In results published on Wednesday, Unibet reported 36 percent year-on-year growth in gross gaming revenue to £51.1m for the first quarter of 2012.
Unibet’s sports-betting revenues from customers based in Western Europe bounced 83 percent from the same period in 2011 to £8.9m, as the firm benefited from the opening of the Danish online market at the start of the year and the November acquisition of Solfive Group, operator of EurosportBet in France.
Chief executive Henrik Tjärnström told analysts the group’s transformation from a “dot.com” to a “dot.country” operator had continued during the quarter, at the start of which Unibet rebranded EurosportBet’s site to Unibet.fr and went live with Unibet.dk in Denmark.
A notable feature of the results was to be found in the report’s business review of the quarter, which revealed that significant inflation in pre-match sports-betting margins had helped underpin strong growth in the segment as a whole, with gross gaming revenue climbing 58 percent year-on-year to £24.4m.
Unibet’s pre-match margin, before the removal of free bets, rose 2.5 percentage points sequentially to 14.2 percent, its highest level since the firm started reporting the metric in 2007.
The thick margin collected on pre-match betting formed something of a contrast with the returns generated by Unibet’s in-play betting product, where margins declined fractionally from the fourth quarter of 2011 to 5.2 percent.
The differential between Unibet’s margins from pre-match and in-play betting has widened in recent quarters from the long-term trend observed since the start of 2007, with the gap between the two metrics reaching a high of 9 percentage points in the latest results.
For comparison, the below chart shows the evolution of pre-match and in-play sports-betting margins generated by the online arm of William Hill, one of the few listed operators to follow Unibet in disclosing this data.
As William Hill Online’s in-play betting product has matured, the differential between pre-match and in-play betting margins has narrowed from a high of 6 percentage points in the first half of 2009 to 4.1 percentage points in the full year 2011. It should be noted that the scale of William Hill’s online operation relative to Unibet’s is conducive to steadier margins on the whole.
Unibet’s Tjärnström noted the “slightly higher than the long-term average” margin performance during the quarter, highlighting “an underlying fundamental growth” in the measure and explaining: “As we focus more on our core markets, where we have a strong brand name, we attract more leisure punters which brings a higher margin.”
In addressing the margin issue, the Unibet executive further cited the limitations of the French online market, in which he said Unibet has made inroads since the November acquisition of EurosportBet and now sits among the “top five operators” in the market.
With a capped payback ratio of 85 percent in France, Tjärnström said that the default minimum sportsbook margin of 15 percent had delivered upward pressure on Unibet’s margins since its re-entry to the French market.
Still, analysts will be looking at future trends with regard to margins at Unibet, to judge whether the explanations as regards to leisure punters and the French market stand up, or whether Unibet is perhaps offering less-than-competitive prices to the punters in pre-match to cushion the impact of consistently thinner in-play margins.