Gambling valuations have fallen significantly since the height of the pandemic. Back then, higher multiples were driven by a low interest rate environment, stimulus programmes, a lack of other entertainment options and free-flowing consumer spending. All four of these factors have now gone into reverse.
Investment bank Houlihan Lokey says that “with multiples down roughly 50 per cent plus since 2021 highs, investors are increasingly focusing on underlying fundamentals”. It thinks this is of benefit in the long run, pointing to the market’s appetite for digital transformation in the sector as an area of focus for companies, as well as interest from European operators in the US gaming market.
Domestic travails have heightened the importance of international markets such as the US. A year ago, we said the UK industry was awaiting the “heavily delayed” regulation-tightening white paper with bated breath. Twelve months on, those delays have got even heavier, and the sector is yet to breathe out. Political instability and governmental priorities have pushed the paper further down the legislative to-do list, which has added to the uncertain outlook for UK revenues.