Entain plc Stock

Good morning, and welcome to Entain's 2026 Interim Results Presentation. And I'm delighted to be speaking to you again and sharing another strong set of Entain results.

It's been a busy first half with lots of progress across the business. So I will begin with an overview of our first half, touching on the highlights of our performance and strategic progress delivered so far this year.

I will then hand over to our CFO, Mike Snape, who will provide greater detail on our financial performance and outlook for 2026. Next, you will hear from our Chief Commercial Officer, Andy Hicks and Curry Sloan, who both will discuss how Entain is winning in the market and driving growth across the group. Mike will then return to outline the actions we're taking to support this growth to accelerate operational excellence and deliver shareholder value. And finally, I will conclude with a few closing remarks before we open to take your questions.

So turning to the headlines. Entain has delivered a strong first half performance. Our underlying momentum has continued with both online and retail performing ahead of expectations. And this now marks online's ninth consecutive quarter of growth, and that's despite tough prior year comparatives. The U.K., Spain, Canada and Australia and New Zealand were particular highlights, each continuing to deliver double-digit growth. Our focused execution and strengthening operations are enhancing both our product and player experiences across the group.

The business also performed well during the recent World Cup, a key customer acquisition opportunity for us, and I'm delighted that our first-time deposits were double those seen in the previous World Cup. Alongside this strong performance, we're also continuing to make good strategic progress, getting sharper and fitter to enable us to digest tax headwinds, whilst also becoming more agile in an increasingly better connected global business. So we're improving the way that we work and leveraging our scale more effectively. This delivers increasing benefits for our customers, colleagues and cost base.

Our optimization initiatives are well underway, and our dynamic yet disciplined approach ensures flexibility to invest where we see the best returns. Similarly, this disciplined focus supported our decision to launch our phased exit of Entain CEE. The initial 20% divestment for EUR 425 million represents an important step in unlocking value created within our portfolio.

So in summary, we are making strong progress and continue to see good momentum across our business. As a result, we remain confident with our guidance for online growth and group EBITDA in financial year 2026. Supported by our confidence in our growth trajectory and continuing operational efficiencies, we remain well-positioned to deliver GBP 500 million of adjusted cash flow by 2028 and to create long-term value for shareholders.

So on that note, let me now hand over to Mike on the H1 financials and trading performance in more detail.

Thank you, Stella. Good morning, everybody. I'm delighted to be presenting my first interim set of results for Entain. As you've already heard, we've had a strong start to 2026. So let's begin with the key financial highlights. As a reminder, growth rates I'll refer to are in constant currency unless stated otherwise. Our reported numbers now exclude CEE since we announced our 20% divestment and planned exit, and though we have included figures including it for clarity as we transition.

So I'm pleased with our strong start to 2026 and the growth we delivered in half 1. On a continuing basis, group NGR was up 5%, with both online and retail performing ahead of expectations. Online was up 7%, with strong volume growth of 9%. Sports margins normalizing during Q2 following the player-friendly results in Q1 in April. Our iGaming momentum continued and Sports also performed well with strong player engagement across our portfolio during the World Cup.

Group EBITDA came in at GBP 479 million, including GBP 7 million of parent fees from BetMGM. On a reported basis, this was down 2% versus last year, as anticipated given the increased U.K. gaming tax, but ahead of expectations given our stronger growth than planned in H1 with our mitigating actions on track.

EPS, excluding CEE, was 20.3p, with lower EBITDA having a small impact, but largely due to lower JV income from BetMGM as well as our ETR increasing. Adjusted cash flow was GBP 43 million, up GBP 38 million year-on-year despite the lower EBITDA due to lower CapEx and interest costs, more on that shortly, as well as lower separately disclosed items due to the phasing of our transformation program.

Net debt remained broadly stable at GBP 3.6 billion, ahead of the receipt from our announced 20% sale of CEE. We reported leverage flat at 3.1x, whilst leverage including the DPA slightly improved to 3.3x given our ongoing payments. Finally, we've declared an interim dividend of 10.3p per share, an increase of 5%, which is consistent with prior years.

In terms of segmental performance, with the move of CEE to discontinued operations, we'll continue to report U.K. and Ireland online, International Online and Group retail. Let's start with the U.K. and Ireland. Our biggest online market delivered yet another knockout performance this half as we continue to enhance our proposition. We're continuing to take market share with NGR and volume growth both up 13%, and that's double-digit growth from both Gaming and Sports.

We're particularly pleased that our momentum accelerated through the half despite lapping strong prior year comparators and adjusting to the higher tax environment and mitigation plans required. This growth is being driven by the ongoing operational improvements, enhancing our product proposition and player experience alongside continuing optimization of bonusing. These combined are driving stronger engagement and retention and more profitable growth.

Alongside Gaming's 13% growth, sportsbook was up 11%, benefiting from an upgrade in Bet Builder and a good World Cup. Overall, the U.K. business is in great shape. Profits have inevitably been impacted by the U.K. tax increase, but we are executing well. We remain highly disciplined and our cost mitigations are firmly on track for offsetting the 25% guided to you for this year.

Moving to International Online. We have many success stories, but also had some challenges, reinforcing the benefits of a diversified portfolio. Overall NGR grew 4% with strong volume growth of 7%, but against tough margin comparatives from last year as well as customer-friendly results this year, particularly in February and April.

Encouragingly, growth improved through Q2 as normalizing sports margins supported double-digit growth in May and June on a reported basis. In terms of winning markets, Australia was a clear standout performer, up 13%, reflecting the successful reinvigoration of the business with refreshed brands and improved propositions supporting stronger customer engagement and market share gains. Spain, New Zealand and Canada were also all up double-digit. More on this later from Andy and Curry.

As I mentioned, sports margin was a drag, and this was most pronounced in Brazil and Italy. In Italy, our continued double-digit gaming growth partially offset this, and we're confident we'll see a stronger second half. In Brazil, we're facing an intense and challenging regulatory and competitive environment, and we're taking a highly disciplined approach to investment with a clear focus on returns rather than growth for growth's sake. Although overall growth rates were disappointing, that approach has seen us hold market share. And our player metrics improved through Q2 with H1 sports wages up 10%, supporting by sporting bet brand strength and targeted marketing campaigns.

We've included the CEE segment here for completeness. However, it is now reported as a discontinued operation. Online was up 7%, including a strong rebound to 16% in Q2 as Croatia and Poland benefited from a stronger-than-expected volume and margin uplift during the World Cup.

SuperSport and STS remain #1 in their markets, and the business is well placed to grow under EMMA Capital's leadership and continue to contribute to our cash flow for as long as we retain our remaining stake in the business.

Finishing on retail to complete the picture. The business continues to perform strongly with half 1 up 1%, which was better than planned. Our U.K. estate remains the best on the high street. NGR was up 3% on a like-for-like basis, and we continue to grow our leadership market share. This is underpinned by our strong brands, leading in-shop cabinets and experiences as well as our strength in multichannel proposition. In Italy, the volume-driven growth in retail gives us real confidence in our future potential in this attractive market as we continue to revitalize our Eurobet brand.

Moving on to EBITDA for continued operations. EBITDA, including BetMGM parent fee, came in at GBP 479 million, down year-on-year as anticipated, but ahead of expectations. FX rates did give us a GBP 16 million tailwind. However, the increase in U.K. tax from 21% to 40% in April was a GBP 56 million negative impact to EBITDA in the half. Our strong online performance still added GBP 22 million despite a GBP 32 million year-on-year increase in half 1 marketing due to World Cup phasing and targeted investments where we see strong returns. This was also net of GBP 18 million BAU tax increases across our other international markets. Retail added GBP 7 million year-on-year, whilst corporate costs were up GBP 5 million due to phasing.

The resilience of our EBITDA demonstrates our structural benefits of a globally scaled and diverse portfolio. Actions we are taking to mitigate 25% of increase in the U.K. tax this year are firmly on track. Mitigation efforts aside across the group, there is far more we can do on our cost base to improve operational leverage.

Let's talk about cash flow. Growth is only valuable if it converts to cash. We see a significant opportunity to step up our cash conversion and target the levers directly within our control, driving down complexity, eliminating cost inefficiencies and demanding strict returns-based hurdles on every pound we spend. On CapEx, our lower half 1 spend is not just phasing. It reflects a permanent returns-led approach to how we allocate capital, allowing us to tighten our FY '26 CapEx guidance today.

Separately disclosable items were GBP 21 million favorable year-on-year relating to restructuring timing. We do expect this to reverse in half 2 as we progress with our transformation and optimize our cost base as we look ahead to 2027 and beyond. In total for half 1, our adjusted cash flow improved to GBP 77 million, which included the net cash flow from our current 67.5% share of CEE.

As well as adjusted cash flow, you will see this table highlights underlying operating cash flow, the continuing consolidated earnings after CapEx, lease payments and TAB NZ revenue share. I believe this metric gives a clearer, simpler view of how our actions are improving Entain's cash conversion. And as such, going forward, I will talk to this more.

Alongside cash conversion, reducing leverage and improving balance sheet flexibility, are critical priorities. Our net debt for half 1 was GBP 3.6 billion, which sees us maintain a broadly stable position despite the increase in U.K. taxes, supported by our cash flow improvements. Our reported leverage also remained broadly stable at 3.1x or 3.3x including the DPA. However, we are laser-focused on our plans to reduce this. As evidenced by our plan to exit Entain CEE, alongside that disciplined approach to investments, we are now taking more decisive corporate actions to improve balance sheet flexibility, both to de-lever and to unlock the potential to return capital to shareholders.

And finally, on to our guidance for this year. Despite the step-up impact of the U.K. tax increase, where we'll see the full 6 months in H2 and the challenges in Brazil, I'm pleased to confirm our previous guidance adjusted for CEE. Having delivered 7% constant currency growth in half 1 and with half 2 starting well, we're confident to reiterate our expectation of this year's online NGR growth, growing 5% to 7% on a constant currency basis.

Our Online margin guidance of 21% to 22% is unchanged, and we remain comfortable with EBITDA consensus. We're also maintaining our guidance on adjusted cash flow, including the remaining 47.5% of CEE, targeting GBP 500 million by 2028, including the contribution from BetMGM despite the recent change to their medium-term outlook.

Finally, on net debt, we expect to end the year below 2025 levels, supported by the proceeds from the 20% CEE stake sale, which remains on track to complete in Q4.

Now to add some flavor to the numbers, let's hear from Andy and Curry on how we're executing to drive profitable growth and why Entain can win not only in each market, but also as a group.

Let's start with the U.K., Entain's largest business, which with digital and retail combined, generates approximately 40% of the group's revenue. And I'm delighted that both channels are performing strongly and continue to gain market share. Our digital mix illustrates Entain's strong gaming heritage whilst also highlighting the opportunity we have ahead of us in sports. Now Gaming represents approximately 75% of the U.K. digital revenue, and we are performing really well.

Our coin economy strategy is resonating strongly with customers, driving improved engagement, loyalty and value. And in sportsbook, we've improved our Bet Builder proposition. We've redesigned the Ladbrokes app, resulting in a step change in customer experience and usability.

Now whilst our digital business continues to outperform and take market share in the U.K., we remain highly disciplined in our approach to profitability, which is particularly important as our sector digests the increased U.K. gambling taxes. Our AI-supported bonus optimization reflects this, ensuring our customer generosity is deployed more effectively. All of this helps us generate stronger returns.

Retail has outperformed the wider market now for 8 consecutive quarters. We have the strongest gaming proposition on the high street, the best cabinets, the best content and afford the customers the very best value. On Sports, our proprietary Betstation product continues to exceed expectations and now accounts for over 50% of total Sports NGR. In addition, we strengthened our multichannel proposition, offering an increasingly seamless experience between retail and digital. Looking ahead, I remain highly confident in the prospects for the U.K. business.

Turning to Australia. This is a high-quality business undergoing significant transformation in an established and attractive market with the resulting outperformance and recent market share gains, clear evidence that the actions we're taking there are working. We have a renewed proposition, broadening our appeal beyond racing, improving our relevance to sports fans, enhancing our Bet Builder and upgrading our native app experience, and our customers are really responding well.

The team has successfully applied a similar playbook in New Zealand, where our partnership with TAB continues to go from strength-to-strength. With more clearly defined positioning, Betcha as a brand is delivering strong double-digit growth, whilst also complementing TAB's established racing heritage.

Now looking ahead, the prospects of regulation of the online casino market presents a unique and sizable opportunity. I am encouraged by the momentum we are building in many of our most important markets. Where we are already market leader, we are extending our advantage. Where we're not yet winning, we are bringing renewed energy, sharper focus and clear plans to improve our position.

Across Americas and Southern Europe, Entain operates in some of the largest and fastest-growing regulated markets, including Brazil, Italy, Canada and Spain. The opportunity across our markets is significant and we have a clear formula to capture it, building distinctive data-led local brands powered by Entain's global technology insights and scale.

Spain shows what that can unlock. Two years ago, bwin was well known, but losing relevance. We reinvigorated this iconic brand. We sharpened our content strategy, our rewards experience, transforming the customer journey. The result, over the past 2 years, we've improved our brand presence fourfold, doubled annual player acquisition and gained market share with strong double-digit revenue growth.

We have a proven successful playbook, which we are scaling across our markets. In Canada, our data highlighted a clear opportunity to diversify sports interaction beyond its hockey-first legacy by securing marquee partnerships across the Premier League, Champions League and Tennis Grand Slams. We are expanding our reach and relevance across customer segments, which generate the greatest returns.

This momentum continues into 2026, delivering double-digit revenue growth in the first half. Our returns-focused analytical approach to marketing and bonus optimization means we win by leveraging data, not by outspending the competition. In Brazil, while new entrants spend aggressively, we are combining high-resonance creatives with comprehensive diagnostics to inform our assets and channel mix. This delivers a more dynamic, more accountable investment approach, focusing on returns and not simply share of voice.

Italy is another key market where we're deploying this shared playbook. We are revitalizing Eurobet, spearheaded by our multiyear AS Roma sponsorship, the first step in a broader omnichannel transformation to reinforce our position, and we are excited about the opportunities in this attractive market. Importantly, across Entain's diverse portfolio, we can dynamically flex investment to prioritize different channels and assets where we're seeing the best returns, ensuring we get the best bang for our buck.

Similarly, we continue to develop share and scale capabilities to better reward and engage with players across our portfolio. Our successful new loyalty program piloted in Canada was then launched in Brazil during Q2 before the World Cup and is showing tremendous traction. Our dynamic Generative AI video platform creates real-time, moment-specific creative, delivering more relevant content at lower cost with faster test and learn cycles.

On bonusing, we're producing predictive churn models for automated ROI-led optimization, which means we are delivering the right offer at the right generosity to the right players, which is incredibly powerful. And our launch of Always On Acca Insurance is just another of the many ways we continue to give back to our players. These are just a few examples of our successful formula, localized expertise backed by global scale and supercharged by disciplined data-driven execution.

You've heard from Andy and Curry about how we're strengthening our local brands through better use of data, AI and shared capabilities. That's helping us improve the customer experience whilst also unlocking efficiencies and future opportunities. Entain is becoming an increasingly better connected global business. Strengthening and building those connections means ideas and expertise move faster and further.

When something is successful in one market, it can be easily rolled out across many more. This creates a powerful multiplier effect as we continue to execute more efficiently. And the World Cup is a really good example. Ahead of the tournament, we expanded our Bet Builder features across multiple markets. With our widest ever offering, the percentage share of Bet Builder stakes during the World Cup has more than doubled those previously seen.

We've also built on the success of Sportingbot in Brazil, adding more sports and starting to introduce our AI-powered personal betting assistant across many more markets, a social media initiative developed by our team in Belgium, is now being used across multiple markets.

Better sharing of assets and content has removed duplication whilst also improving efficiency. Entain's power as a group is just as important in gaming. Our scale and leading positions helps us secure exclusive content. Combined with insights gained from millions of customer interactions, we can offer a more relevant, more engaging experience.

Similarly, with marketing, we have continued to focus on centralizing data-driven performance marketing, directing investment to customers and markets that generate the best returns. Strong local brands, shared capability, scaled execution, that's where the power of Entain as a group really comes into its own. This is why we can win.

Thanks, Stella. As you just heard, across the group, we're improving our ways of working, making our business stronger, sharper and more efficient. Scale alone will not win in this industry. What wins is operating leverage, aggressive cost optimization, relentless margin expansion and strict capital discipline. Our mandates are non-negotiable: lower our costs; maximize free cash flow; rapidly de-leverage; and extract maximum value from our portfolio.

At the full year in March, we were clear that optimization is a key focus for us, and our initiatives are well underway. Optimizing our cost base is the first stage. Our group-wide initiatives will deliver GBP 100 million in net annualized run rate savings by the end of 2027 to offset at least 50% of the EBITDA impact from the U.K. tax increase. These initiatives fall broadly into 3 groups: cost of sales; marketing and operating costs; the largest bucket of opportunity.

The lion's share of savings will come through EBITDA, but we do expect additional CapEx benefits from our product and tech initiatives to also benefit cash flow. Many of these initiatives have already begun, including our recent decision to remove 500 roles. And as you heard from me earlier, actions already taken enable us to reduce our CapEx guidance for this year. This isn't defensive cost cutting or a reduction in investment. It's capital reallocation. We're freeing up cash to reallocate exclusively into high-returning growth opportunities.

Finally, I want to be very clear on our capital allocation framework. Our objective is to maximize value for our shareholders by delivering against our three strategic priorities. Our decision to pursue a phased CEE exit rather than take on significantly more debt to acquire the remaining stake is a clear example of decisive action and how we're putting shareholders first.

Reducing debt remains a priority. Bringing reported leverage below 3x will strengthen the balance sheet and increase our financial flexibility. As that leverage reduces and cash generation improves, we will continue with a progressive approach to shareholder returns with our full exit of CEE providing an opportunity to return capital to shareholders in an efficient manner.

As I touched on earlier, I believe there is so much more that Entain can do to accelerate this journey, and we have a significant transformation ahead. We've already made a strong start, and I look forward to updating you with further detail as we progress.

And with that, I'll hand back to Stella to wrap up.

Thank you, Mike. So to wrap up, our strong first half performance shows continued momentum and clear strategic progress. We are becoming a stronger, sharper, more efficient and better connected business. Our globally scaled and diverse portfolio operates in an industry with attractive structural dynamics, and this underpins the resilience and sustainability of our earnings.

I am confident in our continued strategic focus on cash generation and disciplined capital allocation, which will see Entain well-positioned to unlock value with a clear pathway for shareholder returns.

Thank you for your time this morning, and I would now like to open to your questions.

[Operator Instructions] Our first question comes from Ricardo Chinchilla from Deutsche Bank.

You reiterated the GBP 500 million adjusted EBITDA -- adjusted cash flow target by 2028 despite the planned exit from CEE and a more cautious BetMGM midterm outlook. Can you bridge the key contributors from 2026 expected cash flow to the 2028 target?

I'll let the IR team pick up with you on the detail. But I think the main point is that the disposal that we've announced of CEE is broadly cash neutral when you factor in reduced interest and so on. The move out of BetMGM's medium-term outlook, we still think that we can get to the GBP 500 million. We're very confident in our ability to generate cash.

