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A closer look at German regulation

bet-at-home 10 September 2019 Update
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bet-at-home

A closer look at German regulation

H119 results

Travel & leisure

10 September 2019

Price

€52.00

Market cap

€365m

Net cash (€m) at 30 June 2019

43.1

Shares in issue

7.0m

Free float

47.3%

Code

ACXX

Primary exchange

XETR

Secondary exchange

N/A

Share price performance

%

1m

3m

12m

Abs

(1.1)

(8.7)

(7.9)

Rel (local)

(5.4)

(10.1)

(9.9)

52-week high/low

€73.60

€44.30

Business description

Founded in 1999, bet-at-home is an online sports betting and gaming company with c 300 employees. It is licensed in Malta and headquartered in Dusseldorf, Germany. Since 2009 bet-at-home has been part of Betclic Everest, a privately owned French online gaming company.

Next events

Q319 results

4 November 2019

Analysts

Victoria Pease

+44 (0)20 3077 5740

Richard Williamson

+44 (0)20 3077 5700

bet-at-home is a research client of Edison Investment Research Limited

Online gaming legislation varies widely across Europe and bet-at-home (BAH) focuses predominantly on grey (or ambiguous) markets. At H119, the company’s core markets were Germany (35% of gross win), Austria (c 30%) and Eastern Europe, and this report provides further detail on recent regulatory changes (particularly in Germany). BAH is a strong brand with 5m customers, a capital light model and high cash generation. The stock trades at 9.9x EV/EBITDA and 13.0x P/E for FY20e with an attractive 9.6% prospective dividend yield.

Year end

Revenue (GGR**) (€m)

EBITDA
(€m)

EPS*
(€)

DPS
(€)

P/E
(x)

Yield
(%)

12/17

145.4

36.4

4.81

7.50

10.8

14.4

12/18

143.4

36.2

4.65

6.50

11.2

12.5

12/19e

136.9

32.1

3.97

5.00

13.1

9.6

12/20e

140.3

32.4

4.00

5.00

13.0

9.6

Note: *EPS are normalised, excluding amortisation of acquired intangibles, exceptional items and share-based payments. **GGR are gross gaming revenues

German legislation continues to evolve

Gaming legislation is a key feature for determining both market size and risk potential for online gaming companies and BAH focuses mainly on grey markets, with ambiguous regulation. By gaming volume, these comprise Germany (35% of gross win), Austria (c 30%) and Eastern Europe (17%). While the company pays taxes in both Germany and Austria, the advantage of many grey markets is that they are untaxed and hence generate higher cash flow. The flipside, however, is that operators can be subject to sudden IP blocking (eg Poland in 2017 and Switzerland in 2019). This report summarises the current regulatory situation in BAH’s key markets, with a particular focus on Germany, where licensing for online sports is on track for mid-2021 (but e-gaming regulation remains uncertain).

Continued strong cash flow

Within its Q219 trading update in July, management reiterated FY19 guidance of €130–143m GGR and an EBITDA of €29-33m. This compares to €71.1m GGR and €21.3m EBITDA already achieved in H119 and therefore assumes a significant negative impact from Swiss IP blocking (effective from July 2019). We are leaving our forecasts unchanged as, although we acknowledge that our estimates could be conservative, BAH continues to face regulatory uncertainty across its key markets. Nonetheless, the business model is very capital light, with high cash flow generation. We forecast net cash of €49.8m at FY19.

Valuation: 9.6% dividend yield

BAH trades at 9.9x EV/EBITDA and 13.0x P/E for FY20e, which is towards the top end of the peer group, but its healthy net cash position and 9.6% prospective dividend yield are very attractive. In our view, a major catalyst would be concrete evidence of positive regulation in core markets, especially for German e-gaming (casino).

A grey market operator

Overview

Gaming legislation varies widely across Europe and BAH is focused mainly on grey markets, which are characterised by ambiguous regulation. By gaming volume, these markets comprise Germany (35% of gross win), Austria (c 30% of gross win) and Eastern Europe (17% of gross win).

Given the lack of formal legislation across most of its markets, BAH typically operates through its sports betting and gaming licences issued in Malta. Under EU law, these licences are effective in all EU member countries due to the freedom of movement within the EU, as long as online gaming and sports betting is legal in the respective member country.

