Good day and welcome to the GVC Holdings H1 Post-Close Trading Update Conference call. At this time, I would like to turn the conference over to Mr. Kenneth Alexander. Please go ahead, sir.
Hi there, all. Good morning. I'd like to kick off. Obviously, I'll talk about the news regarding me this morning and retiring from GVC. This is something that I've been thinking about for quite some time. I've been—I don't know if people realize my personal situation. My family are in Scotland. I come down to London every week, Monday to Friday, well, most times, but sometimes it's a bit short on that. I've been doing it for a long, long time. My youngest daughter is now just going to university, and I have decided that this moment was coming for quite some time, that it is time to get back to Scotland, stay there, and spend time with my family rather than do this crazy commute which I've been doing now for, God, nearly 20 years.
I recruited Shay about four years ago, I think, just after we acquired bwin, or just about at the same time as we acquired bwin. I said to him at that time that I, the intention even then was that he would hopefully be my successor, and I'm glad to say that today that plan that was put in motion four, four years ago has been successful, and he is taking over for me as of today. I've worked with Shay for four years, and there's probably a handful of people that have been absolutely critical to the success of GVC, and nobody has been as critical as Shay Segev. He is a first-class operator. He's been taking on more and more of the responsibilities I saw this moment, becoming more eminent over the last couple of years.
He's been taking over more and more of the responsibility, and he is absolutely ready to take on this role as of today. He's also supported by Rob Wood, who was fairly new to the role, young. I don't know if even many of you have even heard of him when he took it on about a year ago, and I have to say that he is, by some considerable way, the best CFO that I've worked with, and I've been fortunate to have worked with quite a few good ones, so between the two of them, the business is in excellent hands, and there's absolutely no reason why it can't continue to kick on as it has done in the last few years and beyond that. I'm very proud of the business that I've managed to build with the team.
We've got great people, great technology, great brands, a great culture, and, you know, it's been a great story. But I had to end sometime, and I felt, after my time up in Scotland and lockdown, it really just rammed home. I just don't wanna keep coming down and battering myself down to London. I've done it all, and it's time for Shay to take it over. As for the results, they are stellar. The results we've announced in the first half of the year, they're testament, and I've mentioned a couple of people here, obviously Shay and Rob, but it's very much a team effort. The people that work for GVC, I've repeated many, many times, as far as I'm concerned, are the leaders in the industry.
We've got an absolutely fabulous team right from the executive level down to senior leadership team and right to all the people who work within GVC globally, all over the world, including, could be in Manila, could be in Australia, could be Tel Aviv, could be Gibraltar, or could be even in retail estates in Italy or in the U.K. Absolutely first class, and these numbers are testament. And you can look at the numbers, and yes, the digital growth is stunning, despite lockdown and limited sports fixtures, etc., etc. But I think you have to look, well, you can't really, but I can tell you the strength of the business has to be seen beyond the numbers, which is, during lockdown, the whole business came together, plans that were put in place.
I must remember our HR director planned, along with Shay and his teams for the worst-case scenario around COVID. I must remember—I must admit. I said I didn't believe it could be as bad as it was going to be in terms of lockdowns. I was wrong. They were right. Thankfully, they had plans in place so that the business, including all our retail estates, were closed down in an orderly manner, were then reopened quicker than any of our competitors, and more importantly, in an orderly manner, we are safe and safe to our customers. It was absolutely paramount. Our digital business was fully operational from the first day of lockdown, and of course, lockdown pretty much is still here, but right throughout, and keeping the volumes going as our—and I've stated it in the numbers.
I said at the time when we were into COVID that if we were to cope with this crisis effectively, it would serve us well for many, many years, help with the culture, help bringing the business even closer together, the various parts around the world. And that, you know, I have to say the teams have absolutely nailed it, and that can't be seen in the numbers, but I can tell you, you know, the business has coped with probably an unprecedented crisis, better than I could have ever expected. So on that point, as for what I'm gonna do in the future, as I said, I'm in Scotland now. I've been in Scotland for four months, and I'm gonna retire. I'm gonna remain here, take some time off, and see what I might well do in the future.