Your next question? I think you've got a second one. So, you have a...

In Brazil, you have... [Technical Difficulty]

Sorry, we can't hear you, I'm afraid. Is it worth just putting that call on hold and coming back to it?

Sorry.

Oh, you're there. Okay. You could carry on. No.

In Brazil, you have [Technical Difficulty] pursuing market share at any cost. What market share have you...[Technical Difficulty]

Okay. We can't really hear you, but I think...

Would you need to increase your investment?

Okay. So we didn't quite get your question, but we have maintained market share in Brazil. But as I think we all know, Brazil is a complicated market going through the teething problems of regulation that is quite fluid and quite challenging. But we are -- and I'll let Mike talk to it in a second. We're taking a disciplined approach to profitability, but we are putting in significant improvements into player journeys. And we will see how that goes in the future. But we are being responsible in the way that we build our business there.

But on the upside, I think there's a few things that we can say. We've got a great sponsorship with Palmeiras. We've got sponsorship with Vasco. We are doing things for player enjoyments like, for example, loyalty programs. So we'll see how they pan out while still taking a responsible approach. Mike?

Well, I think discipline is the right word. So unlike some others in that market, we're not chasing growth for growth's sake. We still make profit contribution in Brazil, we always keep it that way. And despite the fact that we've really managed investment tightly, we're really pleased that we managed to maintain market share. Lots of opportunity in the second half for a recovery in Brazil, but it remains a really difficult environment, both from a competitive point of view, where people are throwing a lot of money at the problem, perhaps without a focus on returns like us, but also that regulatory environment which is still very unpredictable. We've got the election in October, so we think there'll be some more noise around them. But until then, we're going to keep doing what we're doing, which is really, really disciplined focus. And as Stella said, really proud of the brand there.

Our next question comes from Ed Young from Morgan Stanley.

Two questions, please. First is on cash. Your commentary there on what you highlighted as a significant opportunity is obviously very welcome. Can you help us understand a bit more the balance of internal action across OpEx and CapEx and also your posture, how you think about additional actions on the portfolio to bring down leverage? And then my second question, can we talk about the 5% to 7% online growth guidance, particularly as it pertains to international into next year? Obviously, you've flagged Australia and New Zealand in particular as having strong momentum. And on the other hand, the Austrian government has submitted its reforms to the EU. It's under 3-month standstill. And under those rules, [indiscernible] going to be frozen out of the market for a minimum 9 months. So do you anticipate significant interventions on that during the TRIS procedure? Is it shortening? And if not, we combine it with the Spain cross-operating limits next year. I guess the punchline is, do you think international can still deliver in the 5% to 7% range for growth next year?

Thanks, Ed. I think I'll take the second question, and Mike will take the first question on cash. So I think if you look at our portfolio, we have made significant progress in terms of the growth that we are getting across the portfolio. So if you take Australia, we're in healthy double-digit growth because of changes that we've made to the way that we operate. So we think that is sustainable based on good inputs, focusing on more broad sports, less exclusive focus on racing, for example, streamlining the way that we operate to focus in on the things that really move the dial.

If you go to New Zealand, which is in double-digit growth at the moment, it's very exciting that we're going to get the casino regulation start at the beginning of 2027, which is a new opportunity for us. In places like Canada, we're in double-digit growth.

Yes, we're in great growth in Spain, and there are the cross limits coming in, but we have great momentum there. We've got a great brand with bwin. And so we think that the inputs are going to continue to generate market share growth.

You talked about Austria. So long-term, I think Austria is an opportunity for us because we've been playing there all the way through. We've been paying our player claims, and we have a strong brand. Now yes, there may be a little bit of a hiccup in terms of time line of when people might have to have some hiatus. But it's got to take it into context of the scale of Austria versus the scale of some of our other businesses. So when you actually put it into the aggregate, I think that in combination with some of the improvements we're making in terms of the product and the features, which are starting to hit the market now.

And I think you can see that we've made some really good strides with our Bet Builder product, for example, coming out of the World Cup. There are some real momentum points that we've got that give us the confidence to those growth rates. So definitely we're committed to those. Moving to cash?

Yes. On cash, I mean, obviously, the best way for us to generate cash is to grow, and we think we've got a really good model to do that. But there's also a huge cost optimization opportunity. You've already seen in the first half, we announced 500 roles out of the business. That's not cost cutting. That's changing our model, and we're going to continue to do that. We see a big opportunity to optimize our model, drive synergies across the portfolio, remove duplication, simplify.

And then in terms of CapEx, we've already revised our guidance for this year in a very short space of time. That's not a reduction in investment. That's actually changing the way that we invest. So if you think about a huge component of our capital expenditure is on technology, AI offers the opportunity to do that in a much more cost-efficient way and faster importantly. And we think that all those things together mean that we can -- we commit to that GBP 500 million target.

And the only thing I would add to that is that on marketing, the point on AI is very relevant. As we go forward, the percentage of money we spend on non-working marketing dollars versus working marketing dollars is definitely shifting. What customers want is entertaining communications that are fast and relevant, and AI is a brilliant facilitator of that. And that's actually some of the upside that we're starting to see in places like Australia, where they're fully integrated into doing that. And that's obviously a large line of our discretionary expenditure. So getting more value from that as well.

One small follow-up before I jump back in the queue. But on the posture towards further portfolio action, can you just give any broad view on that?

We're very firmly focused on shareholder value and unlocking value from the portfolio. So we're very happy with the businesses that we have, and we can grow those businesses and they can generate money for us, but we're not beholden to the shape and size of it as it is.

And I think that's actually consistent with what we've been saying for the last year or so anyway. We always said that if there's an opportunity to add value, then we would look at it seriously. But there's no fire sales taking place here. We have really good value businesses that we continue to invest and grow in. But CEE deal is a good example of adding value.

Our next question comes from Ben Shelley from UBS.

I wanted to ask on EBITDA for FY '26. You've delivered ahead of expectations at H1, but basically reiterated guidance. Can you expand more on the thinking behind that? Is this just marketing phasing or conservatism? And my second question is on online NGR growth, which is tracking at the top end of your reiterated FY '26 guidance at 7% constant currency. I think from memory, you have some favorable sports margin comps in the back half. So is there something we need to be mindful of in H2? Or is this baking in some conservatism also?

In terms of EBITDA, I wouldn't call it conservatism. I think it's balanced. And we've had a really good first half, and we're definitely ahead of expectations, but there's no hubris. We know that we've got to earn it again in the second half of the year.

Marketing phasing definitely plays a part. So we spent less in the first half than we originally anticipated. So the weighting is far less pronounced than we guided to at the start of the year. But we are overall increasing marketing spend in this year. And we want to make sure that we really exit '26 into '27 with velocity.

The tax obviously steps up in the second half of the year, and that's created a huge amount of disruption in the U.K. market, which we've been taking advantage of. We're gaining market share. We're growing really nicely. But we can't predict what that competitive environment looks like in the second half of the year. So that's why we've taken a more balanced view. We don't think we're being overly conservative. We think that, that represents our best estimate about where we're going to come in.

And I think taking the online growth question, look, we started well. And I think we've continued well into Q3, which is very encouraging. Obviously, at the end of the World Cup was in July. So that was a very positive tailwind. But as we look forward, just to build on the point that Mike has said there, we want to make sure that we can invest in marketing, and we don't have one of those terrible situations where you get to November, December and your margins go down because we know the volatility is in there.

Now on average, you come back to -- you see our margin. But we have a lot more of our volume today in Bet Builder than we used to have. And that is more volatile. It's good because it helps margins in the long-term. But what we want to do is have that consistency and repeatability that what we say we're going to deliver, we're going to deliver, and we're going to deliver it while still investing in the customer because that's the way that we win in the long-term. So that's kind of how we put our numbers together. But I am confident we are building into that solid online growth that you're talking about there.

Our next question comes from Monique Pollard from Citi.

The first question I had was just on Brazil. I'm conscious that the Brazilian comps get, I think, about 40 percentage points easier in the second half versus the first half. So in that context, do you think that Brazilian growth will improve as we go into the second half, conscious that there are also the elections and the competitive dynamics you mentioned? So any insight you could give us there would be very helpful.

And then the second question, sort of coming back to Ben's question on the online NGR. I guess what I'm trying to understand is, in the first half, you delivered 7% constant currency. From what I can work out, there's about a 2-percentage point drag there, though, from Brazil. So let's say, that would have been 9%. The Brazilian comps, as we say, get a lot easier. Presumably, the World Cup benefit in the first half is similar to the second half benefit. If anything, the second half benefit, I would have thought is even bigger. So what are going to be the drags that wouldn't -- that have led you to not at least increase the guidance from 5% to 7%, up to 7% now?

Okay. So do you want to have a go or do you want me to go?

I think on Brazil, I'd say we very much hope that we'll see some recovery in the second half. You're absolutely right in terms of the comps, but that market environment remains incredibly difficult and unpredictable in the regulatory environment in particular. And with the election, we don't want to kind of bet that it's all going to get better. We think the team is doing the right thing. We're being very careful about how we invest. We're very focused on maintaining the profit contribution that Brazil gives us as opposed to just trying to drive for a top line number. We want to build a sustainable business there. And so we will compete, but we won't compete at any cost. We will make sure that we invest really wisely.

And in terms of how that plays into the overall growth, again, I'll go back to what I said before, I don't think we're taking a conservative view. I think we're taking a balanced view. Some of our markets have absolutely knocked it out of the park in the first half. I think it would be wrong of us to assume that, that just naturally carries on into the second half. You have to earn it. We do operate in a really, really competitive environment. We think we're doing all the right things. But it's a mixed bag across the piece. Some of those markets will continue to perform really strongly. Some of them might come off a bit, but we think that we've got the right guidance out there.

Yes. And I think the only thing to add, and it's a success story, but our first half results has had a great growth in the U.K. I think our online was plus 13%. Now continuing that through, we don't want to bet the farm that we're going to continue with double-digit growth in a market that is so big and we're lapping prior comps that were very good. So again, to Mike's point, which is we want to make sure that we have a balanced approach here that means that we can deliver what we say we're going to deliver and continue to invest behind growth into 2027.

Sorry, one quick follow-up. The World Cup benefit in the 2H versus the 1H, is it quite similar?

Yes, probably. I mean we had a nice benefit in H1, but the -- a slightly different profile. You had a lot more games in H1, which was good for volumes. In H2, you obviously got a lot less games, but the margins were pretty strong in H2 for those games where we had the luck of the draw, which is there were a lot more nil-nil draws, or draws, which is great.

I think the bigger win from the World Cup is the fact that first-time depositors went up. We got twice the number of first-time depositors that we did for the World Cup in 2022. And I think as mentioned earlier, a lot of play was on Bet Builder products and Bet Builder products intrinsically higher margin, but also intrinsically more volatile.

Our next question comes from Adrien de Saint Hilaire from Bank of America.

I hope you can hear me okay?

Yes.

Perfect. Two questions, please. First on in Italy, it seems that you're losing some market share in online. I'm just wondering if you have any takes as to why that is, given supposedly you should have an advantage having some real estate, some retail shops? And then maybe, Mike, just to link up your comments around the huge opportunity around the cost base. Am I right in understanding that your confidence in hitting the GBP 500 million cash flow target precisely stems from that cost point that you made?

Sorry, could you say the last part of your question again?

Yes. It's just to link up to the first question in the call about the cash flow target and how we get to the GBP 500 million. Is that notably coming from what you observed in terms of the possibilities around the cost base, the huge potential that you talked about in your earlier comments?

Can I take the first question and then you...

Sure.

Take the second question? Okay. So the first question was about Italy and share. And so I think we look at our Italian business, our growth has been pretty strong in iGaming, double-digit growth, but we've been less strong in Sports in H1. That is true. I think what we have in Italy, we've got a brand in Eurobet, which we are now revitalizing.

We've also started with the Roma sponsorship and also the partnership with Napoli, which is really leaning into football. We also have a new leadership team there, which I'm very encouraged about the way that they are attacking the challenges that we have in that marketplace. And so we also have two other brands there, which is Gioco Digitale and bwin.

And so we do have a lot of plans in terms of driving future growth. And that's one of the areas coming back to my earlier points, which is having the fuel to drive growth in a market like Italy requires the additional marketing investment, which we have factored into our numbers, such that we can do things like the sponsorships we're talking about, and we can actually have plans that get ourselves back into more competitive growth in 2027.

I mean on the cash, it starts with our confidence around being able to grow the business. And we need to be able to grow the business, but then obviously, we need to convert that growth into cash. And that's where the cost piece comes in. We think we can improve operating leverage. We see significant opportunities to optimize the cost base across all the different parts of the P&L.

And then finally, we see opportunities to optimize CapEx. You've already seen a glimpse of that this year. We think that we can optimize the amount of investment that we make and the way that we invest either by using AI or other things as well. So we are confident about that number.

I think we've got one more question. Hello??

Our last question comes from Irina Lagovskaya from UBS.

I have a question about the capital structure, if you don't mind. I think you partially already have answered it. But -- so the proceeds from sale of the stake in Entain CEE, I understand that will be partially used to reduce the total amount of debt. But are there any particular timelines and maturities you are targeting? How are you planning to address 2028 debt maturities?

So the sale -- the proceeds from the 20% sale will go fully to debt, and then we will look to refinance and improve our maturities. That's all planned for. When we sell the rest of CEE, we will probably put some of that to debt as well and then the residual we would look to return to shareholders.

Thanks for the question. We appreciate that. And...

And do you have any particular time-line in mind when it may happen? Is it 2027 event or...

Watch this space.

Thanks very much. We appreciate that. So I think we're coming to the end of the call. I just want to say a big thank you to everybody for dialing in or joining the webcast. Clearly, if there are any questions that we haven't answered or you won't have any more information, then please reach out to the IR team. They're ready to take those questions.

And I just leave me to say thank you very much, and we look forward to speaking to you again soon. Thank you.

Thank you.

Good day, and welcome to the BetMGM Second Quarter 2026 Financial Update. Joining from the company today are Adam Greenblatt, Chief Executive Officer; and Gary Deutsch, Chief Financial Officer. [Operator Instructions] Please be advised that today's call is being recorded.

I would now like to turn the call over to Adam Greenblatt.

Good morning, everyone, and thank you for joining us today. Today, we are providing an update on our Q2 performance and outlook for the remainder of 2026. Q2 was another quarter of focused execution by BetMGM. Although the quarter came in a little lighter than expected, we continue to deliver against our North Star of profitable growth. While the market environment continued to intensify with heightened competition among both regulated and unregulated operators, our underlying business fundamentals continue to strengthen, generating positive cash flow and adjusted EBITDA.

Q2 was an excellent progression from Q1 with significantly higher profitability. We delivered net revenue of $711 million in the quarter, and that's up 3% year-over-year. So first half net revenue came in at $1.4 billion, up 4% year-over-year. And we generated adjusted EBITDA of $74 million, so that's $99 million for the first half.

I will talk shortly about our performance in more detail across both iGaming and sports. But for the headline summary on Q2 performance, iGaming continues to perform well with good growth in engagement and player value, supported by our market-leading offering. And in online sports, we saw Handle growth despite the challenging market environment, driven by strong engagement around the tentpole events like the World Cup and NBA playoffs. Retail had a tough quarter as several largest staking bets were won by players at our on-property sports books.

As we previously highlighted, our industry's licensed operators continue to face an increasingly challenging marketing landscape, now competing for media assets, share of voice and wallet with the big spending prediction market operators. Aligned with our strategy, we've remained disciplined, investing where we see the greatest returns. As we mentioned at our Q1 call, this means we have scaled back our spending in sports, especially in sports-only states, and reallocated spend to channels with the most efficient CPAs and attractive payback periods. Therefore, even despite these industry challenges, I'm delighted that BetMGM's underlying player fundamentals remain healthy.

Across our business, our ongoing player management and disciplined capital allocation continue to drive improving player values, which is consistent with our planned moderation of Monthly Active Player counts. As I look forward to the remainder of the year, our focus and plan is unchanged, delivering profitable and sustainable growth through disciplined execution with emphasis on our areas of strength. We're excited about several new growth drivers that will continue to develop over the balance of this year and beyond, including significant product enhancements, our successful launch in Alberta and the expansion of our Borgata brand. On Alberta, we were encouraged by our early performance and note the value of our relationship with MGM Resorts. Nearly 10% of new players who signed up have a relationship with MGM, which speaks to the power of the brand, the relevance of our omni strategy and the sustainable benefit of our deep collaboration.

Shifting to guidance. We continue to expect full year 2026 net revenue and adjusted EBITDA within our existing ranges of $2.9 billion to $3.1 billion and $300 million to $350 million, respectively, albeit we now anticipate landing towards the lower end of these ranges, reflecting the well-understood market conditions coming out of Q2. Let me reiterate that we are confident in the strength of the business and our long-term strategy. BetMGM continues to focus on our areas of strength and our highest return opportunities, including iGaming and multiproduct states, Nevada, and our most valuable customer segments while reducing investment in lower return OSB-only markets. And our strategy is working. We continue to see healthy player fundamentals and strong engagement across our core markets.

So with that overview, let me now provide more detail on our Q2 performance by segment. Our iGaming business generated $483 million of net revenue in Q2, up 8% year-over-year, with NGR per Active also up 7%. Performance was driven by continued player management improvements and strong player engagement. Active player levels remained stable despite heightened competitive intensity from new entrants in some states. Additionally, consistent with the OSB side, our iGaming business was slightly impacted by lower cross-sell due to fewer OSB Actives given our refined player targeting and management strategy. As a reminder, nearly 70% of our revenue comes from iGaming, and we continue to hold a leadership position in our Active markets, supported by best-in-class content only available at BetMGM and differentiated player experiences.

During Q2, we launched several popular exclusive titles, including in Ontario, from the Game of Thrones franchise. These have been some of the most successful games we've seen in that market, and we have U.S. rollouts planned for later this year. We also expanded several of our most successful omnichannel franchises, including new releases within the Rakin' Bacon, Buffalo Triple Power, and Money Gong families. And lastly, we launched Elvis Presley: Viva Las Records and Marilyn Monroe Slingo, expanding our lineup of exclusive entertainment content.

Our successful launch in Alberta represents another exciting opportunity for the business. While still very early days, I mean we're only 14 days into it now, we're encouraged by the initial indicators and look forward to providing further updates in the future. BetMGM's iGaming offering continues to be market leading. Looking ahead, we remain optimistic about the long-term outlook for iGaming and continue to believe additional jurisdictions will legalize over time, adding to the growth potential within our existing footprint.

Turning to sports now. Online sports generated $228 million of net revenue in Q2, flat year-on-year, while retail, as I mentioned earlier, was down year-on-year due to several large premium player payouts. We are pleased with the resilience of our online sports business despite the competitive headwinds in the industry, prediction market impacts, and the changes we have made to our capital allocation. In particular, we are pleased with the continued growth in underlying KPIs, which is the expected outcome of our strategy.