In some markets (such as Poland), BAH has been subject to IP blocking for e-gaming, which is generally considered a violation of EU law.

Exhibit 1: BAH’s betting and gaming volume (m) by region

Source: bet-at-home. Note: Eastern Europe comprises Bosnia and Herzegovina, Croatia, Montenegro, Poland,

Serbia, Slovakia, Slovenia. Western Europe comprises Cyprus, Finland, Ireland, Liechtenstein, Malta,

Netherlands, Sweden, Switzerland, the UK.

Germany (35% gross win)

At the moment, Germany is a grey market, where online gaming companies operate through either a Schleswig-Holstein licence or another European licence (typically Maltese) and pay VAT on casino revenues and a turnover tax on betting. To date, legislation has been very confusing and there has been a high level of disagreement among Germany’s member states.

In March 2019, German state ministers approved a process towards a licensing regime for online sports betting, although the framework for online casino remains unclear. At present, it appears that entirely new regulations for online sports are to come into effect in mid-2021 and some of the federal states (led by North Rhine Westphalia) have plans to open up the online casino market. It is uncertain whether or not all the federal states will follow suit. BAH believes that the most likely scenario is a licensing model for online sports as well as online casino (at least in some states), from mid-2021 and BAH is optimistic that it will be able to maintain its entire product suite.

We summarise the current online sports and casino situation below:

Sports betting: Licensing regime in sight

In March 2019, German state ministers approved amendments to the Interstate Treaty, establishing an interim sports betting licensing regime from January 2020. The amendments also lifted the cap on licences in preparation for a future agreement on a more permanent regime from June 2021. While the regulatory progress is a positive in general, it is important to note that live play betting will be restricted under the current plans and there will also be a setting of monthly wagering limits for players.

E-gaming: Federal ban still in place

The biggest area of confusion surrounds the issue of online gaming (over 50% of BAH’s online GGR), with online casino and poker technically illegal under the current reading of the Interstate Treaty. In March 2019, the draft amendments maintained a federal ban on online casino set in 2012, with the exception of Schleswig-Holstein (see below).

Reinforcing the negative stance, in June 2019, a large international payments provider was prevented from participating in payment transactions in connection with “illegal gambling” in Germany. However, as noted above, there are a number of states that appear to be committed to the provision of online gaming within the next couple of years and BAH remains optimistic that it will be able to maintain its entire product suite.

Schleswig-Holstein

The Federal State of Schleswig-Holstein went down a different route and issued licences for sports betting and casino as early as 2012, including to BAH. These licences expired at the end of 2018 and could not be extended due to Schleswig-Holstein becoming a party to the Revised Interstate Gambling Treaty. Essentially, operators with both online sports betting licences and online casino licences (issued by Schleswig-Holstein) are particularly exposed, with regulators requiring sports betting licensees to stop offering casino games alongside sports betting. BAH therefore resolved to discontinue the casino products.

In March 2019, the Ministers authorised Schleswig-Holstein to extend its existing casino licences until a new national regulation comes into effect (this is for operators with casino-only licences). BAH is currently implementing the licensing conditions and plans to commence the casino offers in this federal state again no later than in the first quarter of 2020. We assume this means that BAH will split its licences, thereby receiving a casino-only licence.

Injunctions: possible fine from Hesse in 2019

BAH is subject to a couple of e-gaming related injunctions (Berlin, Federal State of Hesse), although it has continued to offer casino products in those regions as it believes the injunctions are a violation of EU law. There has been no conclusive result to any of these injunctions, but management has stated that it may face a penalty in Hesse later this year.

Austria: Business as usual (30% gross win)

There is limited formal gaming regulation in Austria and online gaming is dominated by Casino Austria, which is partially state-owned. On 27 February 2018, the Austrian Ministry of Finance published a draft bill on the amendment of gambling laws. This draft envisaged that online gaming providers without an Austrian licence would be blocked by ISPs from October 2018. However, the draft was subsequently repealed days later and no amendment has since been published.

The government intends to include online sports bets in the gambling law, with the tax income directed towards sport. A new regulation for online casinos in Austria is also being discussed but there is no clarity on when a new draft law will be published.

