Entain Plc (ENT.L) Q3 FY2025 Earnings Call Transcript & Summary

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.