Probably, undoubtedly, not gonna be gaming. Undoubtedly, probably will not be in PLC land, but I'll probably do something to keep myself busy. But I've enjoyed my time in PLC land. I've enjoyed myself in online gaming. I've enjoyed myself in GVC, but all things need to come to an end. And as I say, the time was right for me, and I am delighted to hand it over to Shay in good shape, and I'm sure he'll do a stellar job in the coming years. So on that note, I'll throw it over to you, Shay.
Many thanks, Kenny. First of all, I would like to say a big thank you, Kenny, for having built this incredible company from a modest beginning to a global FTSE 100. I am excited about taking on the role. We've got exciting times ahead of us with many opportunities. For those who do not know me, I've been COO for four years, working very closely with Kenny. Over the last time and over the time, I've been responsible for a number of key areas, including the U.S. joint venture, our tech platform, as well as our M&A strategy. In addition, I led the successful integration of both bwin.party and Ladbrokes Coral. I've been in this industry for 15 years, previously I worked in Gala Coral and Playtech.
GVC is in an incredibly strong position, as demonstrated by the remarkable performance we have delivered in the first half, despite the uncertain world we are currently in. That means we can look forward with optimism, and my initial five key areas of focus are: firstly, the U.S., probably our biggest opportunity to create value in a new dynamic market. Our ambition is to be the leader in that market. We will do whatever it takes, as we demonstrated last week with the increased investment. Secondly, organic growth. Our year-on-year double-digit growth over the last 18 quarters reflects the opportunity we have. We have proven track record of building and rebuilding strong brands and growing market share. We operate in markets that are growing. Around 94% of our revenues last year came from markets that are growing over 10% per annum.
We are the best in the industry at digital marketing, and our operation is supported by the best tech platform and product. Thirdly, M&A. I've been looking after our M&A strategy for a while, and we are focused on bolt-on deals in regulated markets where we can leverage our expertise. We had an exciting M&A pipeline going into the COVID-19 crisis that we put on hold until we're back to normality. Yes, that pipeline is no less exciting, and we will continue on that. Next, operational execution. We have excellent track record, excelling, and the best team and people across the industry. This excellence has been demonstrated through the current COVID-19 crisis. Our team across the business stood up, and I'm so proud of them. We do things well. We never fail on any objectives we aim. Yet, I'm keen. We always look for continuous improvements.
Having led the successful integration of bwin and Ladbrokes Coral, I can see further opportunities across the group. Finally, responsibility. We provide exciting entertainment for our customers every day, but we do need to ensure that we have a robust safety net in place for those customers who show behavioral problems. We have done much so far in putting that safety net in place with algorithms, checks, and interventions. There's always more we can do and will do. It's essential that responsibility is part of our DNA. We have regulatory changes ahead, and we will continue to work with regulators and other parties to ensure that we got a good outcome. I'm extremely excited about the roadmap ahead and look forward to talking to you more about that at our interim result in August. I now hand over to Rob to talk about the result this morning.
Great. Thanks very much, Shay. Good morning, everyone. So, overall, you've seen the headlines. We're very pleased with the performance of the business through the first half of the year, and that very much applies to both the pre-COVID period to mid-March and the post-COVID period as well. Just as a reminder, we had excellent momentum in the business coming into the COVID period. We reported revenue growth across all channels of 11% in constant currency for the 15th of March, and that was made up of online NGR being up double digits again at 19%. U.K. retail was also performing well at only -5%, despite Q1 being the last quarter before we annualized against the Triennial Review changes, and European retail was performing strongly as well at 24%.
Then, of course, all our shops closed and sporting events were canceled, and so Q2 had a very different shape to it. But the strength of our business model and the diversification of our business through our brands, our products, and our geographical spread meant that overall we've been able to deliver a relatively good performance across the first half. I think the benefits of diversification were clear to see in several different ways. So geographically, in Australia, horse racing survived throughout the period, and our Ladbrokes and Neds businesses over there performed exceptionally well. They grew at around 76% in Q2. And at one point, Australia during Q2 accounted for half of our global sports business.
