking statements are not guarantees of future performance and hence may prove to be erroneous. Other than in accordance with its legal or regulatory obligations (including under the Market Abuse Regulation (596/2014), the Listing Rules, the Disclosure Guidance and Transparency Rules and the Prospectus Rules), GVC does not undertake any obligation to update or revise publicly any forward-looking statement, whether as a result of new information, future events or
No representation or warranty (express or implied) of any nature is given nor is any responsibility or liability of any kind accepted by GVC or any of its directors, officers, employees, advisers, representatives or other agents, with respect to the truthfulness, completeness or accuracy of any information, projection, representation or warranty (express or implied), omissions, errors or misstatements in this presentation, or any other written
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Kenneth Alexander Chief Executive
GVC Holdings PLC | Capital Markets Day | 16 May 2019
Purpose of today:
Provide an understanding
Update on specific areas
Introduce a selection of key management
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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
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local execution and entrepreneurial culture
in 2020)
A truly global operator in a high growth sector
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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
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
sports and gaming brands
multi-channel presence
below EBITDA
72.9% 17.4% 9.3%
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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
+ + +
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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
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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
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 Jackpotjoy2018 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 Bet3 65 Stars Gro up PPB William Hill Playtech Kindre d Betsso n 888 Ja ckpotjoy2018 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
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Source: H2GC
Operating in a high growth sector and in high growth markets
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)
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Source: H2GC
The sector has a very long runway for online growth
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 China Japan Italy UK Australia Germany Canada France South Korea Spain Singapore Philippines Netherlands Sweden Brazil
Total 2018 Estimated Market Size – Gross Gaming Revenue (£bn) Land-based and Online
GVC present online
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Highly diversified global operator with a long history of operating in our territories – we know our markets “inside-out”
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
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Proven track record in delivering value from successful M&A
Target identification
Optimal deal structures
Successful execution
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Well-established brands increase marketing efficiency and create barriers to entry
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Vast majority of online revenues are generated in fast growing, regulated and taxed markets
Source: H2GC 1 Sports-betting and gaming duty or equivalents
% of GVC FY18 Online NGR in countries… …if taxed, then are taxed1 at 15%
…that are either regulated, regulating and/or taxed …where the
is growing >5% pa …where GVC is growing >10% pa …with online penetration currently less than 20% (ex UK) 92% 90% 95% 98% 81%
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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
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Decisive action to improve player protection – we have a plan and are making good progress
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
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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
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Shay Segev Co-COO
GVC Holdings PLC | Capital Markets Day | 16 May 2019
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Picture
Shay Segev Co-COO
Agenda
13 years within the online gaming sector Joined GVC as COO in February 2016 Previously Chief Strategy Officer Gala Coral Previous sector roles include:
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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
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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
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
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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.)
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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
Customer Service Examples of sharing to date:
bwin Germany in Q4 2018
tailored CRM
between GVC and Ladbrokes Coral Shared Gaming Content Marketing Trading
product range and delivering operational synergies
improved risk management and increasing margins
practices to Ladbrokes Coral customer service
customer response times (phone, chat, KYC)
brands; Playtech content to follow from Q2 2019
increasingly available on Ladbrokes Coral UK brands
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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
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
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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 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 WAY INTEGRATION SERVICES
SUPPORTING ECO SYSTEM TOOLS SPORTS CASINO POKER BINGO
In-house technology enables rapid action and deployment
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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
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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
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
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Continual improvements to product offering and customer user experience
video
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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
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GVC Holdings PLC | Capital Markets Day | 16 May 2019
Adam Lewis CMO – GVC Brands
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Adam Lewis CMO – GVC Brands
Agenda
Joined GVC as CMO in January 2013 18 years within the online gaming sector 26 years International marketing experience Led the marketing turnaround
bwin.party (2016)
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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
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countries
Highly effective operating model delivering sustained outperformance
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3-Yr Growth
2018 vs 2015
2016 2017 2018 +11% +20% +22%
Q1 2019 NGR
Year-on-year
NGR1
1 Constant currency
Total NGR €m
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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 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
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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
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Additional text here
Data Layer
Transactional Web Customer Services Social & App Survey …Third Party
Customer DNA Analytics Layer
Marketing Mix Modelling Predictive Modelling
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…
Movements
Marketing analytics delivering tangible benefits in sector specific trials – wider deployment planned from H2 2019 onwards
Digital Marketing
(Player Acquisition)
CRM Casino Marketing
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