Poland: Operating sports betting without a licence

Until 2017, BAH operated in Poland via its EU licence for both sports betting and e-gaming. However, in April 2017, an amendment to the gambling laws of Poland became effective and the state monopoly (Totalizator Sportowy) was granted exclusive rights to operate remote casinos and poker. Although the enforcement measures (such as IP and payment blocking) are generally considered a violation of EU law, the appeals by international operators to the European Court of Justice have been unsuccessful. We therefore assume there will be no liberalisation of the Polish e-gaming market. BAH continues to offer online betting in Poland without a licence and is taking action against the discriminatory regulations.

Switzerland: Completely blocked from July 2019

In June 2018, a Swiss referendum resulted in local Swiss casinos receiving exclusivity to apply for e-gaming licences for six years, essentially barring all international operators. The new Money Gaming Act came into effect in January 2019 and international operators are now required to agree a deal with a local land-based operator in order to continue serving players. BAH does not have any such deal.

In addition, the act requires Swiss ISPs to block international sites, with the ISPs being compensated for doing so. Unlicensed operators have been blacklisted from July 2019. Since Switzerland is not part of the EU, it is therefore not bound by the EU free-trade laws and international operators are not likely to dispute the legality of this recent ruling.

Financials

We are leaving our forecasts broadly unchanged following the H119 results and include a summary income statement below. As before, our forecasts assume no Swiss revenues from July 2019 and no further major regulatory changes from this point.

Exhibit 2: BAH income statement

€m

2014

2015

2016

2017

2018e

2019e

2020e

2021e

Sports

55.7

61.2

66.2

64.6

60.5

52.7

54.0

55.1

E-gaming

51.4

60.4

72.5

80.8

82.8

84.2

86.3

88.1

Gross gaming revenue (GGR)

107.0

121.6

138.7

145.4

143.4

136.9

140.3

143.1

Cost of sales (VAT and fees)

(12.3)

(21.3)

(25.8)

(27.6)

(28.2)

(25.8)

(26.7)

(27.2)

Net gaming revenue (NGR)

94.7

100.3

112.9

117.8

115.1

111.1

113.6

115.9

% of GGR

88.5%

82.5%

81.4%

81.0%

80.3%

81.2%

81.0%

81.0%

Personnel costs

(14.4)

(15.5)

(17.3)

(18.1)

(18.7)

(19.8)

(19.9)

(20.0)

% GGR

-13.5%

-12.8%

-12.5%

-12.4%

-13.1%

-14.5%

-14.2%

-14.0%

Marketing

(41.1)

(36.5)

(44.0)

(42.0)

(38.3)

(37.1)

(37.9)

(38.6)

% of GGR

-38.4%

-30.0%

-31.7%

-28.9%

-26.7%

-27.1%

-27.0%

-27.0%

Other

(12.5)

(16.7)

(18.6)

(21.3)

(21.9)

(22.1)

(23.4)

(23.5)

% of GGR

-11.6%

-13.7%

-13.4%

-14.7%

-15.2%

-16.1%

-16.7%

-16.4%

total operating costs (ex DA/SBP)

(67.9)

(68.7)

(79.9)

(81.4)

(78.9)

(79.0)

(81.2)

(82.2)

EBITDA

26.8

31.6

33.0

36.4

36.2

32.1

32.4

33.7

EBITDA margin (%)

25.0%

26.0%

23.8%

25.0%

25.3%

23.5%

23.1%

23.6%

Normalised operating income

25.9

30.7

31.9

35.1

34.9

30.2

30.4

31.7

Operating income

25.8

30.8

31.9

34.1

34.9

30.2

30.4

31.7

Net finance costs

1.7

2.2

2.2

1.5

0.0

0.1

0.1

0.1

Normalised PBT

27.5

32.9

34.1

36.6

35.0

30.3

30.5

31.8

PBT

27.5

32.9

34.1

35.7

35.0

30.3

30.5

31.8

Tax

(1.8)

(2.3)

(3.1)

(2.8)

(2.4)

(2.5)

(2.4)

(2.5)

Normalised net income

25.7

30.6

31.0

33.8

32.6

27.9

28.1

29.3

Profit after tax

25.6

30.7

31.0

32.8

32.6

27.8

28.1

29.3

Reported EPS (€)

3.65

4.37

4.42

4.68

4.65

3.97

4.00

4.17

Adjusted EPS (€)

3.66

4.36

4.42

4.81

4.65

3.97

4.00

4.17

Dividend per share (€)