Handle per Active grew 11% year-over-year and NGR per Active increased 9%. Our average monthly OSB Actives has dropped this year, which we had forecasted. We continue to prioritize value over volume, focusing our marketing and service on a higher-value player base, which will generate more attractive returns over time. As you know, our customer base skews towards higher-value players, which can sometimes result in variability and hold, as has been demonstrated in our retail business this year. This should normalize over time, and we are confident in the play and durability of these high-end players.

One last point on retail, which plays an important role in our omnichannel strategy. A major reason for this year's retail margin volatility is that we continue to see our lower staking players migrate to digital. MGM properties remain fertile ground for digital sign-ups, both locals and tourists. In Nevada, OSB Handle increased 10% year-over-year during the first half of the year, benefiting from our differentiated omnichannel proposition and strong brand positioning. In summary, we look forward to the rest of the year. As with iGaming, we will continue to remain nimble and disciplined as market conditions evolve.

Moving on to our financials. Q2's net revenue of $711 million brought first half total revenue to $1.4 billion. Contribution for Q2 was $171 million and $288 million for the first half, supporting adjusted EBITDA of $74 million for Q2 and $99 million for H1. CapEx for the first half was $22 million, and therefore, with adjusted EBITDA less CapEx remaining the best proxy for total cash to parents, this came in at $77 million for the first half. Parent fees totaled $18 million for the first half, but due to seasonality of marketing for the World Cup and Alberta, no excess cash was returned to parents in Q2. Therefore, we expect total cash to parents in H2 to be higher than the first half.

In summary, Q2 reflects another quarter of disciplined execution and capital allocation, driving profitable growth. While our wider industry faces certain external headwinds, BetMGM's business and strategy remain healthy. We have adjusted our operating and capital allocation framework accordingly, continuing to successfully generate positive cash flow while investing behind meaningful growth opportunities. We are pleased to have maintained guidance despite the competitive environment, albeit towards the bottom end of the range. We also remain confident in our long-term outlook, even assuming status quo for prediction markets.

BetMGM has an attractive opportunity to grow profitability by focusing execution on our areas of strength with iGaming at our core, remaining disciplined in our spend and driving greater efficiencies. Any future iGaming legislation and potential restrictions in prediction markets activity in sports represents even further upside. This, therefore, reinforces our conviction that BetMGM is well positioned to deliver profitable, sustainable growth and generate over $500 million of adjusted EBITDA in the coming years.

With that, I'll hand it over to the operator to open the line for questions.

[Operator Instructions] Our first question is from Ed Young of Morgan Stanley.

My question is on cost efficiencies, please. Your H2 guidance implies you expect to see some stronger profit flow through there. I wonder if you could talk to that and more widely, the cost efficiency opportunities you see in the business, both in this year and next year. You're talking a lot about profitability, Adam. I'd just love to hear your view on OpEx and efficiencies.

Ed, thanks for the question. So thanks for starting us there. It's an area of really high focus for our business at the moment. And it's really across the board. The big areas of cost in our business, as you know, the biggest of all is tax. Then, of course, it's marketing, payments and people. And so to make an impact on our cost base, we are focused on those things. Through the change in our strategy that we announced some time ago, and now is evident in the business, we've really focused on marketing efficiency, focusing on the areas where we have an advantage. We've reduced our spend in sports-only states. This is marketing spend in sports-only states. We are being very disciplined in the people dimension. And so part of the profit flow-through that we are expecting to see in the second half really comes out of that activity. In terms of the specifics, however, I'm going to hand over to Gary for flow-through.

Ed, so the first half -- when you look at the first half of this year versus the first half last year, we absorbed the impact of some tax changes that were significant from last year. So that had an impact. We had a few one-time incidents that cost us a little bit, and that drove really negative flow-through on a comparison in the first half this year versus first half last year. In the second half here, we're now normalized to the tax rates. And as we noted earlier in the year, the efficiencies, really the cutback that we're doing on some of the sports-only marketing is going to roll through in the second half. So that flows through right to the bottom line. And then there's a number of initiatives up and down from people to some of our vendors on the direct costs. So it's going to be over 100% flow-through in the second half. And obviously, some of the efficiencies we're working on there will carry through in our planning for 2027.

Your next question comes from the line of Daniel B. Politzer with JPMorgan.

This is Sam on for Dan. Question on promos. Promos were up year-over-year despite active users down and some slower Handle growth across the market. Was that kind of a result of the World Cup engagement spend to retain higher-value customers? Or is there something else?

Dan, so this was very deliberate. Yes, the World Cup was a part of it for sure. I'm sure we'll get into World Cup later in the Q&A. But there was more concerted investment in our players through the World Cup, and that paid back healthily, by the way. So we're really pleased about the impact of that increased spend. The second part really is the outcome of some of our strategic moves. What we've said is we're not going to reduce investment and reinvestment in player. What we're really very focused on is making sure that, that investment is to the right players. And so the relationship between volume and value is evident in that metric.

What we've done is we've put more value into those players who we are very committed to keeping and we believe that there is long-term enduring value in those players. And what we've really dialed back on is some of, if you like, the lower end of our database, the lower end of our player base, whose value we are less confident in, or rather let me go further, who weren't really adding value to BetMGM. So we're seeing that process still playing out.

That makes sense. And then if I could follow up real quick on the World Cup. The market has obviously seen a large reacceleration in Handle growth and engagement in tournament. How do you kind of view the engagement environment as we begin the current shoulder season into NFL kickoff? Is there any further opportunity for Handle growth in 2026?

So 2 parts of the question. First is about the World Cup itself. I'm so pleased, really so pleased with how this World Cup has played out. What we saw was a massive increase in fandom. And as you know, for our category, that is foundational. That is the core driver to ongoing engagement and betting activity and obviously, over time, Handle growth. And what we've seen and what we hoped for in anticipation of the World Cup was really the emergence of a new sport that could, over time, rival the Big Three in the U.S. And Gary -- of course, I'm now 7 years into being an American, and Gary, who's a lifelong American, is laughing at me. But I think...

He also forgot hockey there. So...

Yes, but -- I think soccer is ahead now. I think, as we look to the future, soccer is a real sports category and growing. And I think that as a feeder to our sector, that's tremendously exciting. So that's the first. We saw massive Handle growth. We saw 3x the Handle in 2026 that we saw in 2022, 3x. The Handle that we took on the -- the bet that we took on the U.S.A.-Belgium game were more than any baseball playoff -- basketball playoff game, any World Series game. So the point is it's legit and it's on the map. And so as we look to the future, I think soccer is a growing category.

To the second part of your question, which is in terms of outlook, is there upside? Sure, there's upside. What I'm particularly also excited about is the fact that we've been able to engage our players through the quieter days of summer. The hiatus between last contact, for those who don't bet baseball, last contact and the commencement of the football season is shorter. And so the memory of a great World Cup betting experience with BetMGM is fresh in our players' minds. So we're very excited about the start of the football season, of course, because of these dynamics.

Your next question is from Joe Stauff with Susquehanna.

I wanted to ask -- maybe shine a light on your Nevada operations a little bit more. One, I guess, Adam, if you could maybe update sort of the importance of Nevada. Obviously, you have a unique offering there. It's a relatively small market in terms of the number of operators. Are you getting more benefit out of Nevada from gross additions as you source them at MGM properties and then they go back home and you monetize them there? Or is it really just in the in-state OSB market?

Joe, thanks for the question. Nevada is central to BetMGM strategy. As you say, the competitive landscape is different and favorable to BetMGM. Anyone who's been to Vegas, you just have to land to understand the strength of the brand in Las Vegas. And so we, of course, benefit from that power, from that impact. In terms of BetMGM directly, we recruit thousands of players on a weekly basis in MGM properties. We track the number of those players that come from BetMGM OSB and multiproduct states, and it's a good proportion of that group every week. And so we also track the value of those players when they get home, and we're into now tens of millions of dollars.

Remember, this is something we talked about when we were talking about the importance of single account, single wallet, remember those words. That's the ability of a player to sign up in Vegas, and with the same app, just open the app when they get home and continue their BetMGM journey. We are seeing that play out. So strategically, the continuity journey for those players is important. But in and of itself, Nevada is critically important. Given the dynamics I started with, we punch above our weight.

One of the other things that we are focusing on now is really penetrating more deeply into the locals market. So we over-indexed in the visitor market given the reach and the number of hotel rooms that MGM has on the strip, but now really making a concerted effort into the locals market. And actually, that's one of the areas that we're very excited about and are making -- relative to the aspect of Nevada, we are making most progress in that area. And we believe that, that represents an untapped opportunity.

I would just add one point. I mean, remember, Las Vegas is part of the BetMGM experience. It's part of our branding. It's how we circulate people through Vegas as a rewards mechanism as well. So it's deeply embedded in what we portray as our value proposition to our customers.

And just a follow-up. Is there any idea that you can give us on what market share you have in Nevada nowadays?

I don't think that's disclosed, Joe. It's not something we share. Given how narrow the market is, I think that would be a relatively more sensitive one.

[Operator Instructions] And your next question comes from Barry Jonas of Truist.

I wanted to ask about prediction markets. Clearly, there's some impact. But at the same time, we're starting to see Kalshi be restricted in states like Nevada and Michigan. So just curious if we should expect to see any positive impact for BetMGM with those restrictions.

Thank you, Barry. Thanks for the question. There would be some positive impact, frankly, for all OSB participants as a result of those progressive restrictions. I think the starting point would be -- the flowback would be commensurate with the downside impact. So I think the starting point is well, what was the impact of prediction markets in the first instance? And then absent any new initiatives on the part of the operators in those markets where prediction markets are restricted, probably the benefit would be loosely aligned with market share in those states or the initial impact.

Your next question comes from the line of Monique Pollard with Citi.

My question is just around the cross-sell to iGaming from OSB? And how do you get comfortable that you're investing sufficiently in OSB, particularly as we go into the second half of the year where you've talked about scaling back that marketing a bit given the CPAs? Will that be enough though to continue to drive the iGaming momentum given the cross-sell opportunities?

Yes. Thank you, Monique. Thanks for the question. It's a really important one. Let me just be clear that our investment in multiproduct states in both sports and gaming remains full throttle. We are not seeding ground to anyone to the extent we can in multiproduct states, which means that we continue to invest concertedly in those markets, which means that the 60% plus cross-sell, which you rightly referred to from sports to gaming will remain healthy in those states.

Your next question comes from Jordan Bender of Citizens.

If we go back to February and the original revenue guidance you gave and we go to today, the midpoint of that has gone down by about 6% or 7%. We kind of talked through some of the prediction market impacts and headwinds. But Adam, Gary, is there anything else you would kind of call out to why revenue has kind of -- we've seen these downward revisions outside of the prediction market impacts?

Jordan, thanks for the question. I think, look, competition is fierce. It's tough out there. But I think, certainly on the OSB side, the primary macro impacts are prediction markets. And then, of course, it doesn't help that gas prices are where they are and consumer discretionary income, but trying to pass out those effects is very, very challenging. I think prediction markets is the primary.

Yes. And just from a mechanical standpoint, Jordan, we assess all the player cohorts we go through, we look at trends, we look at the rest of the year. And bear in mind that when we look at last year's Q4, in particular, we had exceptional sports margins. So when we forecast going forward, we look at this, and that's why some of the flattish sports revenue projections for the rest of the year. But as Adam said, we look at where we are and targeted as best as we can.

Your next question comes from Ben Shelley of UBS.

Are there any updates you can provide on competitive intensity within iGaming? You highlighted elevated competition last quarter. So I thought it would be helpful to understand how that's developed since then.

Thanks for the question, Ben. Yes, the iGaming market is very competitive and remains very, very competitive. What we're seeing is that in the last, I don't know when -- I can't remember when they launched, but certainly last 6 to 9 months, we've seen a couple of new serious competitors join some of our -- new entrants to some of our iGaming states, Michigan being one of them. And obviously, Michigan is one of our larger states. And as new entrants join the market and certainly in established markets, their ability to compete and make impact is very challenging. It's challenged. And so what we're seeing is some of the new entrants investing in growth, investing in players in, frankly, less commercially rational way in order to establish a beachhead. And it's in that context that actually, we're delighted with the resilience of our business, the resilience of our player base and the continued momentum of our business notwithstanding.

So to answer your question, very, very competitive environment. CPAs are a little bit higher than last year. In fact, to help you with that, about 15% plus more than last year iGaming CPAs is our experience. It's also been -- we also have some new regulatory constraints. Particularly in PA, we have new KYC rules, which make the journey to become a player more challenging, that it has more friction. So the environment is challenging. And so it's within that environment, we remain convinced that our strategy is the right one and pleased with the business' performance.

Your next question comes from Charlie Muir-Sands of BNP Paribas.

I just wanted to get a little bit of elaboration on some of your earlier points, particularly just returning to your outlook for the second half. You called out very good sports results for the fourth quarter, obviously, a shift in marketing spend, some other factors. But I wondered if you could also clarify the drop-through on retail margin that you experienced in Q2, and also any other factors which we should take into consideration to get you to that full year guidance?

I mean, to the retail point, I think we called out in the opening remarks. we've had the recreational base of players through Nevada push mostly into digital. So the ones who have sort of bigger margin and less volatility are now living in OSB. So in retail, we now have a lot of higher-end VIP players and it's been volatile, and we had that unique situation of having basically 0 revenue net in Q2. So that flow-through is obviously negative.

Now we believe in this base of players over time. They should be high staking, but have reasonably low margin, but it still is a profitable business for us. So that comes back. Retail historically has had a good flow-through for us, more like 50% typically. And that's what we bake into the second half. But I mean, beyond that, when you get to the second half, we're just sort of normalizing to POs, we're adjusting in for the downgrade in the marketing spend that we're doing in sports. We're rolling through some of these cost initiatives that I mentioned earlier, and you put that with the year-over-year revenue growth and you have over 100% flow-through in the second half.

So for the full year, given that we're spending less in marketing and some of the efficiencies that roll through, we're looking at higher than our guided 40%. We're looking towards 70% or plus for the flow-through of this year versus last year. So in the fullness of time, in a normalized basis, we still expect that 40% flow-through. But this year, when it all evens out for the year, we're going to be better than that.

And just a brief follow-up. You didn't give the monthly active users KPI in the release. Could you just confirm, I think I have heard you said flat in iGaming, but I wasn't sure if that was the metric you mentioned, and down in OSB?

Well, we've given the overall average monthly Actives for the combined player base is down 3% for Q2, and then I think it's down 6% for the first half. So roughly the decline is driven by sports.

Your next question comes from John DeCree of CBRE.

Adam, I think you may have briefly touched on your expectation for iGaming legislation over time. But I was wondering if you could elaborate on your current thinking. Obviously, prediction markets have kind of dominated the regulatory airwaves. But have you seen any political momentum? Or what do you think we need to see to get some more progress on that front?

Thanks, John. Our top 2 remain our top 2. I wish there was a shorthand way or a general way of answering your question. The reality is every state is different, every state has its own specific political landscape, headwinds, tailwinds, fiscal needs, pressures. So the top 3 remain Virginia, where we made some good progress last year, hopeful to see legislation in '27. D.C. also, we're hoping to see some legislation in '27. And the other state which we are turning our attention to as an industry is Indiana, where we've seen some changes to the political landscape, which should be conducive to passage of iGaming. But with all of these, the risks are attendant. So difficult to say. But certainly, as I said in my prepared remarks, in the fullness of time, we very much expect to see an expanding TAM.

And your next question comes from Adrien de Saint Hilaire of Bank of America.

Adam and Gary, can you talk about your expectation for the iGaming market growth ahead, because the market at least is going to lap maybe easier comparatives. Is your expectation that the market growth picks up from here because of those easier comparatives, or that the market stays more or less in the mid-teens as it is right now given the competitive intensity you talked about and the challenges in investing behind player acquisition?

Well, the answer to your question is implicit in our guidance. So we are expecting -- we've guided to a continuation, same course and speed for the rest of the year. Beyond that, it's really difficult to say. I think macro will have a role to play in '27 and beyond. But certainly, for the rest of the year, we've guided to same course and speed.

And it's the exact what he was saying in the last answer, what legalizes, how they roll out, we had Alberta this year. We're working on these other ones. So that is the upside that the iGaming business is getting some of these new ones live.

So I will say that we've brought to market -- just to add to that, we've brought to market some really exciting new content, new games, new live product is available. We will be expanding our suite of jackpot products in the coming weeks. We're hoping to make many millionaires a year with just a $0.10 bet. And so that will likely drive interest. So we're not sitting on our hands expecting the underlying growth in the market to -- the wind of that to catch our sales and off we go, no. we're really making strides to improve our player experience. And frankly, we haven't spent any time in Alberta. I mentioned in my prepared remarks that it started very, very nicely. So if there is some upside to the back end of the year, there is potential for that, but we're not guiding to that now.

Your next question comes from Chad Beynon with Macquarie Capital.

Adam, can you update us on how AI is evolving with your company, whether it's IP with some of the content on iGaming, CRM, customer acquisition, retention, or other areas where this could lead to higher profitability beyond '26?

Chad, thank you very much. I'm very passionate about this subject. I'm also reluctant to go into the detail of what we're doing at the moment, because I want to be able to point to things before we start talking about them. What I will say is that we've made great strides in some of the areas you've already talked about. The area of compliance is an area we're focused on. The area of, obviously, care and risk, we believe to be areas of potential. But I believe that the opportunity for AI is much more fundamental. Of course, there will be tactical moves, as we've discussed. As we've just talked about, there will be tactical areas of impact, but I believe that there are -- in terms of how the business is managed, AI, I believe, will be a disruptor, fundamental disruptor over time, and we'll talk about that more when our plans are -- not our plans, when our plans are more real, we'll get into that. But let's keep talking about it.

Your next question comes from Pravin Gondhale with Barclays.

So my question is on the $500 million sort of EBITDA target push out after 2027. Could you please talk about how should we be thinking about the EBITDA flow-through between now and then the 40% normalized that you are expecting in fullness of the time? And what are the sort of moving parts there to get to that -- moving parts in 2027 and get to that $500 million target there?

Yes. Thank you, Pravin. What I hope was evident from our prepared remarks was that we see a path to $500 million of EBITDA with our existing -- only on our existing footprint with the gaming growth that we believe to be ahead and the focus on costs, which I referred to at the beginning of the call, and assuming our standard flow-through rates.

Which is about 40% to 45%.

Which is about 40% to 45%. So you bring all those things together and that leads -- that gives us our pathway to $500 million. What we did say in prepared remarks and in our written release is that it will probably be extended beyond -- it will be extended beyond 2027, however.

Your next question comes from Clark Lampen of BTIG.

I wanted to follow up on iGaming competition and just see sort of a high-level question, how you guys think about differentiation sort of now and over time? And maybe sort of within, I guess, the sort of quiver of options or opportunities that you have to differentiate the BetMGM offering, how you think about first-party content? Is that something that you guys would be willing to lean into over time in addition to expanding the number of sort of third-party games and exclusives that you have? Or is that maybe -- conversely, maybe there's another area of sort of differentiation that you would rather lean into relative to that? But would be particularly curious, I guess, if you guys could talk about how you think about that evolving over time.

