Digital drives Allwyn growth, UK lottery investment hits profit

Allwyn International has made headlines in the gaming sector, reporting a record group gaming revenue (GGR) of €8.43 billion (£7.41 billion/$9.58 billion) for 2024, despite challenges related to its investment in the UK National Lottery.

The company’s substantial growth can be attributed primarily to its expanding digital business. In a trading update released on March 11, Allwyn revealed that its total group revenue reached an impressive €8.8 billion for the twelve-month period.

Growth Metrics: A Deeper Look

When analyzing revenue streams, Allwyn’s performance excluding its UK, North American, technology, and content segments was notably stronger, growing by 8% to €4.6 billion. Additionally, the group’s GGR for these segments showed a similar upward trajectory, increasing by 8% year-on-year to €4.4 billion.

Allwyn identified its digital segment as the standout performer in 2024, driving growth with a remarkable 20% revenue increase. This segment now represents 39% of the overall group GGR, reflecting a significant shift toward digitalization in the gaming industry.

Net Revenue and Adjusted EBITDA Trends

Shifting focus to net revenue, Allwyn reported an 11% year-on-year increase, totaling €4 billion. CEO Robert Chvatal noted that the company transitioned to a new incentive and profitability mechanism in the UK, coinciding with the launch of its national lottery license in February 2024. This transition has slightly dampened profitability in a very competitive market.

The group’s adjusted EBITDA saw a moderate increase of 4% in 2024, amounting to €1.55 billion, alongside a reduced profit margin of 38.6%, down from 41.2% in 2023. When excluding the UK, North America, and technology and content operations, adjusted EBITDA climbed 11% to €1.45 billion.

“This was another year of record financial performance and strategic progress,” stated Chvatal in the operator’s earnings report. He added, “We delivered notable growth in profitability in 2024, despite the complexities involved in the new incentive model within the UK.” This indicates a resilient performance amidst industry shifts.

The full 2024 results are anticipated to be disclosed on March 21.

Lottery Updates: Challenges to UK Profitability

In its strategic investments, Allwyn recorded €255.8 million in capital expenditures, reflecting a significant increase of 151% from 2023. This investment is aimed at transforming the National Lottery, following the acquisition of operations from the previous license holder, Camelot UK Lotteries, in February 2023.

While there have been reports of technological updates facing delays, Allwyn has assured stakeholders of “significant progress” in enhancing the National Lottery’s infrastructure. “We are actively overhauling our retail estate of 40,000 locations and have launched several new campaigns and products, such as the Paris 2024, Lotto, and Set For Life initiatives,” a spokesperson noted. The introduction of innovative player protection measures, including a new scratchcard purchase limit, further exemplifies Allwyn’s commitment to responsible gaming.

Q4 Performance Highlights

The trading update also disclosed Q4 figures, revealing a total revenue of €2.4 billion and a GGR of €2.3 billion—marking a 10% increase over the previous year. Net revenue climbed 12% to reach €1.12 billion, while adjusted EBITDA grew by 12% to €437 million, showcasing a profit margin of 39.1%.

If we isolate performance outside the UK and US, total revenue experienced a growth of 11% to €1.28 billion, and net revenue increased by 9% to €807.1 million. Adjusted EBITDA for these regions surged by 16% to €397.3 million, indicating robust underlying growth.

Strategic Acquisitions and Future Outlook

Chvatal also touched on recent strategic acquisitions that are poised to bolster Allwyn’s growth trajectory. Notably, the completion of a 70% stake investment in Instant Win Gaming in September and a 51% majority stake in Logflex MT Holding, the owner of Novibet, in December align perfectly with the company’s strategy of pursuing selective acquisitions in relevant products, technologies, and content.

“The new year has commenced positively, positioning Allwyn for a successful 2025 and the next exciting chapters of our growth narrative,” Chvatal concluded, showcasing confidence in the company’s strategic direction.

Conclusion

As Allwyn continues to navigate the complexities of the gambling landscape, its focus on digital expansion, strategic acquisitions, and responsible gaming positions it well for sustained growth in the coming years. Both operators and stakeholders in the gambling industry will be closely monitoring these developments as the company migrates toward its goal of transforming the gaming experience for players globally.