0.60

2.25

7.50

7.50

6.50

5.00

5.00

5.00

Source: BAH, Edison Investment Research


Exhibit 3: Financial summary

€m

2014

2015

2016

2017

2018

2019e

2020e

2021e

31-December

IFRS

IFRS

IFRS

IFRS

IFRS

IFRS

IFRS

IFRS

INCOME STATEMENT

Revenue (GGR)

 

 

107.0

121.6

138.7

145.4

143.4

136.9

140.3

143.1

Cost of Sales

(12.3)

(21.3)

(25.8)

(27.6)

(28.2)

(25.8)

(26.7)

(27.2)

Net Gaming Revenue

94.7

100.3

112.9

117.8

115.1

111.1

113.6

115.9

EBITDA

 

 

26.8

31.6

33.0

36.4

36.2

32.1

32.4

33.7

Normalised operating profit

 

 

25.9

30.7

31.9

35.1

34.9

30.2

30.4

31.7

Amortisation of acquired intangibles

0.0

0.0

0.0

0.0

0.0

0.0

0.0

0.0

Exceptionals

(0.1)

0.1

0.0

(0.9)

0.0

0.0

0.0

0.0

Share-based payments

0.0

0.0

0.0

0.0

0.0

0.0

0.0

0.0

Reported operating profit

25.8

30.8

31.9

34.1

34.9

30.2

30.4

31.7

Net Interest

1.7

2.2

2.2

1.5

0.0

0.1

0.1

0.1

Profit Before Tax (norm)

 

 

27.5

32.9

34.1

36.6

35.0

30.3

30.5

31.8

Profit Before Tax (reported)

 

 

27.5

32.9

34.1

35.7

35.0

30.3

30.5

31.8

Reported tax

(1.8)

(2.3)

(3.1)

(2.8)

(2.4)

(2.5)

(2.4)

(2.5)

Profit After Tax (norm)

25.7

30.6

31.0

33.8

32.6

27.8

28.1

29.3

Profit After Tax (reported)

25.6

30.7

31.0

32.8

32.6

27.8

28.1

29.3

Minority interests

0.0

0.0

0.0

0.0

0.0

0.0

0.0

0.0

Discontinued operations

0.0

0.0

0.0

0.0

0.0

0.0

0.0

0.0

Net income (normalised)

25.7

30.6

31.0

33.8

32.6

27.8

28.1

29.3

Net income (reported)

25.6

30.7

31.0

32.8

32.6

27.8

28.1

29.3

Basic average number of shares outstanding (m)

7.0

7.0

7.0

7.0

7.0

7.0

7.0

7.0

EPS - basic normalised (€)

 

 

3.66

4.36

4.42

4.81

4.65

3.97

4.00

4.17

EPS - diluted normalised (€)

 

 

3.66

4.36

4.42

4.81

4.65

3.97

4.00

4.17

EPS - basic reported (€)

 

 

3.65

4.37

4.42

4.68

4.65

3.97

4.00

4.17

Dividend (€)

0.60

2.25

7.50

7.50

6.50

5.00

5.00

5.00

Revenue growth (%)

25.0

13.6

14.0

4.8

(-1.4)

(-4.5)

2.5

2.0

Gross Margin (%)

88.5

82.5

81.4

81.0

80.3

81.2

81.0

81.0

EBITDA Margin (%)

25.0

26.0

23.8

25.0

25.3

23.5

23.1

23.6

Normalised Operating Margin

24.2

25.2

23.0

24.1

24.4

22.1

21.7

22.2

BALANCE SHEET

Fixed Assets

 

 

4.5

4.8

4.9

4.0

3.4

7.3

6.3

5.3

Intangible Assets

2.4

2.2

2.0

2.0

2.0

2.1

2.3

2.5

Tangible Assets

2.1

2.6

2.9

2.0

1.4

5.2

4.0

2.8

Investments & other

0.0

0.0

0.0

0.0

0.0

0.0

0.0

0.0

Current Assets

 

 

89.9

123.3

140.5

120.6

99.9

85.3

80.3

76.5

Stocks

0.0

0.0

0.0

0.0

0.0

0.0

0.0

0.0

Debtors

57.9

70.7

47.9

16.9

20.1

25.1

30.1

35.1

Cash & cash equivalents

21.8

40.7

82.3

94.4

70.6

49.7

39.7

30.9

Customer cash

9.7

9.4

9.5

7.5

7.7

9.0

9.0

9.0

Other

0.5

2.5

0.7

1.8

1.5

1.5

1.5

1.5

Current Liabilities

 