Yes, for sure. So an important question and one I think we think about most days given the centrality of gaming to our business and our gaming-first orientation. We think about differentiation through -- one of the primary reasons is through content. We have a very now clear IP strategy. We are the home of entertainment. So we have acquired third-party games on an exclusive basis. What we've also done is acquired IP, and this is the intersection between your question and our strategy, we've acquired third-party IP and build our own games. So it's almost a synthesis of that first-party, third-party idea. We've also leaned more heavily, in the last 18 months, into bespoke engagement tools, so kind of the intersection between real money and free-to-play. That's been successful for us.

So then moving into the area of live. With our shareholder, MGM Resorts, we have unique offerings in the world of live, and we think that's an area that we can build from. It's popular in our Ontario business, and we believe it will gain traction in Alberta. The U.S. regulations require that live product be produced in state, which introduces a degree of complexity. We don't know whether that will sustain over time. But we think live is another area where we can differentiate.

And of course, omnichannel is an important component of our iGaming offering and what we've done successfully over the last while is launch online, and in a retail environment, game titles, which means that a digital player, we can continue there. We can offer them the game that they like in Nevada. Of late, we've sent some of our players to Nevada as a thank you for their loyalty, and they can continue to play the game that they love most in a physical environment, in that MGM environment. So that's another area where I won't say only at BetMGM, but certainly, between BetMGM and MGM Resorts, we have a very, very compelling and we believe differentiated offering.

Your next question comes from Andrew Tam with Rothschild & Co. Redburn.

Just a quick one. If I zoom into a state like Ohio, I was just wondering whether the sale of MGM Northfield has impacted the omnichannel strategy in terms of a customer acquisition strategy that you have in that state and impacted any trends there or operational trends?

Thanks for the question. It hasn't. I'll just leave it at that. It hasn't. We've adjusted our strategy and been able to compensate for that. So the business has continued on as before.

Understood. And then just following on from your earlier comments about some of the competitive dynamics out there and some of the irrational marketing. Does that extend into the Ohio market as well in terms of the pullback that you were talking to earlier?

We've not seen particularly irrational spend in Ohio, no.

We will now take our last question from Julie Hoover of Bank of America.

I think we covered the prediction market revenue impact, but can you talk a little bit more about what impact you're seeing from prediction market entrants on to the customer acquisition side, maybe specifically around World Cup and then how you expect that to trend into NFL kickoff?

What a great question, and thank you for that, because it's a lovely way to end. We've seen excellent player response to the World Cup, as I mentioned previously. What that has meant is notwithstanding the outsized spend by the prediction market operators, we have, through our own refinement actions and, of course, market demand, we've seen OSB CPAs reduce dramatically through the World Cup. Now the big question is, well, what happens next? And what we would obviously love to see, a continuation of those attractive CPAs and attractive paybacks in OSB that we've seen through the World Cup, that's not what we've planned for. We've planned for the experience that we saw prior to the World Cup to be maintained through the rest of the year. Now of course, that does represent potential for upside. But until we have more experience post World Cup, I think it would be premature to bake that in.

That concludes the question-and-answer session. I will now turn the call over to Adam for his closing remarks. Please go ahead.

All right. Thank you very much for joining us today. We at BetMGM remain focused on executing our strategy, delivering profit growth and building long-term shareholder value. And as we've covered on the call, our fundamentals remain healthy, and we are confident in the opportunities ahead for the remainder of 2026 and beyond. So with that, I want to thank you for your time, thank you for joining, and we look forward to updating you again next quarter. Have a great day.

This concludes today's business update. Ladies and gentlemen, thank you for participating. You may now disconnect.

Hello, everyone, and thank you for joining the Entain 2026 Q1 Trading Update. My name is Lucy, and I'll be coordinating your call today. [Operator Instructions]

It is now my pleasure to hand over to Stella David, CEO, to begin. Please go ahead.

Thank you, and good morning, everyone, and welcome to today's Q1 results call. I am delighted to be speaking to you again and sharing another strong set of Entain results. I'm also very pleased to be joined by Mike Snape for his first Entain update. So welcome, Mike, and it's great to have you on board.

This morning's call will broadly follow our usual format. I will begin with an overview of the quarter, then Mike will take this opportunity to share some initial reflections before he runs through the Q1 trading performance, and then we will finish with your questions.

So let's get started. Entain continues its positive trajectory. Our diverse and globally scaled portfolio of podium positions is a powerful engine, which is proving it can deliver consistent and sustainable growth. We maintain our relentless focus in executing against our strategic priorities, which saw us exit last year with strong momentum, and this has continued so far this year.

I'm also very proud of the leadership team we have in place who are focused on increasing both our pace and our capacity, enabling us not only to do more but also continue to improve our delivery.

Now turning to Q1. The group delivered results in line with expectations. Net gaming revenue was up 3%, within which online was up a healthy 5%. Importantly, Q1 being in line was despite most markets experiencing particularly customer-friendly sports results. So a better reflection of our underlying performance and momentum is volume growth.

In Q1, our volumes were up 8% with an impressive plus 10% for online. Our online NGR and underlying volume growth has not only accelerated from our 2025 exit rates, but continues to come from across our portfolio, and I'm delighted that Q1 marks our eighth consecutive quarter of online growth. The U.K. once again was a standout performer, delivering another great quarter. And we fully expect to have gained both share in online and retail. This sets us up well to withstand the impact of the draconian tax increases better than the competition.

And a point worthy of note, we paid GBP 574 million in U.K. taxes in 2025, whilst the growing black market pays 0 tax. Hence, we remain focused on lobbying government to take action to stop the advertising and promotion of these unlicensed sites.

Australia's recovery continued and is now back to meaningful year-on-year growth, and we expect to continue to having made solid market share gains. So a great performance, which reflects the new management's disciplined and reinvigorated approach. Elsewhere, Spain, Canada, Greece, Georgia and New Zealand, all continued their double-digit NGR growth.

A market that's been steadier than anticipated this year is the U.S. Now I won't repeat it in detail, but as you heard from Adam earlier this week, BetMGM continues to execute its plan, deliver profitable growth and remaining rational in a noisy market. This disciplined approach allows them to remain comfortable of delivering EBITDA still within their guided range, albeit at the lower end despite softer top line growth.

We have strengthened our foundations, improved operational execution and are back to delivering high-quality top line growth. And we have a strong pipeline of activities to continue that journey. These include the many opportunities from AI enablement, improvements to player journeys and exciting new features such as side bet jackpots, revamping the U.K. Ladbrokes app, and our sporting interaction brand in Canada going forward in a very positive way. The wider rollout of SportingBOT, our new AI assistant ahead of the World Cup, as well as deepening our engagement with sports fans across Europe with new campaigns and partnerships.

We're focused on driving greater efficiency, effective capital allocation, and as I have flagged before, we are fully committed to strong cash generation. So just to summarize before I pass to Mike.

We have started 2026 with strong momentum. The business is well positioned, getting sharper every day, and we are navigating the impact of the U.K. tax raises as well as anyone. We are reiterating our full year guidance and remain confident in generating over GBP 500 million of cash annually from 2028. We have a strong team and a busy pipeline of initiatives, and I'm excited about the opportunities in the year ahead. And while it is early days, Q2 has got off to a strong start, and we look forward to the World Cup in June.

And on that note, over to Mike. Mike?

Thanks, Stella. Good morning, everybody. I'm delighted to be here. Before I talk through the Q1, and Stella has really captured the key headlines already, just a few thoughts on first impressions and a flavor of what we've been focusing on in my first few weeks. I think it goes without saying this is clearly a strong business with a model that's performing well.

The full year results in March, and this update is testament to that. We're growing volumes, we're growing share and we're building growth on growth. The front end of the business, the customer-facing part, if you will, is delivering, and we see continued opportunity to do that across all of our markets, a diverse portfolio that gives us the ability to both trade through different macroeconomic conditions and most importantly, absorb or mitigate financial shocks such as the U.K. tax increases. That said, as you heard from Stella at the full year and today, there is far more for us to do to unlock value here.

We have significant potential to optimize our cost base, both to improve operational leverage as we continue to grow volumes and also importantly, to accelerate investments in driving the top line, taking advantage of all the opportunities available across the portfolio, particularly in markets like the U.K., where the tax increase has changed the competitive landscape. This does not mean a new project. It's not time bound with an end date or a target. It's putting in place the right model to support the business through the continuous improvement and driving growth. And today, from what I've seen, we're only in the foothills.

We also need to ensure this growth converts to cash. Alongside driving volume and revenue, cash, deleveraging and balance sheet flexibility are our top priorities, and you can expect our approach to capital investments and other actions going forward will reflect this. This, again, is an area where we see a lot to go for and will be a consistent theme we talk to going forward. So lots of exciting opportunities ahead. Lots for me still to learn, but Stella and I are looking forward to sharing more of our thoughts and our plans at the interims in the summer.

Coming back to Q1. And as a reminder, all the growth numbers that I quote today are in constant currency. It's worth highlighting that alongside NGR and sports margins, we've included volume growth in the release today. It's a metric we've often referenced in remarks and in previous presentations, and we think it gives the cleanest picture of underlying performance, removing some of that noise from sports margins. So as Stella has already said, we've had a strong start to 2026 with the momentum from last year not only continuing but accelerated into Q1.

Group NGR was up 3% with strong volume growth of 8%, again evidencing the underlying health of our business, adjusting for that sports margin noise. Online NGR was up 5% with volumes up 10%. Customer-friendly results pulled sports NGR down 1%, but was more than offset by ongoing iGaming strength, up 9% in the quarter. Similarly, in retail, softer sports margins were supported by wages growth in gaming for overall volume growth of 3%. Importantly, this total result was driven across the portfolio and with volume growth accelerating through the quarter in our largest online markets.

The U.K. and Ireland turned in another fantastic result. Total NGR was up 6% with online at 13%, all the more pleasing, given we're lapping a 23% comparator from last year. Retail also continues to perform well, flat on a like-for-like basis, and we see customers continuing to engage strongly with our gaming and sports terminals with that volume and wages growth reflecting our leadership position on the U.K. high street, which we're taking every opportunity to capitalize on. We can't make any claims on market share yet as the data hasn't been released. But when it does come through, we're confident it will show we are continuing to recapture share. That high-quality retail offering remains an important omnichannel differentiator for our online business, and we believe makes us best positioned to navigate the U.K. market as it digests the recent tax changes.

Moving on to international. Also a strong start to the year across many markets with volumes up 9%, but offset by unfavorable sports results. International Online NGR was 2% higher with gaming performing well, up 8% dampened by a 1.4 percentage point year-on-year sports margin headwind against tough margin comp and reflecting customer-friendly sports results, particularly in February. That adverse sports results impact was most pronounced in Brazil and Italy, both of which saw a particularly challenging margin but pleasing volume growth, especially in Italy where volumes were double digit year-on-year.

We also continue to grow strongly in many other markets. And again, a special mention to Australia, which was up 12%, the first double-digit NGR growth quarter since 2022 as we continue to see the benefits of new leadership and the fantastic work the team are doing there. International Retail, as many of you know, is predominantly Italy sports betting. So this was also impacted by sports results, but we remain very confident in the quality of our estates and future growth opportunities.

On Entain CEE, it's again, really a story of sports results offsetting healthy volumes in Croatia. Given the product mix weighted particularly to football betting, a minus 7.1 percentage point sports margin drag in Croatia pulled NGR growth lower for the quarter. Poland, however, benefited from the migration to the CEE sportsbook and the revamp of the app.

So in summary, we've seen a good start to the year. We delivered strong volume growth across our markets, and that's allowed us to digest unfavorable sports results. And so we remain firmly on track for our FY '26 expectations, but there's plenty more for us to do.

I'll now pass to the operator and open the call for your questions.

[Operator Instructions] The first question today comes from Ed Young of Morgan Stanley.

Two questions, please. First of all, on the U.K., you cited some shift in the competitive dynamics. I wonder if you've seen anything so far already. Obviously, the U.K. growth numbers are very strong, momentum to be entering that change anyway, but I wonder if you could just give a bit more color there on what you're seeing. And then second of all, a similar question on Australia. As you mentioned a long time since we've seen double-digit growth. How much of that is market level support? How much of that is share gains?

And I guess, how do we stitch together the result with the changes from the leadership change we've seen down there and the changes that we made to business?

Ed, nice to hear your questions. Let me try and answer those 2 for you. So I think the first question was, have we seen -- what impact have you seen in the U.K. since the taxes went up at the beginning of April. It's really too early to say. I think the more important point is that we have definitely been increasing our share in the U.K. in advance of those tax increases. And part of our strategy is to continue to increase share.

And certainly, in gaming, if you look at the market, there is a long tail of Tier 2 and Tier 3 operators all having very small percentage shares of the market. So within the regulated sector, we definitely see there's an opportunity to continue to build on that share gain. And we will see over time just how much of an impact the black market has on the overall growth of the regulated sector. But as I think I said in my opening remarks, it's very important that we continue to lobby with government to encourage them and others to stop the inroads into the U.K. black market. But we're very happy with where the U.K. is performing so far.

And then the second one was on Australia. Yes, it's great that we've seen double-digit growth. We believe that is absolutely driven by market share gains. I think the team there is doing a great job. We've been very strong historically in racing. They're expanding the focus more to sports in general now there, which is a really good opportunity for us because the market is much wider than racing, even though that's very important. So I think the team there have got a good strategy, and we're hopeful that we'll continue to build share as we go forward.

The next question comes from Estelle Weingrod of JPMorgan.

First, can you comment on the phasing of margin progression, H1 versus H2? I mean you have the U.K. gaming tax starting in April, which will, therefore, be more impactful in H2. But the phasing of the World Cup-related investment is likely to be more H1 weighted in June, I believe, and organic growth will likely be more H2 weighted given sport comps across international and CEE. Any color would be helpful.

Another question on the U.K. as well. Can we get -- maybe it would be helpful to get a clearer read on what's driving the U.K. market, particularly sports. How do you see the competitive environment evolving into the World Cup? And is there anything notable you'd highlight perhaps in terms of latest product developments? And if I may, just the last one on Brazil. We've now seen unfavorable spot results for like, I think, over the last 3 quarters. Can we get an idea of what's the underlying volume growth in Brazil at the moment?

Okay. So I think you've got 3 questions there. One is about margin progress during the year. The second one is more of a read on the U.K. and the competitive environment and Brazil unfavorable sports results.

I think if we pick up the modeling questions offline with the IR team and just go into the U.K. a bit, that's probably be best.

Yes, I think that's probably the easiest way of dealing with it. So we'll do a follow-up with IR. In terms of the U.K., in terms of what's happening. I think we've been on a journey of increasing market share over the last 18 months or so. Our customer journeys have improved dramatically. We've had new features that have been added in. We've got new features that continue to come out. We've got better Bet Builder, both in football and in horse racing. We've also got a new Ladbrokes experience, which is coming out in advance of the World Cup.

In terms of the kind of phasing of activities, yes, the World Cup starts in June, but it does go on into July. And so that way it does straddle both halves of the year. I think my observation on the World Cup, it will be great for volumes. But it's going to be a bit of a roller coaster ride because in the early days, there are many more teams playing and margins could be wildly fluctuating because there'll be high scoring lopsided games.

I think towards the second half of the World Cup, it will be more equally based competitors. And I think there'll be some lovely upsides there, particularly given that most of our markets are in the World Cup, with the exception, I think, of Italy and Poland who were expected to qualify. Most of our other markets are actually playing in that. And any other comments on that, Mike?

I just say on the U.K., and it relates back to Ed's question as well because we see the huge potential on the cost base in the business, we've really not taken our foot off the gas in terms of driving that U.K. business forward. Many other companies, I think, given the severity of the U.K. tax increases will really be pulling back off growth driving investment. We've absolutely not done that.

We're taking advantage of everything that we see in the market at the moment. And this is merely the start of what we think we can achieve with that U.K. business.

Yes. Okay. And then I think on Brazil, yes, you're absolutely right. Sports margins have been very poor in Q1. Volume has been up. So that's a positive. But I think it's something that everybody needs to watch out just in terms of that is probably one of the worst performing sports margins that we have seen in the short term, and let's see how that goes. But underlying volumes have been positive, which is good news. And have we covered all the questions there? Okay.

The next question comes from Ben Shelley of UBS.

Congratulations, Mike, on the new role. A couple of questions from me. One, in terms of your group online sports wager growth or even more broadly, group volume growth. Can you give us a bit of an idea how much do you think you've benefited from recycling in the quarter? Or rather how much do you think -- how much of this is simply strong underlying business performance?

And then I guess on online volume growth versus the full year guidance, online volume growth is at 10% in the quarter and you have the World Cup ahead of you alongside momentum across the business. How are you thinking about that 5% to 7% online revenue guidance for the full year?

I think on the recycling point, it's really difficult to say. And clearly, there's a lag in terms of the data that we get through from customer accounts and as we close the quarter, but it's something that we'll definitely start to look at for the previous quarter, more as we get through this one. On the volume piece, as you can see, we're reiterating the previous guidance that we've had. I would draw your attention to the fact, and I think you've done it for me that the volume growth was significantly stronger than that. The NGR growth was at the lower end of that range because of the sports margin.

We're very focused on continuing to drive volume across the rest of the year, and we're very comfortable with the guidance that we've got out there.

[Operator Instructions] The next question comes from Rasmus Engberg of Kepler Cheuvreux.

I was just wondering about the World Cup. How much of your 5% to 7% online growth is sort of relating to the World Cup and how much is underlying?

Okay. So on the World Cup, thanks for the question. It's a good thing for us. It's not as big a thing as you might think. I mean it's probably worth about 1% or something like that across the year is really where we would anticipate that to be as an upside. It's bigger than the Euros, but it's not as dramatic as you would think. It's important also to recognize the point I made earlier is that we shouldn't over commit to what it's going to give because I think there will be some volatile sports margins, particularly in the early half of the whole activity.

What I think it does is provides a good recruitment drive opportunity because that's when you get a lot of people are interested in signing up to apps. So I think it's more about the recruitment side of it, where I would say you get the big value from it. It's an exciting activity. I think it will be good for some of our markets, particularly the ones which are in the same time zone. So big markets like Brazil will be very engaged in it. Markets like Australia and New Zealand also will be very engaged because it's about basically watching it live. But that's kind of where we're at. It's a positive, but it's not a major driver of overall numbers this year.

And sorry, just a follow-up question. From an earnings perspective, I guess, but for this year might be invested in attracting and reactivating customers rather than driving earnings in the short term?

Exactly. It is more of a recruitment driver than anything else, yes.

The next question comes from Pravin Gondhale of Barclays.

Firstly, on Poland, are you back to winning your sort of loss shares in the -- lost market share in the country now you have done the migration? And what's your sort of outlook on the iGaming regulation in Poland? And is there any sort of update on iGaming rollout in New Zealand since full year results and other regulatory updates elsewhere in the world?

Okay. I'll take that one. So in Poland, we've always had a process of making sure we have maintained a profitable business. As I think most people know, there have been a lot of new entrants to the market that have gained share, but at a very high cost. What I think is encouraging is -- and I think before I go that far, I think we make the vast majority of all profit that is made in Poland based on our common sense approach to the numbers. It's true, we did lose share.