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Consistently exceeding player expectations
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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
YoY 78%
increase in new customers
35%
increase in NGR
32%
increase in unique active players
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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
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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’
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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’
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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
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NGR1 2016 2017 2018 +18% +26% +23%
Q1 2019 NGR
Year-on-year
NGR growth since acquisition
1 Constant currency
Total NGR €m
Making the bwin brand authentic and passionate
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Artificial Authentic Humorous Passionate Factual
Making bwin the standout No.1 sportsbook in Germany
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2020…2021…2022
‘Welcome to the Big League’
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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
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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 growth %
1 Constant currency
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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%
Total NGR GELm
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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
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Andy Hornby Co-COO
GVC Holdings PLC | Capital Markets Day | 16 May 2019
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GVC Co-COO since the 2018 acquisition
Previous sector roles include:
– COO
Chief Exec Coral 8 years within the gaming sector Previous roles include:
Andy Hornby Co-COO
Agenda
UK Online:
UK Retail:
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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
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Source: Gambling Compliance FY17 estimates
0% 2% 4% 6% 8% 10% 12% 14% 16% 18% 1,000 2,000 3,000 4,000 5,000 6,000 7,000 2012 2013 2014 2015 2016 2017 2018E 2019E 2020E YoY Growth NGR (£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
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1 Excludes acquisitions
14% 6% 5% 3% 11% 7% 0%
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
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1 Excludes acquisitions
8%
15%
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 Not reported Not reported Reported on a different time period
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These models are unique IP – driving efficient and effective marketing Scalable real-time marketing engine delivering unique experience to each customer
Bespoke predictive models include:
Predictive analytics models Behaviour Segmentation models Macro and micro segmentations defining player cohorts:
Next Best Offer Models Real-time decisions defining next best offers:
promote second market
banner offer to Rugby
Models are highly accurate
Organic FTDs – Adj R2 97%
Week 1 Week 52 ActivesExisting Active Customers – Adj R2 89%
Week 1 Week 52 ActivesReactivated Customers – Adj R2 94%
Actual Model prediction Week 1 Week 52 Actives60
Highly relevant personalised CRM drives increased customer retention Advanced marketing capabilities enable unique interaction with every customer
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
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
week
communications
football, but with a high propensity to horses and
Gambling score – no previous problem gambling triggers
likely to churn
15:02 Customer A receives a push notification advertising “1-2-Free” free-play game
Push
Example customer interaction:
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Advanced marketing capabilities are a competitive advantage
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Brand differentiation reinforced through new campaigns
‘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
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38% 21%
33%
21% 5% 36%
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)
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
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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
Coral.co.uk has consistently outperformed the market
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Growth driven by market leading CRM and continued improvements to user journeys and product offering 2014
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
end
house games
Club’ launched
2018
launched
Very high marketing ROI driving sustained growth
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41% 17%
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
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brand positioning and Foxy as the lead
partnership with exclusive products, bespoke TV and C5 sponsorship
will re-embrace the Foxy character to lead the brand
JOIN THE FOXY FABULOUS.
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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
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Andy Hornby Co-COO
GVC Holdings PLC | Capital Markets Day | 16 May 2019
Six weeks trading since implementation of £2 stakes
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Key Model Assumptions
First six weeks vs model expectations In-line Positive In-line No update yet
Investment in machines, SSBTs, shop fabric and a new proprietary EPOS system leaves the business well positioned
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Machines
at pace − 29 games launched in Q1 − 24 games planned in Q2 Q1 2019 LFL Machines NGR growth: +4% SSBTs
increase by 30%
delivering strong double-digit growth
in-shop” Q1 2019 LFL SSBT NGR growth: +14% OTC
Guarantee (BPG) all-day every- day
ahead YoY since launch of BPG
ahead YoY across both brands during Grand National Q1 2019 LFL OTC wagers growth: improved to flat1
1 Includes SSBTs
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Competitive advantages in the battle for market share Leading offer on the high street
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):
Highly Cash Generative Driving Online Growth
advantage
to Connect and Grid
contributed 14% of ladbrokes.com and 20% of coral.co.uk NGR Reinforcing Brand Recognition
advertising restrictions
80% 79% 78% 74% 72% 70% 69%
Ladbrokes William Hill Paddy Power Coral Bet365 Betfair Sky Bet
Total awareness of Online brands1
Retail brands
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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
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15 minutes
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Adam Greenblatt CEO – ROAR Digital (US JV)
GVC Holdings PLC | Capital Markets Day | 16 May 2019
76
Previous roles include:
Practice Previous sector roles include:
Director of Corporate Development and Strategy
President 16 years within the gaming sector CEO – US JV since October 2018
Adam Greenblatt
CEO – ROAR Digital (US JV)
Agenda
77
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
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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
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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
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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
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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%
The JV is well-placed with current access to 19 states; expect to enter every regulating state where commercially viable
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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