 

(27.0)

(32.7)

(35.7)

(35.3)

(34.0)

(41.0)

(42.0)

(43.0)

Creditors

(1.3)

(1.0)

(0.5)

(1.8)

(3.3)

(4.3)

(5.3)

(6.3)

Short term provisions/ tax liabilities

(14.1)

(19.9)

(21.4)

(22.6)

(19.2)

(25.2)

(25.2)

(25.2)

Short term borrowings

0.0

0.0

0.0

0.0

0.0

0.0

0.0

0.0

Other

(11.5)

(11.8)

(13.9)

(10.9)

(11.5)

(11.5)

(11.5)

(11.5)

Long Term Liabilities

 

 

(0.1)

(0.0)

(0.1)

(0.0)

(0.0)

(3.5)

(3.5)

(3.5)

Long term borrowings

0.0

0.0

0.0

0.0

0.0

0.0

0.0

0.0

Other long term liabilities

(0.1)

(0.0)

(0.1)

(0.0)

(0.0)

(3.5)

(3.5)

(3.5)

Net Assets

 

 

67.5

95.3

109.6

89.3

69.3

48.1

41.1

35.3

Minority interests

0.0

0.0

0.0

0.0

0.0

0.0

0.0

0.0

Shareholders' equity

 

 

67.5

95.3

109.6

89.3

69.3

48.1

41.1

35.3

CASH FLOW

Op Cash Flow before WC and tax

26.8

31.6

33.0

36.4

36.2

32.1

32.4

33.7

Working capital

(4.4)

(3.6)

(0.1)

(2.4)

(6.5)

(4.0)

(4.0)

(4.0)

Exceptional & other

5.8

5.9

0.4

(0.4)

0.0

0.0

0.0

0.0

Tax

(1.8)

(2.3)

(3.1)

(2.8)

(5.0)

(2.5)

(2.4)

(2.5)

Net operating cash flow

 

 

26.4

31.7

30.2

30.8

24.8

25.7

26.0

27.2

Capex

0.0

0.0

0.0

0.0

(0.7)

(1.0)

(1.0)

(1.0)

Acquisitions/disposals

(2.4)

(1.1)

(1.3)

(0.5)

0.0

0.0

0.0

0.0

Net interest

2.2

2.2

0.3

1.5

0.0

0.1

0.1

0.1

Equity financing

0.0

0.0

0.0

0.0

0.0

0.0

0.0

0.0

Dividends

(2.8)

(4.2)

(15.8)

(52.6)

(52.6)

(45.6)

(35.1)

(35.1)

Other

(15.0)

(9.6)

28.2

33.0

4.7

0.0

0.0

0.0

Net Cash Flow

8.4

19.0

41.6

12.1

(23.8)

(20.9)

(10.0)

(8.8)

Opening net debt/(cash)

 

 

(13.4)

(21.8)

(40.7)

(82.3)

(94.4)

(70.6)

(49.8)

(39.7)

FX

0.0

0.0

0.0

0.0

0.0

0.0

0.0

0.0

Other non-cash movements

0.0

0.0

0.0

0.0

0.0

0.0

0.0

0.0

Closing net debt/(cash)

 

 

(21.8)

(40.7)

(82.3)

(94.4)

(70.6)

(49.8)

(39.7)

(30.9)

Source: bet-at-home, Edison Investment Research

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Copyright: Copyright 2019 Edison Investment Research Limited (Edison). All rights reserved FTSE International Limited (“FTSE”) © FTSE 2019. “FTSE®” is a trade mark of the London Stock Exchange Group companies and is used by FTSE International Limited under license. All rights in the FTSE indices and/or FTSE ratings vest in FTSE and/or its licensors. Neither FTSE nor its licensors accept any liability for any errors or omissions in the FTSE indices and/or FTSE ratings or underlying data. No further distribution of FTSE Data is permitted without FTSE’s express written consent.