I think what we're seeing now is some encouraging signs of starting to gain share back off the back of continuing to support the brand, which is very strong. Also, the migration, as you mentioned, onto the Croatia Sportsbook is bearing fruit. And so we're optimistic for the future in Poland.

In terms of iGaming legislation, I think it is significantly in the future. I mean the current regime there is not open to iGaming at the moment. So I think in the medium term, we would suggest that, yes, legislation for iGaming will come through, but I wouldn't be putting into any forecast right now. If you go to New Zealand, iGaming is going ahead, going live at the end of '26, beginning of '27. There's going to be a toleration regime put in place from May.

What's exciting about that is we have the only legal betting sites, which is with TAB, the New Zealand government relationship that we have. And so when iGaming comes out, there's going to be like 15 licenses that are going to be allowed, of which we will have TAB, which will be the only one that will be doing casino and sports. And we're hoping to have 2 other brands as well out of those 15 labels.

So our outlook for New Zealand and iGaming is very positive. But the majority of the impact of that will start to hit from 2027 when we can start to advertise and promote iGaming.

The next question comes from Jamie Bass of Citigroup.

Just one question from me, please. Stella, it's a follow-up on what you were saying there about using the World Cup as a recruitment driver. Just wondering if you have any data from previous World Cups or potentially the Euros on retention once you have sort of acquired customers who are downloading the app for the first time. Once the World Cup is over, do you have any data on whether they then engage in other leagues such as the Premier League?

So we have lots of data about retention and value of customers. We have a team who work on -- I lost the word actually. I've got a cold, so my brain is a little bit foggy. But performance marketing, that's the word I was looking for. Performance marketing. Our team in the performance marketing across most of the world now are really, really strong at getting -- understanding the payment, paybacks, the recruitment efficiency that we get from investing in areas like this. So actually, it's kind of day-to-day BAU stuff that we do with that team. It's a 365 sports team that do most of our performance marketing around the world, and we would apply the same rules to that as we do for the World Cup as we do for any recruitment drive. So we're very hopeful that we will get some strong retention off the back of the activities we do.

And just to add to that, the performance marketing discipline and model that we have here is one of the most impressive things to me that I've seen at Entain coming from a consumer retail background. And so we're very careful to make sure that we don't waste money. Lots of people, obviously, in tournaments like the World Cup will bet and then never bet again until the next World Cup. And we have a very, very good model to try and identify and weed out that type of thing so that we don't waste marketing money on it. That's reflected in the level of marketing that we do around the World Cup.

So we're absolutely in it, and we're absolutely open for business. But you won't see us blast it all over ITV and Sky because we just don't waste money in trying to lean in too heavily. We do think about paybacks in every pound that we're spending.

I appreciate it. I've got my meds with me. Any other questions coming through? No.

We have no further questions at this time. I'd like to hand back to Stella.

Thanks so much. So look, thank you so much for participating. We're really pleased with how the year has started. We believe we're firmly underpinning our 2026 expectations. And I'm very confident that our strong momentum positions us well to seize opportunities ahead. and to be a long-term industry winner. I myself and Mike look forward to speaking to you at the interims. And of course, if you have any follow-ups, then please do contact the IR team who will definitely be there to help. And on that note, thank you, and goodbye.

Thank you.

Good morning, everybody, and welcome to Entain's 2025 Results Presentation. I'm delighted to be here to present a strong set of results. I'm joined this morning on stage by Rob Wood, our CFO and Deputy CFO. And I also have members -- by the way, can you hear me? Good, good. Okay. Always helps in a presentation to be heard, I think. Anyway, I'm also joined by the IR team here in the audience. We also have senior members of the executive team in the audience as well. And we have our new CFO designate, Michael Snape, who's in the front row as well.

So welcome to everybody. And now on to the agenda. I'm going to start with the headlines and some of the highlights of our strong progress. After that, Rob will then take you through the financials and provide you with the guidelines for 2026. And then it's going to be back to me to discuss our strategic delivery, how our priorities are evolving to further accelerate our performance and why we have confidence in our pathway to earnings growth, margin expansion and cash generation, including our conviction that we are going to hit at least GBP 500 million of annual adjusted cash flow from 2028.

And then finally, I will briefly wrap up before we open everything to your questions. But before I actually do move on to 2025 financial performance, this is the first time that I have spoken publicly since the U.K. budget back in November. The U.K. government's decision to dramatically increase taxes on the gambling sector was extremely disappointing. It opens the door to the illegal black market who pay no tax, do not have a license and offer no player protections.

However, during this period of turmoil, we will invest wisely in the U.K., and we will seize the opportunity to gain share from the long tail of subscale operators who, quite frankly, are ill-equipped to withstand this impact. Okay. Now turning to our results. 2025 has been a good year for the group. We delivered against our strategic priorities and achieved a strong financial performance with EBITDA for both Entain and BetMGM ahead of expectations. Importantly, growth was broad-based and underpinned by strong volume growth, which demonstrates the underlying health of the business.

Online volumes were up 7% year-on-year in 2025. And impressively, it was up 9% in Q4. Throughout 2025, online business consistently delivered growth, and we now have 7 consecutive quarters of revenue growth online, and that is despite starting to lap some tough comps. The U.K. continues to be a standout performance, but also there are markets like Spain, Canada, Greece, Georgia, New Zealand, all showing strong double-digit growth. And our joint venture, BetMGM, produced an excellent year of strong and profitable growth. We also enjoyed efficiency improvements. Entain's EBITDA was up 8% year-on-year to GBP 1.16 billion. And including our share of BetMGM, EBITDA was up an impressive 28% to GBP 1.244 billion.

The EBITDA outperformance is stronger than expected and -- the EBITDA performance and the stronger-than-expected cash return from BetMGM has driven a meaningful improvement in our adjusted cash flow, again, ahead of expectations. So our improvement journey is working and it is delivering. Our diversified portfolio of podium positions provides resilience and scale advantages that matter more than ever now. Building on this momentum, we have evolved our strategic priorities to further optimize how we work, enhance profitability, drive meaningful cash generation. So in summary, 2025 has been a strong year. The business is in good shape, and we're confident in our ability to not only navigate the challenges, but to emerge stronger. And with that, I'll temporarily hand over to Rob.

Thanks, Stella. Good morning, everyone. So for the eighth and final time, I'm delighted to be delivering the full year results presentation, and it's a pleasure to present strong numbers again before I hand over the baton to Mike. It's a familiar format for me this morning, so let me jump straight in. And as usual, all revenue and EBITDA growth numbers that I quote are in constant currency unless stated otherwise. So starting with revenue, and I'm really pleased with the growth we delivered across the whole group. Total revenue, including 50% of BetMGM, was up by nearly GBP 0.5 billion to GBP 6.4 billion or up 8% year-on-year.

Within that, online NGR ex U.S. was up -- was GBP 3.9 billion, up 6% year-on-year. And barring adverse sports results in Q4, that growth number would have been 7%, in line with volume growth for the year. On to EBITDA, which came in ahead of expectations for both BetMGM and Entain. Ex U.S. EBITDA of GBP 1.16 billion beat our guidance and was up 8% year-on-year despite digesting new taxes from Brazil following their new regulatory regime. Online EBITDA margin also beat guidance, and I'm delighted to say it was up 0.4 percentage points year-on-year despite a 1.4 percentage point drag from Brazil taxes.

So that means that our scaled growth and improving operational execution drove an underlying 1.8 percentage point margin improvement, which is a key highlight of the year. So with EBITDA beats from both Entain and BetMGM, total group EBITDA was GBP 1.24 billion, which was up a very strong 28% on the prior year. And that EBITDA growth led to equally impressive EPS growth, which more than doubled to 62p.

Moving on to adjusted cash flow, which is a key measure for us, and I'm delighted to report a strong year-on-year improvement from an outflow in 2024 to an inflow of GBP 151 million in 2025. GBP 151 million is comfortably ahead of expectations and was driven by both the Entain EBITDA beats and higher-than-expected cash from BetMGM. On to dividends, we've declared a final dividend of 9.8p per share, up 5% year-on-year, which is consistent with the half year and our progressive dividend policy.

Finally, leverage. We've added a look-through leverage metric, which better reflects the group's leverage position. What do we mean by look-through? On the debt side of the equation, we include the outstanding DPA payments and the balance sheet value of the CEE minority. And on the EBITDA side, we include our 50% share of BetMGM. And as the slide shows, look-through leverage at year-end was 3.6x, which is down significantly from 4.3x at the end of 2024 due to both EBITDA growth, but also paying down the DPA. On a reported basis, leverage has come in at 3.1x, flat year-on-year as expected, and available cash remains strong at over GBP 900 million.

Let's turn now to our online revenue performance ex U.S. over recent quarters. And this chart shows 2 lines: one for NGR growth, which includes volatility from sports margin and one for volume growth, which adjusts NGR to remove any impact from sports margin and is therefore a clear measure of underlying growth. Two particularly satisfying callouts. Firstly, we've now delivered 7 consecutive quarters of growth, all on an organic basis, evidencing the structural growth in our business model. And secondly, we maintained strong volume growth into the second half of the year despite lapping the voluntary code in the U.K. in the summer.

No doubt there'll be some recycling benefit to volumes in H2, given margin was below expectation in both Q3 and Q4, but volumes were consistently strong and grew 7% across the year. So that means we're growing at least in line with our markets, and we enter 2026 with continued momentum. Now for the eagle eyed amongst you, you'll note this chart is not quite the same as we've shown previously. The prior version normalized for Euro 2024 and it adjusted the current year margin to a normalized margin, meaning that volatility from the prior year margin still impacts the picture, but that version is included in the appendix.

Now to our usual market breakdown. And again, it's a strong picture with growth coming from across the portfolio. Our largest market, UK&I, continues to be a standout performer, delivering growth of 15% in online, well in excess of market growth as we continue to regain market share. We also saw sustained double-digit volume growth in the U.K. throughout every quarter of 2025. And U.K. Retail also saw market share gains as we were flat like-for-like across the year in a market which declined by mid-single digits. International online NGR grew 2%, slightly behind volume growth of 4% due to soft margins, especially in Brazil and also Australia.

Importantly, the second half saw an acceleration in volumes from 1% in H1 to 7% in H2, helped by lapping the regulatory changes in 2024 from Belgium and Netherlands. If we look now by market within international, Brazil had a tough sport margin in H2, falling 3 percentage points year-on-year. So consequently, NGR declined in H2 and brought growth for the year down to flat. However, on the plus side, volumes were up 13% over the year. Market share was maintained over H2, so we know other operators were hit by a poor margin, too. And we delivered a positive contribution to EBITDA despite the new regulation and high competition.

Australia next, where customer-friendly results at several tentpole events suppressed NGR, particularly in the second half of the year. Volume growth fared better with 3% growth in H2 as our refreshed management team have been a catalyst for improving performance and improving profitability. Italy online was up 5%, growing NGR consistently by mid-single digits in every quarter of the year. And Italy retail also fared well with 7% NGR growth over the year.

Other large markets in International continued to see double-digit growth, including New Zealand, Georgia and Spain on this page, but also Canada, Greece and parts of the Baltics and Nordics as well. CEE next and both Croatia and Poland delivered growth in both NGR and EBITDA and retained their market leadership positions in those markets. And finally, BetMGM also reported an outstanding performance with 34% growth in online revenue. The key takeaway from this slide should be the unrivaled broad-based growth that Entain enjoys across the diversified portfolio.

Looking forward, we're targeting growth across every one of these online markets in 2026, which positions us very well for '26 and beyond. Moving on now to EBITDA, which came in ahead of expectations for both Entain and BetMGM. This slide shows our year-on-year bridge with EBITDA excluding BetMGM on the left and then EBITDA including BetMGM on the right. Starting on the left, Entain's EBITDA grew 7% or up GBP 71 million on a reported basis, that 7% becomes 8% on a constant currency basis, and it would be 14% excluding the new Brazil taxes.

As usual, as the left-hand side chart shows, our online business is the main growth engine, adding GBP 136 million year-on-year. Where did that come from? Three things. Firstly, NGR growth, as we've looked at on the prior slides. Two, efficiency savings, particularly within cost of sales as our online gross profit margin increased a whole percentage point before Brazil tax. And thirdly, improved marketing returns, enabling us to hold spend broadly flat year-on-year in absolute terms, thereby improving margin.

Retail now, and we saw EBITDA up GBP 16 million year-on-year, helped by a favorable margin versus our expectations. Then in addition to Entain's GBP 71 million year-on-year increase from the left-hand side, the right-hand chart adds our share of BetMGM's significant EBITDA improvement of GBP 178 million year-on-year as it inflected to profitability, which gives an all-in total group EBITDA of GBP 1.244 billion, up almost GBP 250 million year-on-year. That's an impressive 25% growth on a reported basis and a touch higher at 28% in constant currency, and that's all organic growth. And as I mentioned earlier, that EBITDA growth is the primary driver of why EPS more than doubled last year.

Let's now take a closer look at cash flow and leverage. And as always, there's a detailed cash flow provided in the appendix. As a reminder, adjusted cash flow is effectively our distributable cash, i.e., cash flow pre-equity dividends, and we also exclude working capital noise and strip out M&A and debt movements. In 2025, we delivered adjusted cash flow of GBP 151 million, which is meaningfully ahead of expectations. You'll remember a year ago, I had guided adjusted cash flow to be broadly neutral. And then by Q3, we were ahead of plan, particularly thanks to BetMGM. And so guidance effectively moved from neutral to GBP 75 million, and then we beat that too.

So what drove the outperformance? Firstly, Entain's EBITDA beat guidance. And secondly, BetMGM returned more cash to parents than guided, $270 million in total for 2025, which far exceeded expectation. And finally, a net favorable movement across other cash items, including lower interest costs following our debt refinancing efforts last year. Net debt ended the year at GBP 3.6 billion, with the improvement in adjusted cash flow offset by an FX translation bad guy of over GBP 100 million and the working capital outflow that was as expected.

So overall, reported leverage of 3.1x is in line with where we expected it to be, but more insightfully, look-through leverage of 3.6x saw a meaningful improvement, down from 4.3x in the prior year, reflecting EBITDA growth, improved cash flow and a reduction in the remaining DPA balance. So our cash flow and look-through leverage improved significantly. Our available cash remains strong at over GBP 900 million, and we have a healthy debt maturity profile with our next significant maturity of around 20% of the debt not falling due until 2028.

A few quick comments on BetMGM now. It won't be new news, but it's still important given its significance to the group's priorities, particularly cash generation. BetMGM had a fantastic year and delivered ahead of its upgraded expectations with total revenues up 33% and EBITDA up over $460 million year-on-year as it moved into profitability. This inflection triggered the start of cash returns to parents with $270 million distributed in 2025, including excess cash from the 2024 year-end. The strong performance last year was driven by BetMGM's disciplined execution, underpinned by a leading iGaming offering and BetMGM remains on track to deliver approximately $500 million of adjusted EBITDA in 2027.

Since we created BetMGM around 8 years ago, total net investment between parents now sits at almost exactly $1 billion. So with approximately $500 million of EBITDA next year, it's easy to see that the ROI on that investment has been excellent. Now last slide from me, the outlook for 2026. And remember, the appendix includes a detailed guidance slide for modeling purposes as well as a slide on the BetMGM parent fee mechanics.

To be consistent with prior years, when I refer to Entain EBITDA, this is before parent fee income, which does start in 2026. So for 2026, we expect online NGR growth of 5% to 7% on a constant currency basis with broad-based growth across the portfolio. Online EBITDA margin is expected to drop to 23% to 24% in 2026 following the increase in U.K. gaming taxes, including our expectation of mitigating approximately 25% of that cost in 2026. Stella will talk about it more shortly, but our upgraded mitigation expectation today is to improve cost mitigation to over 50% of the U.K. tax impact from 2027 onwards. The efficiency plans, which Stella will take you through, will support an upward trajectory for both EBITDA and EBITDA margin from 2027.

So with 5% to 7% online NGR growth and 23% to 24% online EBITDA margin, we're comfortable with current market expectations for 2026 Entain EBITDA, which represents a small decline year-on-year. However, when combined with growth in the U.S., EBITDA, including the U.S., will be broadly stable year-on-year. And broadly stable, of course, represents significant underlying growth before absorbing the U.K. gambling tax rises.

Another consequence of the U.K. tax rise is that we lose a year on a deleveraging profile because now look-through leverage will be broadly stable in 2026 before resuming deleveraging thereafter. Two more bits of guidance to touch on. Firstly, marketing phasing because 2026 is a World Cup year, we expect approximately 55% of marketing spend to be in the first half, consistent with previous tournament years. And then secondly, now that BetMGM is sustainably profitable, our ETR guidance going forward is on an including U.S. basis. And the new ETR, so effective tax rate, the new number is 30%. This is higher than 2025 due to the U.K. tax increase as we'll now have less profits in the U.K., which are taxed at a below average ETR. And so that adverse change in geographical mix pushes up the group's blended ETR.

In addition, there's a slide in the appendix, which takes you through expected tax accounting treatment of our share of the $1 billion of available brought forward losses in BetMGM. In short, a deferred tax asset is expected to be recognized in 2026, which will give a boost to EPS in 2026, but then available losses are no longer benefiting EPS in the following 2 to 3 years. Cash tax is not impacted.

So in summary from my section, we expect 2026 total group EBITDA, including BetMGM, to be stable year-on-year despite digesting the significant increase in U.K. taxes. How do we achieve that? We operate in growth markets where we have the most diverse set of podium positions globally. So we have structural sustained growth built into our model. We also have a gaming-led business in the U.S. without material exposure to prediction markets. So those combined give us confidence that underlying growth will continue into 2026 and beyond.

And on a final note, I'm proud to say that our EBITDA of just under GBP 1.25 billion is now twice the size of the first EBITDA number that I reported 7 years ago and is many multiples bigger than my early days at Gala Coral. It's been quite a journey. It's been hugely eventful. It's been highly rewarding, and I'm delighted to be leaving the business with great momentum across an outstanding global footprint, yet still with so many growth opportunities ahead. And it's also clear that in Mike, we have -- I'll be handing over the CFO reins to a hugely capable replacement. With that, I'll hand back to Stella.

Thank you, Rob. It's difficult to beat that because he's got all the numbers, and I've got all the fluffy stuff. So -- and this is the audience for fluffy stuff. You like numbers. So I'll do my best, okay? So look, Entain in 2025 did deliver strategically and financially. So that is a really good starting point. But now our priorities have to evolve because we have to reflect the next stage in our journey, and it's an improvement journey. And we have to build on some of those achievements, but we also have to be bolder in our mindsets. We have to address the significant challenges from the dramatic tax increases in the U.K.

So what are we doing about it? Well, we're intensifying our focus on cash generation and disciplined capital allocation. And importantly, today, we reiterated our confidence in delivering at least GBP 500 million in annual adjusted cash flow from 2028. Cash generation being a key component of long-term value creation. And as you can see from this slide -- yes, good, you see from this slide, it is now an explicit strategic priority, called out in our bonusing for our people, called out in our long-term incentive plans, it's a very important part of where we're trying to go.