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Flexible model that is fully customisable state-by-state NGR run-rate of over $100m across Retail, Online and B2B
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
heads within GVC supporting the platform and shared elements
Powerful proprietary technology is resource backed and provides operating leverage
85
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 WAY INTEGRATION SERVICES
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
Launch on the GVC technology platform in H2 2019 will significantly enhance offering
87
MGM NJ Retail sportsbook migrated to GVC platform
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
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)
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Matt Prevost CMO – ROAR Digital (US JV)
GVC Holdings PLC | Capital Markets Day | 16 May 2019
89
Previous roles include:
Officer
Previous sector roles include:
CMO – US JV since January 2019 6 years within the gaming sector
Matt Prevost
CMO – ROAR Digital (US JV) Agenda
Building the foundation for growth; ready for the start of the 2019 NFL season
90
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
“To Entertain the Human Race”
Very high awareness of the MGM brand enables higher ROI acquisition spend
92
Video
Driving awareness and loyalty through sports partnerships
93
Billions of advertising impressions annually National Regional Las Vegas
Stanley Cup UFC Pac 12 The Match Canelo vs. GGG NBA Summer League
Hosted-events provide opportunities for VIP engagement as well as new player acquisition
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Efficient player acquisition and retention
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
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
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
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rooms
Capability Development New Jersey Nevada Mississippi
96
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
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Rob Hoskin - Group Director of Legal and Regulation Grainne Hurst - Director of Responsible Gambling
GVC Holdings PLC | Capital Markets Day | 16 May 2019
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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:
Director Corporate Affairs
in the David Cameron Government Director of Responsible Gambling since the 2018 acquisition
99
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
We are supportive of well-regulated markets
than 20 countries)
Regulating Markets Advertising Restrictions UK Responsible Gambling Germany
Over 90% of Group revenues are derived from taxed or regulated markets
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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
Government to legislate online and retail sports-betting
direct customer acquisition driving market growth Netherlands
Advantages of regulated markets
1 Excluding Germany which is taxed and regulating
We are already well-taxed in all major regulated territories
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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
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)
Whistle-to-whistle live sport TV advertising ban (March 2018)
Full advertising ban – all channels (1 July 2019)
Major Responsible Gambling changes have already been implemented in our UK businesses over the last three years
104
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
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
Understand the problem and best solutions
Tailored to individual markets
Drive cultural change within
Champion responsible product design
Empower customers
Fund treatment for those in need
Promote responsible attitudes
Educate our key stakeholders
106
Decisive action being taken to improve player protection – we have a plan and are making good progress
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
for markers of harm by Q2 2019
for the retail and online gambling industry – Q3 2019
ban – Aug 2019 Working with regulators
with UKGC and the industry
decision likely by in Q3 2019 Applying learnings across territories
systems outside the UK
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
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bwin has over 20 years experience of operating a successful business model in this complex regulatory environment
include online gaming regulation
The Lander vote on 21 March 2019 sets a clear pathway to regulation
108
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
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
21 March 2019: Prime Ministers agree to abolish limitation to 20 licences by agreeing on amendments to the current State
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
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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
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Jason Scott CEO - Australia
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CEO Australia since the 2017 15 years within the gaming sector
Picture
Previously ladbrokes.com.au trading director Previous sector roles include:
Jason Scott CEO - Australia
Agenda
112
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
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
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2012 2013 2014 2015 2016 2017 2018 2019
Launched as Bookmaker.com.au Acquisition by Ladbrokes plc Acquisition
0% 5% 10% 15% 20% 50 100 150 200 250 300 350 400 2015 2016 2017 2018
Ladbrokes.com.au Neds Online market share
the market Provides scale and growth opportunity
Acquired Betstar Launched exclusive Cash- In product First to market with OddsBoost product
Historic NGR and market share1
A$m
NGR
1 Source: Market share stakes based on management estimates
Market Share Stakes
Australian market is high growth with long-term regulatory upside
114
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
implemented from May 2019
New Zealand
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
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
scale and increases barriers to entry
117% 120% 2018 2019
x
113% 114% 115% 116% 117% 118% 119% 120% 121% 122% 123% Jan-18 Feb-18 Mar-18 Apr-18 May-18 Jun-18 Jul-18 Aug-18 Sep-18 Oct-18 Nov-18 Dec-18 Jan-19 Feb-19 Mar-19
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
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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
The Neds platform is a scalable, modern, cloud-first architecture:
delivery, ensuring rapid speed to market for new products
Platform migrations to Neds platform:
Ladbrokes.com.au and Neds have a track record of leading product innovation
118
Ladbrokes.com.au and Neds have a track record of leading product innovation
119
variants planned
Ladbrokes Odds Boost
use as they like
Neds Toolbox
Video
Legends Boost is the latest example of product innovation to be released in the market
120
Standout marketing has firmly established Ladbrokes as part of the Australian betting culture
121
Neds acquisition provides the benefits of a dual-brand strategy
122
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
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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
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Rob Wood CFO
126
Upgrade to synergy and triennial review guidance
1 Bloomberg FY19 EBITDA consensus £646m as at 15May2019
127
Double-digit Online NGR growth delivering sustainable long-term profit growth and cash generation
growth
This is pre-US – which is a significant opportunity on top…
1 Cashflow conversion is defined as net cash-flow after all outflows (including dividends) / EBITDA
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Kenneth Alexander Chief Executive
GVC Holdings PLC | Capital Markets Day | 16 May 2019
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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
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GVC Holdings PLC | Capital Markets Day | 16 May 2019