Australia

Edison Investment Research Pty Ltd (Edison AU) is the Australian subsidiary of Edison. Edison AU is a Corporate Authorised Representative (1252501) of Crown Wealth Group Pty Ltd who holds an Australian Financial Services Licence (Number: 494274). This research is issued in Australia by Edison AU and any access to it, is intended only for "wholesale clients" within the meaning of the Corporations Act 2001 of Australia. Any advice given by Edison AU is general advice only and does not take into account your personal circumstances, needs or objectives. You should, before acting on this advice, consider the appropriateness of the advice, having regard to your objectives, financial situation and needs. If our advice relates to the acquisition, or possible acquisition, of a particular financial product you should read any relevant Product Disclosure Statement or like instrument.

New Zealand

The research in this document is intended for New Zealand resident professional financial advisers or brokers (for use in their roles as financial advisers or brokers) and habitual investors who are “wholesale clients” for the purpose of the Financial Advisers Act 2008 (FAA) (as described in sections 5(c) (1)(a), (b) and (c) of the FAA). This is not a solicitation or inducement to buy, sell, subscribe, or underwrite any securities mentioned or in the topic of this document. For the purpose of the FAA, the content of this report is of a general nature, is intended as a source of general information only and is not intended to constitute a recommendation or opinion in relation to acquiring or disposing (including refraining from acquiring or disposing) of securities. The distribution of this document is not a “personalised service” and, to the extent that it contains any financial advice, is intended only as a “class service” provided by Edison within the meaning of the FAA (i.e. without taking into account the particular financial situation or goals of any person). As such, it should not be relied upon in making an investment decision.

United Kingdom

This document is prepared and provided by Edison for information purposes only and should not be construed as an offer or solicitation for investment in any securities mentioned or in the topic of this document. A marketing communication under FCA Rules, this document has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research.

This Communication is being distributed in the United Kingdom and is directed only at (i) persons having professional experience in matters relating to investments, i.e. investment professionals within the meaning of Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the "FPO") (ii) high net-worth companies, unincorporated associations or other bodies within the meaning of Article 49 of the FPO and (iii) persons to whom it is otherwise lawful to distribute it. The investment or investment activity to which this document relates is available only to such persons. It is not intended that this document be distributed or passed on, directly or indirectly, to any other class of persons and in any event and under no circumstances should persons of any other description rely on or act upon the contents of this document.

This Communication is being supplied to you solely for your information and may not be reproduced by, further distributed to or published in whole or in part by, any other person.

United States

The Investment Research is a publication distributed in the United States by Edison Investment Research, Inc. Edison Investment Research, Inc. is registered as an investment adviser with the Securities and Exchange Commission. Edison relies upon the "publishers' exclusion" from the definition of investment adviser under Section 202(a)(11) of the Investment Advisers Act of 1940 and corresponding state securities laws. This report is a bona fide publication of general and regular circulation offering impersonal investment-related advice, not tailored to a specific investment portfolio or the needs of current and/or prospective subscribers. As such, Edison does not offer or provide personal advice and the research provided is for informational purposes only. No mention of a particular security in this report constitutes a recommendation to buy, sell or hold that or any security, or that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person.

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

1,185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

1,185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

General disclaimer and copyright

This report has been commissioned by bet-at-home and prepared and issued by Edison, in consideration of a fee payable by bet-at-home. Edison Investment Research standard fees are £49,500 pa for the production and broad dissemination of a detailed note (Outlook) following by regular (typically quarterly) update notes. Fees are paid upfront in cash without recourse. Edison may seek additional fees for the provision of roadshows and related IR services for the client but does not get remunerated for any investment banking services. We never take payment in stock, options or warrants for any of our services.

Accuracy of content: All information used in the publication of this report has been compiled from publicly available sources that are believed to be reliable, however we do not guarantee the accuracy or completeness of this report and have not sought for this information to be independently verified. Opinions contained in this report represent those of the research department of Edison at the time of publication. Forward-looking information or statements in this report contain information that is based on assumptions, forecasts of future results, estimates of amounts not yet determinable, and therefore involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of their subject matter to be materially different from current expectations.

Exclusion of Liability: To the fullest extent allowed by law, Edison shall not be liable for any direct, indirect or consequential losses, loss of profits, damages, costs or expenses incurred or suffered by you arising out or in connection with the access to, use of or reliance on any information contained on this note.