But before discussing our achievements and progress during '25 in detail, these next 2 slides are an important reminder of Entain's foundations. We are a global leader in an industry that is in long-term growth, and we are well positioned. This slide is a powerful visual representation of the breadth and the quality of our business. In Entain's 16 largest online markets, we have a podium position in 13 of them. And we're in the top 4 in all 16. And excitingly, many of these positions have the opportunity for significant growth.

So for example, if you take New Zealand, where we are the partner with the New Zealand government for sports betting. We now have a great opportunity in iGaming when it becomes regulated at the end of '26 beginning of '27. And in Spain, we have a great revitalization of our beautiful bwin brand. And we're really hopeful that by the end of 2026, it will also have a podium position. And this next slide is also going to be familiar. I'm a bit boring. I keep showing the same slides, but that's consistency for you. Consistency is good.

The left-hand bar chart shows that over 98% of our NGR is locally licensed. And 97% of our online revenue is from markets estimated to grow at least by mid-single-digit CAGR. That is a truly impressive statistic, 97% of revenue coming from markets in good, sustained long-term growth. And the pie charts on the right showcase the diversity of the portfolio by both geography and by product. And it's the combination of all of these things that gives our business the resilience that it needs, underpinning our ability to deliver long-term shareholder value.

And now I'm going to share a few of the highlights from across our portfolio in 2025. In the U.K., one of our many initiatives was refining our bonusing, using real-time player data to increase segmentation, reduce bonusing as a percentage of GGR while increasing player value. This bonus optimization on our central platform is also driving benefits in markets like Brazil, Spain, Portugal and Canada. Our U.K. retail team continued to raise the bar with a state-wide rollout of our group bet stations. And this has driven an increase in our market share as well as an increase in our Bet Builder staking.

In Australia, our new leadership team adopted a disciplined and returns-led approach, retiring some of the inefficient legacy marketing initiatives whilst also leaning into AI to produce high-quality creative assets more quickly and at a fraction of the cost. Across the group, we've also reduced nonworking marketing spend, centralized performance marketing and improved our allocation of investment. Our strong performance in Spain reflects that reawakening of the bwin brand and also markets like Canada, Brazil, Georgia, all benefiting from refining how our brands engage with our customers.

And also some things on product and tech. In Poland, STS migrated onto our Croatia Sportsbook, rebuilt its mobile app and now has a slicker, faster user experience. And in Brazil, we launched Sporting bot for the Club World Cup, an AI personalized assistance to help our customers enjoy the product more. And it's proved to be such a success that it's being rolled out across more markets and more sports this year. So that's just a flavor of the strategy in action. We're seeing improvements to the portfolio because we have shared learnings that generate a powerful multiplier effect, supporting our momentum and our operational efficiency.

Moving on now to customer acquisition and retention. And again, this slide will be familiar. Net revenue retention is holding strong. It's above the 85% benchmark, and it has been north of 90% for the entirety of 2025. And this reflects the work that has been done to close product gaps and improve our customer journeys. You'll see there's a slight drop-off in Q4, but that is due to customer-friendly sports results, and it's nothing structural. Customer acquisition also remains comfortably above the 15% level. So if you get the combination of strong net revenue retention and healthy acquisition, that underpins our sustainable growth. And these metrics remain strong as we enter into 2026.

As I mentioned with our strategic priorities, Entain is now in the next phase of its improvement journey to accelerate forward. Project Romer delivered over GBP 100 million in savings annually. But we can and we have to do more by continuing to improve on our cost of sales, by optimizing marketing rates as a percentage of NGR and a continued focus on operating efficiencies. We already have multiple work streams identified to deliver against these 3 key levers. And we're also excited by the opportunities that our continued AI enablement program will have for improving the customer experience, the colleague experience and importantly, for increasing our bandwidth, whether that's resolving legacy issues with old -- can't say that, old code. You know what I mean. I hope you know what I mean.

Speeding up development cycles to improve the user experience, improving our customer care handling, automating low-quality contracts and legal work or dramatically cutting the cost of asset generation in our marketing areas. So delivery of these type of group-wide initiatives support our expectations to now offset over 50% of the U.K. tax increases from 2027, up from our previous estimate of 25%. I just want to do a slight call out on that. When the tax rates went up, we said immediately, we would mitigate 25%. That was the right thing to say because we haven't done the work at that stage. You need to take the time to add up the numbers and go through the figures to have the confidence.

So we didn't come out of the block shouting it's going to be 50% or 60% because that would have been quite frankly, a made-up number. Now we've done the work, and we've got increasing confidence in our ability to deliver against that. And that is the right way to do these things, engage into the business, build the confidence and start to solidify those initiatives. So I just wanted to give that flavor. We're not being dramatic and changing our minds. We're just building on what we started to do immediately after the tax increases, really important points.

So let's bring this all together. Despite the jump in those taxes in the U.K., we now remain comfortable with the market expectations for 2026. And when you combine BetMGM and Entain, that means we are delivering a stable set of numbers in '26 versus '25. From '27 onwards, organic growth and those optimization initiatives means that we're going to grow both EBITDA and cash flow and both on a year-on-year basis and importantly, versus 2025. And by 2028, we've got the building blocks in place to achieve at least GBP 500 million in annual adjusted cash flow. And therefore, that will support our journey to getting our leverage back to our target range of 2 to 3x.

So let me briefly wrap up before we go into Q&A. 2025 was definitely a strong year. We delivered growth across the portfolio, and that is a highly attractive portfolio that is well diversified. And our relative scale means that we will be winners in the U.K. because we will gain meaningful share from the regulated market. So execution is definitely improving. There's definitely a lot more to do. There always is. That's how you keep being competitive. And we have a clear pathway ahead. So we are confident in it. We are getting more disciplined, and we are accelerating forward. And on that note, I would like to open the floor to your questions, and I will return back over here.

[Operator Instructions].

It's Monique Pollard here from Citi. So 2 questions from me. Firstly, on the UK&I, obviously, you've delivered a pretty amazing performance today. You're now materially outperforming, let's say, your main competitor and largest competitor in the market, both on iGaming and sports and even including the comp, so on a 2-year stack, outperforming on both those metrics and taking material market share. Just wanted to get a sense from you of whether you think that can continue as we go into 2026, given some of the initiatives that you've taken on.

Second question I had was when we think about the Q4 win margin and that was down 1.4 percentage points in the fourth quarter online sports margin and year-on-year. But obviously, the online EBITDA has come in really good. So what are the sort of measures you've taken to protect that online EBITDA margin despite the unfavorable sports results in the quarter?

Okay. Great. Well, I think that's 2 questions. So I'll answer one, and Rob will answer the other one. Which one should I do? Okay. I'll take the U.K. and Ireland one because it's been great actually, the revitalization that we've seen in the U.K. And I actually have the U.K. team here. So they are in the audience, so I have to be nice to them. But they genuinely have done a great job. We've done lots of things, improved customer journeys, innovated, more innovation yet to come. We're putting a whole new Ladbrokes experience together before the start of the World Cup. We innovated with the first Bet Builder in horse racing.

So there's a lot of focus and there's a lot of energy. And it's energy is really important in these journeys, that belief and that willing to lean in and get it done. So we think there are lots of opportunities, both online where we definitely think we will win share once the new taxes come in place. But let's not forget, we have the best retail estate in the U.K. It's 2,400 shops, great shop colleagues. You would be amazed about their motivation. When we do our global employment engagement survey, they score amazingly. And you think about -- they're not high paid people, but their motivation and their customer care is just outstanding. And those things make a difference to how you perform and how you are relative winners in a marketplace that is going through change. So we're very optimistic. And I can say this because it's true, the U.K. has got off to a great start in 2026.

And then on to the online question. So yes, as you say, win margins below expectations. So in the end, NGR only plus 3%, but volumes plus 9%. How did we still get there on the EBITDA delivery? The main answer is within that gross profit margin point that I made earlier. We've seen great success, particularly this year sort of the continuation of Project Romer. Hugo sat in front of me, his team working on things like payment service providers where we've generated material savings. I referenced it earlier, if you take out Brazil tax, gross profit margin was up about a percentage point. And actually, there were some other tax rises at Netherlands and others that meant that it was even more on an underlying basis. So 1 point across the whole online revenue base, that's GBP 40 million, and actually, it's more like GBP 50 million, GBP 60 million. So that's the primary answer. It wasn't marketing. We spent exactly as we intended to in the second half of the year. We spent GBP 20 million more than we did in the first half, which is what we guided to last summer. So it's really the cost of sales margin or gross profit margin that delivered the catch-up against the NGR miss.

It's Ben Shelley from UBS. Two for me, if I may. One, could you talk about the growth outlook for the U.K. iGaming business, specifically amid the tax changes in that market? And then secondly, on New Zealand, can we expand a bit more on that opportunity? I appreciate it's very early, but what kind of upside do you think that can present to medium-term revenue guidance?

Okay. Well, we'll try and do them sort of -- I say a bit, you say a bit.

Okay.

So growth in iGaming, I mean, clearly, there is a market share opportunity here when the taxes go up. If you look at the shape of the business, the bottom 25% share of the iGaming market is through competitors, which are very subscale, 1% percentage share -- 1% share of the market. And they're just ill-equipped to ride the storm with this. So we feel very confident that we will gain share during that journey of the regulated market. Clearly, the black market is going to grow. At the moment, there aren't enough barriers in the way of the black market. And there are still 4 black market operators advertising on the front of football shirts on the Premier League.

I spent a letter expressing my concern about that. There is a consultation that's taking place with government. But quite frankly, that should be dealt with now because for all the reasons, the level of interest in the black market is going to go up. But we are in a very strong position. We're very strong in gaming. We have the scale to significantly increase share, which I think we will do. And we factored that partly into our numbers. Anything else on the U.K. before I go into New Zealand?

I mean we also extended the coin economies to Gala and Foxy. So it's not just about Ladbrokes and Coral driving growth in gaming in the U.K. So those brands are responding well, too.

Yes, that's great. And then on to New Zealand, just as a kind of a bit of background for everybody in case everybody isn't fully up to speed. We are the partner of government in New Zealand. We are the only licensed sports betting operator, and we have that long-term license agreement. Going forward, towards the end of '26, maybe the beginning of '27, there will be licensed operators for iGaming. They're going to be giving out 15 licenses. We are confident that we'll probably get 3 of those licenses. And I think the opportunity for us is significant because we'll be the only player who will be able to do cross-sell, yes. And so therefore, it's too early to say. We haven't explicitly factored it into our numbers, but we have put it forward as one of those opportunity areas that could be significant for us as we go forward.

So really exciting. And what's great about the team over in Australia and New Zealand under the leadership of Andrew Boris is they're really leaning into this that they're working very closely with our partners over there. We have 2 brands. Actually, we do under our licensing agreement. We have the TAB brand, but we also have betcha. Betcha is more focused on sports in general, whereas the TAB brand is more focused on horse racing. So we have lots of opportunities going forward.

And maybe put some numbers on it. Andrew probably won't appreciate this, but the opportunity is big. And we estimate that there's around a GBP 600 million marketplace. And currently, we're less than GBP 200 million. So if we have all of sports and a reasonable share of gaming, why can't that below GBP 200 million number go to, say, GBP 300 million. So an opportunity for significant growth over a number of years.

Estelle Weingrod from JPMorgan. I've got 2 questions as well. The first one on your online organic growth revenue guidance. Could you perhaps provide more granularity, more color on the different geographies, what you're baking in like between U.K. and IAC and international? And the second one on the Netherlands. I know it's a small market for you now. But just to understand a bit better how is your -- how was the exit rate and maybe what you're seeing right now in the market because you -- I think you're now lapping some of the affordability check comps that were implemented last year in February. Just to see if you're seeing an inflection in the market now.

You go and then I'll chip in.

Okay. We'll do it the other way around. So first question, the 5% to 7% guidance, where does it come from? I mean, unusually, I think it's going to be pretty uniform across our segments. So I mentioned it earlier, but international, for example, was below in 2025, but it had the drag from Netherlands and Belgium. I'll come back to Netherlands. So that's now washed through and it exited with 7% volume growth in the second half of the year. And U.K. incredible in '25 with 15% growth. Of course, it won't be 15% in 2026. And so I'd expect those segments to be much more uniform. Plus I mentioned earlier, if you look at the negatives, I'll come back to Netherlands in a moment. But Australia, we do expect Australia to return to growth in '26. And Brazil, when we annualize against those poor margins in the second half of the year, you'd expect growth in Brazil as well.

So I think you'll see a more uniform picture. And then the second part of the question, Netherlands. So as at Q3, we were minus 30% at the end of Q3. Then Q4, I think I'm right saying was minus 2%, so you can see a massive difference in performance. So the objective now is to get back into a little bit of growth. But even if we don't, the key thing is we've washed out that minus 30% that we were carrying for 4 quarters.

Yes. And just one thing to add on Netherlands. It's a kind of -- it's a terrible combination as a market because not only have the gambling taxes gone up significantly, but there's huge amounts of friction for players with very low thresholds in terms of deposit limits, et cetera. And I think I'm right that there's just another tweak up that's going to go on in duty rates, I think from January. Is that right? Yes. I think it's going from 34% to 37.5%, which is, again, a little bit more friction for players there.

Richard Stuber from Deutsche Bank. Can I ask just a couple of questions on the optimization plan. You talked about it's going to be effective from 2027. I was just wondering whether there are any opportunities to accelerate that? Why don't you sort of start those plans now? And the second question on that as well is, I guess, the initial guidance you gave in terms of U.K. tax mitigation was looking at the U.K. market. So how much of the optimization plan do you think is related to the U.K. and how much is sort of more of a global initiatives?

Thanks very much. I'll take the first, you take the second.

Yes.

So I hope I haven't miscommunicated. Optimization plans take place every single day. So it's an ongoing journey. And I think the way that I would describe it is prior to the U.K. taxes going up, we had areas that we were continually thinking about what are the next areas we can improve, whether that's payment service providers, whether it's automation, removing the processes, whether it's using AI to cut down our marketing production costs. So it's an ongoing journey. And if you think about the hit in 2026, we take the big hit from gaming, which is the big increase from 21% to 40% bang first of April. And so without mitigation, we'd obviously have a lower run rate. So we are mitigating and optimizing in 2026 to get to the numbers we have. But some of these other initiatives, they organically happen sequentially over time. And so it will continue to build as we go forward.

So it isn't a wait and see. I think everybody is very active in the company looking for those improvements in run rate that come from multiple activities. There isn't one big silver bullet. And I think if I were you, I'd be horrified if there was a silver bullet because why haven't we shot it. So therefore, it is literally multiple activities that go into how we improve the customer experience, how we improve the colleague experience, so we get more efficiency out of them, how we generally cut costs using the tools that are available to us and how we use AI, which is a huge game changer if it's done in the right way, to increase our bandwidth and our capability. A lot of people say AI is about this or that. AI is about enabling us to do more with the resources that we have to help protect us in the future.

And perhaps the only thing I'd add from a modeling perspective, put it through in '27. We're happy with where the market sits for '26 as it stands. And in terms of where is it coming from, where is that initial 25% that we announced last November, that was U.K. focused. The second 25% is a global view for all the reasons Stella has just said, primarily all online, but you can assume it's uniform or proportionate with the segments. There will be a little bit of corporate benefit as well, but the lion's share would be online across all the segments. I think that was the question.

Adrien de Saint Hilaire from Bank of America, please. A couple of questions. First of all, can you talk about the risk in your view of prediction market platforms coming into your markets and I say your markets beyond the U.S., obviously. And then, Rob, maybe an easy one as the last question. I can see your cash flow Slide 21. You have it down in '26, and I'm not too sure why because you've got stable EBITDA, declining CapEx, declining interest and so on and so forth. So what's the moving part?

Okay. I'll take the first question on prediction markets outside the U.S. I might even comment on it in the U.S. as well. So in the U.S., there is a unique set of circumstances. It doesn't get taxed like sports betting, and it is not approved by the state regulators. which means that there is a huge amount of prediction markets goes through nonregulated states, particularly California and Texas. I think the percentage going through those 2 states is it's -- I don't know, it's something like 80% of the total volume. There's also a huge amount of play of underage players. So in the U.S., you're going to be 21 to play. So 18- to 21-year olds are playing prediction markets, and they're playing prediction markets in non Luno regulated states.

It doesn't touch us that much in the U.S. because we are very much stronger in iGaming, and we never had a business to protect in those nonregulated states. So it is a bit of an anomaly in the U.S. And let me be clear. When people play the prediction markets in sports, it looks like a sports bet, it sounds like a sports bet, and it acts like a sports bet. So I don't think anybody should be any doubt it's sports betting. Now what happens to that legally in the U.S. and have a strong relationship with the regulators. We are in Nevada. Other sports players are not in Nevada. It is a key part of our offering. It's just what I wanted to say that.

If you look outside the U.S., equivalents to prediction markets, effectively like betting exchanges with Betfair in the U.K. have existed for decades, and it takes a small single-digit share of the market. There are not the structural reasons for prediction markets to be the hot topic, the flavor of the month in other markets. And indeed, in some countries, they've already come out and said, it's illegal. I think the Netherlands have said, polymarket you're out, otherwise, it's going to cost you $450,000 a week in fines.

France has come out against it. So it is a much smaller threat than I think it is -- than people perceive it to be in the U.S. But in the U.S., we're quite comfortable with our position, if that helps. Sorry for the long answer, but I thought it was going to come up at some time. Do you want to take the easy question?

I'll take the easy one. It's easy if I keep it simple. There is more complexity to it. But the simple part of it is Entain EBITDA does go backwards a little bit, as we referenced earlier. So consensus right now is GBP 1,126 million. We delivered GBP 1,160 million in 2025. So there's a little bit of a drop there. The second part of the answer is BetMGM. Even though BetMGM EBITDA does grow, remember, in 2025, we had an outsized cash distribution, including the 2024 surplus. So from a cash perspective, BetMGM is broadly neutral, whereas Entain EBITDA is down a little bit. That's the bulk of the answer. There are some other puts and takes. CapEx is down a bit, interest is down a bit. But that ETR point that I mentioned earlier, that's an offset against that. So the 2 primary drivers, Entain EBITDA down a little bit and BetMGM cash not up, just flat because of the 2024 credit that came through in '25.

I'm Ricardo Chinchilla from Deutsche Bank. I was hoping if you could give us a little bit more of a breakdown of the different buckets for the mitigation strategy for 2026 and 2027. Is it going to be mostly marketing reductions? Do you guys anticipate operational efficiencies from the use of AI? And if you could also comment on how you anticipate the promotional environment to be in the U.K., given that all of the large players have actually referenced the fact that 25% of the market is not going to be able to compete. So we anticipate that there is going to be competition to take that share back.

Okay. So let me just talk a little bit about mitigation. There are many initiatives. The way we try and sort of bundle them up in the business, we probably put them into probably 8 key buckets of opportunity. It ranges from optimizing our marketing expenditure. It ranges to looking at our cost structure to make sure we're more efficient. It ranges to looking at procurement, lots of opportunity in the very large amount of third-party spend we have. So third-party spend is a very interesting area because we get lots and lots of feeds externally. We have lots of licenses externally. We have lots of external legal fees.

I'm just adding them up, giving you a flavor of the different areas that we have. And then the devil's in the detail going down to specific line-by-line item activities. We also see that there is opportunities in terms of hopefully increasing our trading margin sequentially over time. But it takes -- it's a long-run thing, reducing fraud, taking the opportunity to get rid of bonus abusers. There's lots of things that build those buckets up to where they need to be. But I think the thing that I was trying to say is we have a detailed road map. We have sponsors behind that. We have targets that are being set. And we also have specific targets for how we increase the bandwidth from AI, which means that if you think about it, everybody who works in a corporate role or an in-market role or a finance role, they all have to become competent with AI so we can increase efficiency and make those people actually highly employable for the future.

But again, efficiencies flow out of doing those kind of things. So there are just many, many initiatives that build up to the total number, yes. Promotional costs, do you want to have a stab at that?

Yes, sure. I'll have a go. So I think you're right. I think the 2 obvious large competitors in the U.K. will lean in as well as ourselves. The fourth largest probably not so much. But then there is such a long tail, as we've touched on earlier. And when you look at one of these staggering numbers as a consequence of these U.K. gambling tax increases, when you look at the tax that we'll now pay in the U.K. as a percentage of profit before tax, it's over 80%. So in how many sectors and how many parts of the world you operate in an environment where your income tax rate is over 80%. That's an astonishing number, which essentially means how can subscale operators possibly want to do business and spend money here.

So I think with the exception of the 3 larger operators who I fully expect to want to, just like us, capitalize on it and seize the moment to take market share, I think you will see a lot less promos from mid- to smaller firms. The sort of the unknown dynamic is the black market. Of course, they'll be aggressive, why wouldn't they be? And quite what the impact of that is, we'll see from April onwards.

We're just coming up to time. I'm going to -- just one last question on Italy from Andrew Tam from Rothschild. It wasn't touched on a huge amount in the presentation. Obviously, it remains a key market. So a bit of color on the performance this year and then actually opportunities and actually how you're thinking about going forward.

Well, I'm happy to just talk about some of the opportunities, and I'll let Robbie okay, just talk about some of the performance at the moment. So we are a distant #3 in Italy, but we do have some exciting plans coming up in 2026. I don't want to share the confidential information. But if you watch this space in the next few weeks, I think we'll be announcing some nice initiatives that will give some more high-profile presence for our business in Italy. There is quite a detailed plan that has been developed to help optimize our position, recognizing that we are disadvantaged in terms of our footprint because we don't do retail gaming. And that is something that is not available to us because we don't have the license and the license isn't open for that. But there are some other things that we can definitely do, but I don't want to spoil the surprise. So, talk about the numbers.

Can I just clarify, these are organic plans in Italy.

Sorry, definitely organic plans, yes.

So in terms of performance of the business, the way we look at it, we grew online 5% last year, mid-single digits. Retail grew 7%. EBITDA grew 8%. It's a healthy business that's growing nicely year after year after year. That's very well run, tight ship. And so yes, there's a gap to the top 2 operators, but we have a great healthy business in the #3, particularly with Eurobet, which is a very strong brand.

Are we -- any more questions? Or are we having to wrap now? There was one there. Unless it's a hard one.

I'm Pravin from Barclays. Firstly, on the marketing expense, you sort of mostly answered that, but 45% in second half, given -- I appreciate its mitigation in U.K. seems a bit low given it's World Cup year. So do you think is there any scope in your guidance to sort of raise that if the market demands that, if competitors sort of market hard in second half? And then secondly, on regulation, is the worst behind us or you are still hearing anything in any of your markets there?

So on the marketing expense, we're investing well throughout the year. We're just shifting it forward because it's World Cup year. So World Cup, even though it's sort of June, July, it goes over 39 days, which is the longest World Cup there's ever been and there's more teams than there's ever been, means that the activity for acquisition, which is one of the things you really want to do in the World Cup comes quite a lot before then. So you're doing -- you do a buildup in terms of marketing.

So it does pull investment through into H1. But hopefully, that acquisition then rolls through into H2. But I'm a marketeer by training. If we have any spare money, I'll always put more money into marketing. But we have to deliver the numbers, too. I realize that. So that's obviously an area that we'd always look at going forward. But I think World Cup is a great opportunity. I think it's going to be a bit of a roller coaster ride because there's so many teams playing.

In the early days, the margins may be volatile. But hopefully, net-net, the whole thing is going to be an amazing thing, particularly for some of our markets. So given it's in the Americas, our business in Brazil will be really engaged in it. Our business in Canada -- by the way, Canadians, they love betting on soccer. Yes, absolutely love betting on soccer. And also, we've got quite a lot of our markets have teams already in the World Cup final. So we have a high overlap. So I think it will be good for us. And of course, and BetMGM, that small company in the U.S., BetMGM, yes.

Regulation. Look, I think it is -- it's our duty to flag the challenges of the increase in taxes and the increase in regulation that it does fuel the black market. I think we talked about the Netherlands earlier. I mean that is the perfectly worst mix. You have highly frictionful regulation and high taxes and their own government or the regulator says that over 50% of their market is black. That is a place that no sensible government would want to go into, in my view, because actually, it's just fueling profits in a different part of the world. And so I think it is the job of people like ourselves to flag the dangers of the black market to try and dissuade other places going like where the Netherlands has gone.

Yes. Can I just make one point of clarification on marketing. So we do expect marketing to increase in absolute terms. You can probably model broadly in line with revenue. So the marketing rate holding firm. It's just the weighting that's H1 related. Yes. And then on regulation, aside from the U.K., then everything else looks a lot more of a balanced picture, which is nice.

I know the Republic of Ireland, we have to do a wallet decoupling, which is a small adverse move there. But in Germany, it looks like touchwood, this might be the year that we get an increase in the slots cap, which, as you'll know, has driven the slots market to be 70%, 80% black. So that could be significant for us. We have New Zealand iGaming and other examples of clamping down on the black market as well. So aside from the U.K., and that's a big an aside, but aside from the U.K., it's a more balanced regulatory outlook, I would say.

I draw your attention to the 2 slides that started about the podium positions and our quality of our foundations of our portfolio, which gives us that resilience and the ballast to absorb any regulatory changes.

I think we're going to have to wrap it up now. But before we do, I just wanted to say a huge thanks to Rob for his huge dedication and passion for this business. He's been in it for 13 years, I think. And I do think if I chopped his arm off, it would actually say Entain.

Glad.

Should try. No, no. But genuinely, thank you so much, Rob. I really, really appreciate it. And I'm sure everybody in the room, along with all your Entain colleagues, is wishing you the very best in your new ventures when you eventually start them. But he's not going anywhere just yet. He's helping us out on some things until the end of June, but Mike takes over formally as the CFO tomorrow. But Rob is still with us, and we just say thank you so much.

Thank you.

I'm just going to say something. Rob soak that in. You never get clapped at one of these events ever. This will be the first and last time you get a round of applause.

Thank you very much, everyone. I do really appreciate it. As I said earlier, it's been quite a ride. And you can tell I've been here a long time and also I don't wear suits very often because I looked this morning, and I've got GVC business card. Yes. Thanks, everyone.

That's funny. Thank you very much. Thank you.

Good morning, all, and thank you for joining us for the Entain Group 2025 Q3 Trading Update. My name is Carly, and I will be coordinating the call today. [Operator Instructions].

I'll now hand over to our host, Stella David, CEO. Please go ahead.

Good morning, everyone, and welcome to today's Q3 results call. I'm delighted to be speaking to you all again and sharing another set of good Entain results. I'm joined by Rob Wood, our CFO and Deputy CEO; and our Investor Relations team. So sticking with our usual running order, I will start with the Q3 headlines and some highlights of our operational progress. Rob will then dig into the trading performance and outlook for the balance of this year. And then we are going to open it up to your questions. So let's kick off.

Entain's transformation continues at pace, and we continue to make strong progress with our strategic priorities. We are definitely getting stronger and fitter every day, and our improving operational execution means we can expand our bandwidth, enabling us to do more across more markets in our portfolio. Our technology underpins everything we do. And it's thanks to our hard-working product and tech teams who are supporting our commercial organizations with better capabilities. And these ongoing tech upgrades are the cornerstone to both Entain and BetMGM's improving performances.

All of this hard work is focused on delivering for our customers, providing players with improved products and enhanced experiences. Importantly, our efforts continue to deliver results. Entain is back to consistently delivering growth. Q3 is our fifth consecutive quarter of Online growth, having started on our transformation journey at the start of 2024. And importantly, we are rebuilding the resilience of our business to deliver sustainable growth. And I'm incredibly proud of both Entain's high-quality portfolio and the teams around the world who are highly committed to delivering results.

Looking at the Q3 headlines. Total Group NGR, so that's including our 50% share of BetMGM, grew 7% in constant currency. Entain Group NGR grew 5% with Online up 6%, while Retail grew 3%. Growth was seen across our portfolio, including the U.K., Italy, Croatia, New Zealand, Georgia, Spain, Canada, Austria and Greece. And as some of you may well already know, September had very customer-friendly sports results. And statistically, it just happens. So net of digesting that, Q3 was a really pleasing performance.

Similarly, BetMGM's impressive year-to-date is evidence of the success of the tremendous work that the BetMGM team have been delivering, and also Entain's product and tech teams in supporting BetMGM. As you heard from Adam and Gary yesterday, Q3 was another quarter that beat expectations, driven by the significantly strengthened sports product, our leading iGaming offering as well as BetMGM's successful player engagement approach.

As well as BetMGM updating its '25 guidance, its inflection to sustainable profitability means that we are now comfortably in a position to start returning cash to the parents. We have mentioned this expectation during our H1 results presentation in August, as it is a key pillar of cash flow outlook. And I'm delighted that BetMGM confirmed yesterday it's estimating at least $200 million coming back to the parents before the end of the year.

So in summary, Entain has a high-quality and diverse portfolio of podium positions in our attractive markets, and we're embedding a growth mindset in our business. Our transformation is progressing well, and we are delivering tangible results. We've reiterated our guidance for '25, and the strong momentum for both Entain and BetMGM supports our confidence in delivering consistent underlying growth and generating over GBP 0.5 billion of annual cash from 2028. There is clearly still a lot of hard work to do, but the prospects are positive, and we're excited about the opportunities ahead.

So on that note, I'm now going to hand over to Rob to take you through the trading in more detail. Over to you, Rob.

Thanks, Stella. Good morning, everyone. I'm delighted that Entain's Q3 results saw us deliver another quarter of consistent growth, including particularly strong results from BetMGM, as you heard yesterday. So let's dig in. And as always, all revenue growth numbers that I quote will be in constant currency. Group NGR, including our half of BetMGM, was up 7%. And within that, Online ex U.S. was up 6% and Retail was up 3%.

Let me start by unpacking the sports margin impact, which took a little shine off the quarter's performance after a run of very customer-friendly results in September. Firstly, and importantly, if we adjust out sports margin noise, then Online volumes growth was pleasing at 7% year-on-year in Q3. Yet NGR growth was 6% year-on-year. So you can see only a small margin impact on the year-on-year growth. However, the impacts versus expected margin was larger than that. And across the quarter, it's equated to approximately GBP 20 million of EBITDA. So sports results were unhelpful, but a little volatility is part of the course. And across the year-to-date margin is almost exactly in line with expectations.

Moving on, and our iGaming business was up strongly again in the quarter with 9% NGR growth year-on-year. Gaming therefore, helped to offset lower sports growth as sports ended with NGR growth of 1% year-on-year on wages growth of 5%. Looking at our markets now. And U.K. and Ireland continues to perform well with NGR up 8% in total with particularly strong growth again in Online at 15%. Whilst 15% growth in Online is slower than the 21% delivered in H1, as we start to lap the acceleration in the prior year, 15% is likely to again represent market share gains as we benefit from a level regulatory playing field and improved product and marketing. It's also worth noting that U.K. Retail returned to growth in Q3 after a slight decline in H1.

Moving to International, where Online NGR was up 1% in Q3 as volume growth of 5% was offset by the customer-friendly sports results in September. The impact of adverse results was most pronounced in Brazil, where Q3 NGR was down 11% year-on-year despite volumes growing by a pleasing 14%. We, of course, expect sports margin to normalize over time and the volume growth shows why we continue to be excited about the future in Brazil. In Australia, we saw stabilized volumes, but NGR was down 7%, again reflecting adverse sports results. Italy continues to perform in line with expectations and maintain share with Online up 5% year-on-year and Retail up 8%.

In addition, our high-quality, diverse portfolio saw many other sizable Online markets performing strongly. New Zealand, Georgia, Spain, Canada, Austria and Greece, all delivered strong double-digit growth in Q3. This not only showcased our strength across many geographies, but also helped us to digest declines in the Netherlands and Belgium following regulatory changes in 2024. We are now lapping those changes in both markets, and therefore, expect to see a more stabilized performance looking forward.

Entain CEE continues to perform well with NGR up 10%, Online was up 9% and Retail was up 11%. Both Poland and Croatia reported strong growth, and we continue to be leaders in those markets. Finally, BetMGM, and as you saw from yesterday's update, Q3 was another quarter of outperformance coming in ahead of expectations.

Moving on to outlook for the rest of the year, and I'm pleased to be reiterating our 2025 EBITDA guidance range of GBP 1,110 million to GBP 1,150 million. We've managed to absorb the sports margin impact of approximately GBP 20 million and remain comfortable with where consensus sits.

We also continue to expect 2025 Online NGR growth of approximately 7% on a constant currency basis or mid-single digits on a reported basis. BetMGM continues to see strong momentum, and yesterday upgraded both its NGR and EBITDA guidance for the year to NGR of at least $2.75 billion and EBITDA of approximately $200 million. Significantly, BetMGM also confirmed they anticipate returning cash of at least $200 million to Entain and MGM before year-end. Entain's share of this distribution can be added to our previous guidance of neutral adjusted cash flow for the year, which did not anticipate cash from BetMGM this year.

So in summary, Entain is firmly back to continuing to deliver consistent growth quarter after quarter, growing at least in line with our markets. We're making great progress with our strategic priorities, in particular, underpinned by significant tech improvements, and we have pre-fits working both for Entain and BetMGM. Our Q3 results also demonstrate the quality of our business, the sustainability of our earnings and the strength of our podium positions across our diverse portfolio. Coupled with Entain's earnings growth, BetMGM's milestone of starting to return cash to parents reinforces the clear pathway to our target of at least GBP 500 million of adjusted cash flow from 2028. We're excited for the final few months of 2025, and we're well placed to deliver on our many opportunities through 2026 and beyond.

With that, I'll hand the call to the operator to open for Q&A.

[Operator Instructions] Our first question comes from Ed Young from Morgan Stanley.

I've got 3, please. First of all, could you give some color on Netherlands and Belgium? You mentioned you've lapped the measures taken last year. I suppose that's the largest idiosyncratic change we'll see in Q4. So can you perhaps give a bit more color on what the underlying picture looks like there at the moment?

Second, on the JV cash, it's obviously very positive to start receiving that and it's more material than was expected. Does it lead you in any way to consider reviewing the GBP 500 million adjusted cash target for 2028?

And then finally, Stella, you made some recent commentary in the press around U.K. investment and the outlook for U.K. betting shops recently. I was wondering if you could give us an update on U.K. tax? And do you think the government understands the potential consequences of a material rise there?

Thanks, Ed. So taking the 3 questions. I'll obviously take the one on tax. But before I do that, maybe I'll ask Rob just to give you a little bit of an update on the first 2 questions, please.

Yes. So the first question was on Netherlands and Belgium. So they're 20-plus percent negative year-to-date and represent probably 6% of the Online mix, something like that. So as we look forward, that drag has now been eliminated. So that's roughly a percentage point, maybe slightly more of benefit to the growth rate. And that obviously helps to alleviate the deceleration that we'll see in the U.K. as we lap the acceleration in 2024. So far in Q3, as I say, both of those markets have now lapped the regulatory changes. They've both seen volume year-on-year growth. So that's very early days, but a good sign coming out of those businesses.

And I suppose just continuing that theme as we think forward to 2026, we don't have, as it stands today, touch wood, another Netherlands or Belgium. Aside from potential tax movements, which Stella will come on to, there's no market with material regulatory change on the horizon. So hopefully, we won't have another Belgium/Netherlands in 2026.

Second question was around cash. So yes, we're obviously delighted with the cash that's coming out of BetMGM. It does help underpin the GBP 500 million guidance. We will keep that under review. We'll probably comment more on it in March. But for now, you'd like to think there's more upside and more momentum to that target than when we first announced it back in March.

Stella, back to you.

Yes. Thank you. So yes, the question of U.K. tax, I'm glad the question has come up nice and early in this session. It's really important that we, as a business and the wider industry, have an active engagement with government on this issue, because tax rates going up, it is very well proven that every time you increase tax, the black market increases in size. Put extra regulation in place that limits opportunity for players, they tend to go to the black market as well.

And if you look at what's happened in the Netherlands, which is very clearly documented, they put the tax rates up to over 30%. Now it is well known that over 50% of that market has gone to the black market. And so therefore, it has actually backfired. So if the objective is to raise more taxes, then the best opportunity is to reduce the amount of black market that exists in the U.K. today. Over 500 sites exist. They look very professional, and they promise great rates, no prior protections, no guarantee you get paid out. And from a customer point of view, that they pose a real risk, and for government, they pose a real risk of accelerating the bleeding away of tax revenues to people who pay no tax at all.

So I'm very clear in my position on this one. We have to have a very close dialogue going ahead. We do. We are in close dialogue with the Treasury, and it's very important that the maths are used rather than emotion to decide what the right course of action is. But we are already a great contributor to the U.K. economy. We're a very highly taxed sector already. I think we pay an effective tax rate, and correct me if I'm wrong here, Rob, of around about 65%. So therefore, we already contribute at a very high level.

The industry employs 110,000 people, thousands of shops on the high street, including 2,400 of our own. And so it's about having the right balance here. And let's work together with government and regulator and service providers to take the black market sites off the market, where there are hundreds of millions of pounds of tax lost to people who pay no tax at all, and also restrict the advertising of black market sites in the U.K., which is deeply frustrating. So the answer to the question is it's an ongoing dialogue, and I believe that the maths should dictate where we end up here.

And maybe I'll just double down on that point that we're already a very high taxpayer. So that's one of the points we make when we're in with Treasury. I do like that stat that Stella referred to in the U.K., it's actually just over 2/3 is our effective tax rate. So that means that for every pound that we make in the U.K., on a pretax basis, 2/3 of that goes to the U.K. government. And that's why we're a top 20 taxpayer in the U.K., but we're obviously not one of the top 20 largest companies in the U.K.

So these are the kind of points that we're making when we engage with Treasury, as well as the fact that it doesn't matter what tax you put up, if you're going to put any tax up, we're one company and the mitigations available to us will be the same in any instance, and Stella has touched upon some of those. So I won't repeat them. But yes, these are the kind of messages that we're sharing with Treasury at the moment.

[Operator Instructions] Our next question comes from Estelle Weingrod from JPMorgan.