No personalised advice: The information that we provide should not be construed in any manner whatsoever as, personalised advice. Also, the information provided by us should not be construed by any subscriber or prospective subscriber as Edison’s solicitation to effect, or attempt to effect, any transaction in a security. The securities described in the report may not be eligible for sale in all jurisdictions or to certain categories of investors.

Investment in securities mentioned: Edison has a restrictive policy relating to personal dealing and conflicts of interest. Edison Group does not conduct any investment business and, accordingly, does not itself hold any positions in the securities mentioned in this report. However, the respective directors, officers, employees and contractors of Edison may have a position in any or related securities mentioned in this report, subject to Edison's policies on personal dealing and conflicts of interest.

Copyright: Copyright 2019 Edison Investment Research Limited (Edison). All rights reserved FTSE International Limited (“FTSE”) © FTSE 2019. “FTSE®” is a trade mark of the London Stock Exchange Group companies and is used by FTSE International Limited under license. All rights in the FTSE indices and/or FTSE ratings vest in FTSE and/or its licensors. Neither FTSE nor its licensors accept any liability for any errors or omissions in the FTSE indices and/or FTSE ratings or underlying data. No further distribution of FTSE Data is permitted without FTSE’s express written consent.

Australia

Edison Investment Research Pty Ltd (Edison AU) is the Australian subsidiary of Edison. Edison AU is a Corporate Authorised Representative (1252501) of Crown Wealth Group Pty Ltd who holds an Australian Financial Services Licence (Number: 494274). This research is issued in Australia by Edison AU and any access to it, is intended only for "wholesale clients" within the meaning of the Corporations Act 2001 of Australia. Any advice given by Edison AU is general advice only and does not take into account your personal circumstances, needs or objectives. You should, before acting on this advice, consider the appropriateness of the advice, having regard to your objectives, financial situation and needs. If our advice relates to the acquisition, or possible acquisition, of a particular financial product you should read any relevant Product Disclosure Statement or like instrument.

New Zealand

The research in this document is intended for New Zealand resident professional financial advisers or brokers (for use in their roles as financial advisers or brokers) and habitual investors who are “wholesale clients” for the purpose of the Financial Advisers Act 2008 (FAA) (as described in sections 5(c) (1)(a), (b) and (c) of the FAA). This is not a solicitation or inducement to buy, sell, subscribe, or underwrite any securities mentioned or in the topic of this document. For the purpose of the FAA, the content of this report is of a general nature, is intended as a source of general information only and is not intended to constitute a recommendation or opinion in relation to acquiring or disposing (including refraining from acquiring or disposing) of securities. The distribution of this document is not a “personalised service” and, to the extent that it contains any financial advice, is intended only as a “class service” provided by Edison within the meaning of the FAA (i.e. without taking into account the particular financial situation or goals of any person). As such, it should not be relied upon in making an investment decision.

United Kingdom

This document is prepared and provided by Edison for information purposes only and should not be construed as an offer or solicitation for investment in any securities mentioned or in the topic of this document. A marketing communication under FCA Rules, this document has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research.

This Communication is being distributed in the United Kingdom and is directed only at (i) persons having professional experience in matters relating to investments, i.e. investment professionals within the meaning of Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the "FPO") (ii) high net-worth companies, unincorporated associations or other bodies within the meaning of Article 49 of the FPO and (iii) persons to whom it is otherwise lawful to distribute it. The investment or investment activity to which this document relates is available only to such persons. It is not intended that this document be distributed or passed on, directly or indirectly, to any other class of persons and in any event and under no circumstances should persons of any other description rely on or act upon the contents of this document.

This Communication is being supplied to you solely for your information and may not be reproduced by, further distributed to or published in whole or in part by, any other person.

United States

The Investment Research is a publication distributed in the United States by Edison Investment Research, Inc. Edison Investment Research, Inc. is registered as an investment adviser with the Securities and Exchange Commission. Edison relies upon the "publishers' exclusion" from the definition of investment adviser under Section 202(a)(11) of the Investment Advisers Act of 1940 and corresponding state securities laws. This report is a bona fide publication of general and regular circulation offering impersonal investment-related advice, not tailored to a specific investment portfolio or the needs of current and/or prospective subscribers. As such, Edison does not offer or provide personal advice and the research provided is for informational purposes only. No mention of a particular security in this report constitutes a recommendation to buy, sell or hold that or any security, or that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person.

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

1,185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

1,185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

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