I've got 3 questions also, please. The first one is on Australia. It continues to be challenging. You mentioned customer-friendly sports results. But also, I think comps were tough to start with on the back of operator-friendly sports results in Q3 last year. So Q3 Australia, you've got minus 6%. Can you just provide more color on the impact coming from these 2 separate elements, the idea being to quantify this year's adverse sports results specifically?

Second question, looking at your product now in the U.K. for Online sports betting versus what it was same time last year, what are the key improvements that have been made? And where do you think you're positioned versus the best-in-class equivalent products at the moment? And the third question on prediction markets. I mean, questions were asked at the BetMGM call yesterday already. But today, my question is more on this platform's ambition to expand internationally. Does it pose a risk for Sportsbook like yourself in the U.K. or Australia or any other country? What's your take on this more generally?

Estelle, thank you for the questions. Let me just -- I seem to do things in reverse order here. Let me take the third one first, which is prediction markets. And I think Adam yesterday gave a very fulsome answer to the challenge of prediction markets in the U.S. We essentially believe that it is illegal, and with the regulators that we have to have a relationship with and be licensed through, we are not entering that market. And I think he gave a very clear answer to that question.

I think about the bigger question about prediction markets in other parts of the world, we've had things like Betfair in the U.K., which is an exchange. So it's not necessarily totally new, this concept. It's similar. So I think looking at Sportsbook and the range of things that we offer, that's what customers are really looking for. And in a regulated market, Sportsbook offering is highly superior, in my view, to what prediction markets are currently offering. But that's not to say we shouldn't be constantly innovating and looking for new things for customers to be engaged with. And if there is a new feature that makes sense for them, clearly, we would lean into that.

Then back to your second question, which was about where we are in the U.K. in terms of product. I mean there's been a lot of iterative improvements to the customer experience in the U.K. And it's a range of things from improved Bet Builder, to navigation of the app, to better customer journeys in general, because customer journeys are not just about the product, it's about the ease of depositing, withdrawing. It's about the friction in the process and making sure that we are aligned with what's expected in the market. So there's a lot of improvements.

A lot of them are small initiative that you don't tend to see, but they make a huge difference just in terms of navigation around the app, for example, making it more intuitive. So there's lots of things that have been done. But let me be very clear, because we like to be very honest, is that this is a journey. The journey is an ongoing one of iterative improvements rather than -- it's not a destination. It's a constant moving forward. So we're very pleased with how the U.K. is performing, obviously, but there's still significant opportunities ahead.

And then I'll give most of the Australia questions to Rob. But in terms of sports margins, that was an unbelievably negative for the operators, but joyous for the customers at Rugby Match in Q3 in Australia, which was very expensive, not just for us, but for the industry, which, as I said at the beginning of the presentation, sports margins, sometimes the customer wins big. And that's not a bad thing. It's just statistically an inevitability. But Australia, a bit more color, please?

Sure. So I think you've hit the most important point, which is results go for you sometimes and against sometimes. What's important is volumes. And in Australia, we were a shade positive in Q3. And that's really how we see the market going forward. Low single digits positive is our best guess of what we see from a volumes perspective in Australia in 2026. So from our perspective, it's stable, albeit when you look at NGR in the quarter, obviously, it looks adverse.

Perhaps what we'd also say we've got a new CEO in Australia. He's doing loads of great initiatives in the pipeline. So we're really excited about what he's achieving in his plans in Australia. And then neighboring New Zealand is continuing to go well. So we delivered over 20% growth in NGR in Q3 in Online. And we look forward to iGaming coming as well, which could be a nice filler for us in the latter part of 2026.

Our next question comes from Monique Pollard from Citi.

Three from me as well, if I can. The first one, Robert, was just coming back to your comment on the impact -- the GBP 20 million impact to the EBITDA in the quarter from the bad sports results. I guess I'm just trying to understand that, because you also called out in the statement and you made the comment earlier that there was a sort of 1 to 2 percentage point cut to the Online NGR growth from the sports results, and that sort of barely will get me to a revenue number of GBP 20 million let alone an EBITDA number of GBP 20 million. So I don't know if, as you say, about this sort of where you expected the margins to go versus them just being flat year-on-year. If you could just give some clarity on that would be helpful.

The second question was just on the 7% constant currency Online NGR growth target for 2025. I guess the way I'm thinking about it is we're at 7% constant currency year-to-date. We've got a 4Q comp for Online sports of plus 20%, given how bookmaker friendly the 4Q sports results were. So just wondering if that 7% for the full year is now a bit challenging. I understand the points you made on Netherlands and Belgium adding maybe a percentage point.

And then final question, I had was on CEE. So good growth from CEE. You mentioned that Croatia continues to perform ahead of expectations. Just wondering if you could give us, please, a quick update on Poland and how that is performing? Whether the market is still very competitive and whether you think you're back to maintaining market share there?

Thanks for those questions. I think the first 2 you've directed at Rob, so I'm going to let Rob answer those. I'll try and do the third one, because I like to do the third question first. That's kind of my thing. So Poland, we're trying to do a balance in Poland, which is it's been very competitive, lots of people have come in and have made little or no money, in fact, significant losses. And we like to do the balance between maintaining a healthy market share and delivering significant EBITDA. And I think we've actually got that balance right.

Now going forward, how competitive the market is going to be is going to be interesting, because the liberalization of casino has been pushed back quite considerably. And so that might change the market dynamics. But our approach to Poland is, look, long term, this is a great market. It's when casino comes in, which we're all confident in the long term, it will, we're in a great position to take advantage of that. But as I say, we are doing a great job of delivering EBITDA out of that market while maintaining a very strong market position. So that's our kind of approach to that specific market.

If I now hand over to Rob on the other 2 questions.

Thanks, Stella. And maybe I'll just add on Poland. We still grew 8% in Q3. So I'm pleased with the revenue growth despite the competitive pressure. We just migrated on to the SuperSport Sportsbook, which is an upgrade for the offering. So we've got that to look forward to. And as Stella mentioned, I looked it up after my comments in the interims. If you look at public filings in 2024, we had a market share of about 85% of net profit. So we're happy with how we're positioned in Poland for all of those reasons. And Croatia continues to grow double digits pretty much every quarter since we've owned it.

So to the other questions, GGR margin impact GBP 20 million. So yes, specifically, the 1% to 2% that's quoted is the impact on year-on-year growth. When you look versus expectation, it was more like a 3 percentage point impact, and that's where the GBP 20 million of EBITDA comes from. You might notice that the Q3 margin this year was our lowest for 2 years. And it's all about September. We were actually trending ahead coming into September, our Online NGR growth was very high single digits, but then it got pared back to 6% off the back of the adverse results in September. So hopefully, that explains that.

And then when it comes to the 7% constant currency guidance. So the year-to-date number is 7 and a bit, rounding down to 7%. So there's a little bit of headroom to still get there in Q4. But you're right to observe that there is year-on-year margin pressure in Q4 because Q4 last year was exceptionally strong. But based on a normalized set of results in Q4 of this year, we should still get home to 7% despite September taking the edge off of our -- and taking the headroom, if you like, out of our numbers.

[Operator Instructions] Our next question comes from Pravin Gondhale from Barclays.

Firstly, on the 7% Online volume growth in Q3 and then potentially improving structural margins. So underlying NGR growth in Q3, excluding sports results, it is near or touch higher than your top end of your medium-term revenue guide. How do you feel about sustaining this into 2026. .

And then you have kept FY EBITDA guidance unchanged despite the GBP 20 million EBITDA drag from sports. Can you help understand if there were any marketing or other cost adjustments this quarter which had helped you to absorb the sports results strike?

I think I'm going to hand those ones to Rob. Rob?

Yes. So firstly, Online NGR growth and views into 2026. I mentioned earlier that the good news is we don't have any known material adverse regulatory changes in 2026. So no repeats of Belgium/Netherlands. But of course, we won't see what we've seen from the U.K. in '25 repeated in 2026.

Our longer-term spread is 5% to 8% on a multiyear basis. The market is currently set at 6% for 2026 in terms of Online NGR growth, and we're comfortable at that level. EBITDA guidance unchanged. So firstly, no changes to marketing plans. Everything remains as we discussed at the interims in August. Why is the guidance unchanged despite the GBP 20 million? We've had a couple of small good guys. Firstly, FX is slightly more favorable than was anticipated when we set the guidance range. And also, Brazil tax, I'm sure you noticed that they withdrew the intended increase in Brazil tax. So that had a small benefit to 2025 as well.

The other aspect is we were trading the right side of expectations prior on a volume basis. And therefore, the net of those things is that we were able to fully absorb the GBP 20 million headwind from margin, in effect, that effectively torpedoed our planned upgrade today. So that's the way we think about it. We would have been able to lift guidance a little bit, but with that GBP 20 million headwind, we were not.

Our next question comes from Ben Shelley from UBS.

I have 2. Stella, I hear you on your U.K. tax comments. I just wanted to hear a bit more detail on potential mitigation measures. I think you've got a rule of thumb of around 50% in the Online business. Would that be accurate? And I'd love to hear a bit more about the Retail side as well just because that's a different business model to Online. And then my second question is, you talk about a stabilization of market share in Italy. Could you clarify whether that's quarter-on-quarter or year-on-year, and talk about what's driving the stabilization there?

Ben, thank you for the questions. So on U.K. tax, my primary goal right now is to make sure that we put our arguments forward, which is increasing taxation does not lead to increasing revenue for government. And I want to primarily focus on that because that is the right narrative to have, and there is compelling evidence out there.

So I come to the second part of the question, which is, say there is an increase which is unknown at this moment in time, how would we mitigate against that? And there are numbers of levers that we would pull, which include being less generous on bonusing, odds maybe not quite as good, reduction in marketing. These are all things that one does to mitigate against unwelcome tax increases. And obviously, we don't sit on our hands and not plan for that eventuality. We do plan for that eventuality. But it is a negative place to go. And I really want to focus in on the arguments about maintaining the right balance and keeping the black market under control, because I think as one of our competitors said in the newspaper the other day, increasing taxes, the jackpot goes to the black market. And we've got to be very clear about that communication.

In Retail, taxation, it is different kind of challenges that we face. And clearly, we run a range of shops, 2,400, and some of them are more profitable than others, obviously. And there's no doubt that increases in taxes that affect the Retail shops would make some of those shops marginal to unprofitable, and it would have a damaging effect on the high street. And again, it's a sliding scale. The further the taxes go up, the more the impact is. There's no scenario where there's no impact. And we would have to take actions accordingly, unfortunately, in that situation. And then on market share, just -- I don't know if you've got that number to hand, Rob, that would be very helpful on Italy.

Yes. And maybe can I just build a little bit on mitigations, because I think it's important to think through the various levers that we have. And sponsorships is a really important one to consider. And it doesn't matter which, as I said earlier, tax moves, sponsorships inevitably, because there's a longer payback, they're about brand awareness really. It's an obvious place where operators will go. And the only winners in that situation is the black market, because if they lose, they have less competitive disadvantage if the licensed operators are stopping sponsorships. And the losers, of course, is sports and not just football, but some of the smaller sports like Snooker, Darts, Rugby that are heavily reliant on sponsorship from us. So sponsorships is an important area as well as promotions, so bonusing, which again feeds the black market.

Just one other thought on Retail. It's worth -- these aren't exact numbers, but 80-20 rule, 80% of the EBITDA comes from 20% of the shops. So what that means is we have a long tail of marginal shops that we keep open because they support employment, they support the local high streets, but also they support online growth in terms of brand awareness and player acquisition. And so if online players are worth less money even, then that also feeds into it, not just the Retail tax moves, but also online tax moves. So I guess we've spoken a lot about this. There's a lot of mitigation available to us. So I think the rule of thumb is still applicable. But let's hope we don't need to implement too many of these measures.

And then on to Italy. So the answer is -- your question was, is market share stabilized quarter-on-quarter? Or is it year-on-year? The answer has now become both, which is a good place to be. Why is that happening? Part of it is a slower growth in some of our larger competitors, as they've sort of driven out a lot of the revenue synergy opportunities that they've had following consolidations.

And on our side, a couple of things I'd call out. One, Eurobet has actually done a reasonable job of maintaining share over this period, but bwin and Jackpot Digital, while small, was still contributing to that market share decline that we had seen. That's now been somewhat stemmed, not least helped by improving product.

And also on the Eurobet side, there's a lot of attention on product and tech at the moment. They've been quite innovative with things like their [ casi ] bets, which is sort of paying out early if bets almost are successful and that's proved popular. We have a new app coming as well. So a little bit of actions on our side to stimulate more growth, but equally slowing growth in competitors have contributed to market share stabilization.

[Operator Instructions] Our next question comes from Adrien de Saint Hilaire from Bank of America.

First of all, regarding 2026, would it be reasonable to expect a little bit of a boost on Online NGR growth coming from the World Cup? And then secondly, on U.K. tax again. In your opinion, will the potential tax increase only focus on Online? Or is there still a remote chance that it also hits Retail?

Okay. Thank you, Adrien, for those 2 questions. Let's talk about the World Cup, which is it's a great competition, obviously. And yes, there should be a boost to NGR from the World Cup naturally. I would be crazy not to say that. And so in terms of our journey, we'll definitely factor that in. And hopefully, that's again part of the opportunities in '26. I mean, we've got to also focus in on what the underlying growth is as well. So I mean, one-offs like the World Cup are great. But then the next year, you've got to have got the underlying growth there to offset that in '27. But yes, definitely an opportunity for us there.

In terms of U.K. tax, it's not just for Online, it's Online and Retail, which are both equally exposed to increases in taxes. And so again, I come back to my conversation piece that I had before. Our ongoing debate with the relevant departments and governments, including the Treasury, are critical to making sure that we get this right, and also working with the Betting and Gaming Council is really, really important.

Now obviously, Online is the more vulnerable part of this journey than Retail, because there are different factors at play in Retail, but I don't think it's remote. I think we've got to work on making sure that both the arguments are being put forward firmly and coherently. And alternatives, which is we closed down the black market together and the government gets hundreds of millions of more in taxation. That's the win-win in the scenario. But yes, all to play for.

Our next question comes from Richard Stuber from Deutsche Bank.

Just a couple of follow-ups from me. The first question is you spoke a lot about September results being very favorable for customers. Just wondering whether you've seen any recycling in the first few weeks of October? And the second question is on Brazil. Obviously, the sporting results heavily impacted NGR. Just wondering sort of how exposed is the Brazilian market to parlay mix. Is that a big factor of the volatility in margins? And could we expect that sort of to continue as we go forward?

Great. Thanks for those 2 questions. So yes, September, very happy customers. We're seeing October has gone up to a good start. We're very comfortable with where October is. Good margins, good volumes, as we hoped it would be. So yes, that's hopefully, some recycling that's taking place as people have enjoyed their experience with us. So no watchouts there. I think in Brazil, it's a multicomponent market. There are lots of things that go on in Brazil, and it's got to be very agile because there are things like parlay mixes, as you've said. But there's also ongoing ensuring that we're navigating the regulation well, but -- I'll hand over to Rob in a second, but we were particularly hit on margins in Brazil in Q3, way, way off our [ feel ], if you like. And some of that was just genuinely bad luck on sports results. They were very unfavorable towards us. But Rob, do you have anything else to add to that?

Yes. So Brazil, obviously, a high footfall mix and yes, high parlays. And interestingly, it wasn't just European football, so that the worst week of all in September was led by the -- it was the first week of the Champions League. So that had an impact in Brazil, but also local football was also adverse. So it compounded it. And in Brazil, we have a strong 2-up offer, which many of you guys will be familiar with, and that paid out on a few matches. So that was more customer-friendly as well. Overall, in Q3, Brazil's GGR margin was single digits, and you very rarely see that. So hopefully, just an exception, and we trend more towards that double-digit volume growth as we look forward.

Our next question comes from David Brohan from Goodbody.

Two questions from me. Firstly, on Brazil, you've talked a lot about kind of sporting results. Could you give any color on the iGaming performance in Brazil in Q3? And then secondly, just on AUSTRAC, any latest developments there? Or what kind of time line should we be thinking about for that?

Thanks, David. I'll take the second question first, and then I'll hand back to Rob on Brazil. So on AUSTRAC, I mean, it's a journey that we are on. I mean I think the first thing I'd say, we're very pleased with the program of compliance we have in place in Australia now. I think we're probably market-leading, which I think is a great point. In terms of the historical challenges that we have with AUSTRAC, clearly, there is a journey that we are on with them.

There is a process which is the legal process, which ends up potentially with us working this out in court, but there's also the other program that goes on in parallel, which is the mediation process, which we are obviously engaged in. And I think the answer to the question, this will take as long as it takes to get to the right point. There's no point in us trying to rush a process which has a cadence that we need to work within. So we're comfortable that we are engaging proactively leaning into it, and we have a very good compliance program in place now.

So I think it's one of those ones which is we've given the kind of parameters that these cases have ended up in previously when working with AUSTRAC. So I think we know what the guardrails are. And so we just keep on that journey. In terms of Brazil, iGaming, yes.

Yes, I'll take that. So iGaming is not particularly strong at the moment and all the growth is coming from sports. Same themes as we spoke about at the interims and I think in our Q1s as well. So content is a bit limited and game authentication has been slow. So we think this is a market-wide phenomenon, not just Entain. And even of those games that have been authenticated, sometimes the RTP levels are not where we would choose them to be. So the good news is we think there's a lot more growth to come out of gaming as we look forward. But so far in 2025, it's been slow.

And our final question today is from Andrew Tam from Rothschild & Co.

Just one quick one on U.K. tax. How do you think through the potential for second order impacts in terms of the potential hikes driving sector consolidation? Is there a market share gain opportunity for larger-scale operators like yourself relative to some of the smaller subscale operators who would likely see outsized impacts from hikes, notwithstanding the black market?

Okay. Great. Thanks for the question. And the answer is yes. There is always opportunity in a situation where taxes go up, that the smaller operators get squeezed. And that would be part of our mitigation program against tax increases. And these things play out because the brand awareness is lower, the level of marketing goes down. It just naturally goes in that direction. So it's a very good point to call out. However, it's on the negative side of the beds.

We've got to go back to let's work against the black market growing, which is a huge challenge. I mean -- and I do this with probably a very serious point of view, there are no player protections, whether it's about the amount of money people spend or whether they have limits or whether they have appropriate marketing and even whether they get paid out. So I do want to come back to the other side of the line if we can. But in the event of increases, definitely market share increases would be on the table. Hopefully, that answers that question.

Just to put a number on it for you. The answer is particularly pronounced in iGaming, where we estimate around 1/4 of the online U.K. iGaming market sits with Tier 3 and smaller. So that's a long tail that inevitably would be up for grabs in the event that there's a material move in the iGaming tax rate.

Was that the last question? Okay. So before we finish, I think I'd just sort of just like to wrap up and say thanks, everybody, for joining. I hope you get a sense of positivity and commitment we have to the future. We really believe that we are putting the foundations in place for continued growth through '25 on into '26 and beyond. And the opportunities are very significant going forward. So thank you all for listening. Very much appreciated.

Thanks all.