Product diversification was also paramount during the quarter, whether that's shifting volumes to minor sports like table tennis and esports, or to gaming products like bingo, casino, and of course, poker, which performed very well. Also, having diverse and strong brands, I think, helped us. Our gaming brands like PartyPoker, Foxy, Gala Bingo, they've all grown exceptionally well as customers were already familiar with them as lockdowns kicked in. I think that strength in diversity is reflected in our very strong online numbers, as you've seen, NGR up 23% in Q2 in constant currency. Within that, gaming was up 46% in the quarter.
Now, of course, we're seeing a steady increase in top-flight sport, and thankfully, it's clear that our customers are pleased to see the return of sports as much as we are because betting activity is back to pretty close to pre-COVID levels already. Just on retail, clearly, revenues for both U.K. and European retail were down significantly in H1 as shops were closed, but our teams have worked extremely hard, as you heard earlier from Kenny, to get all of our shops open. In the U.K., we opened on the first possible day in each jurisdiction, and we've done it in a fully compliant manner with social distancing measures in place, as you'd expect. All of our shops across the U.K. and Ireland are open, and thankfully, those initial onerous restrictions in Scotland are going to be lifted next week.
You have to say early signs on trading are encouraging and ahead of where we might have expected to be. It is early days, of course, but we're less than 20% down on pre-COVID levels, already, which is a good result given restrictions are still in place, and it also means we're immediately back to profitability, which, of course, is important, so we were EBITDA positive right from week one. Demographic data is also encouraging. We can see that our older customers have come back to shops in the same proportion as pre-COVID levels, so the older customers haven't chosen to stay away so far. In Europe, European retail, it's a similar picture to the U.K., actually. We're almost entirely open, just a handful of shops in Belgium left to go, and again, volumes are within 20% of pre-COVID levels, and that's despite, again, ongoing restrictions.
There's no footprint in Belgium, for instance, and there are some other product gaps as well. But crucially, we're already profitable in European retail as well. So all in all, even though group NGR is down 10% for the half because of retail closures, we're very happy with our performance and especially with our online growth. You might remember at our full-year results in March, I talked about our record of consecutive quarters of double-digit year-on-year growth in constant currency. And now, with Q2 delivering 23%, we're up to 18 consecutive quarters of double-digit online growth, which is some record. And pleasingly, that growth came from all our major territories in H1. Every area was at double digits. So again, demonstrating the strength of our business. Let me add a quick note of caution on revenues.
You've got to imagine, as we move into the second half of the year, that there'll be increased macro pressures on discretionary spend as local government support unwinds, recessionary pressures may kick in. And also, as lockdowns ease around the world, there'll clearly be more competition for leisure spend, and that will have an impact on us. And I should point out as well, we have benefited from unusually good GGR margins in H1, especially in the U.K. and Australia. So heading into H2, I'd say we can be absolutely confident on our relative performance, but we should also be cautious that there are some market headwinds as well.
Moving down the P&L, we expect first half EBITDA to be in the range of GBP 340 million-GBP 350 million on a post-IFRS 16 basis, which clearly is a reflection of the strength of our online performance, but also do remember lower levels of marketing spend in there, in particular in April and May, and looking forward, a bit too early for us to give clear guidance on the full-year outcome, but we would expect, of course, stronger EBITDA from our retail divisions in H2 compared to H1, but do note that we could be lower in online as you can't assume those margins will continue into the second half of the year and will more than likely increase our marketing spend in H2 as we push to continue our strong market share growth in all territories into 2021 as well.
Just lastly from me, a quick word on cash. Really pleased to be able to confirm that we achieved our target of getting through the period of cancellations and retail closures with zero cash burn, which is no mean feat, and which thanks mostly to the cost and cash management measures we've put in place. But as well, of course, the stronger-than-expected revenues in our online business. So in summary, a highly unusual shape to the first half of the year, but as usual, GVC delivered another strong performance, and we look forward to the second half with some caution but with confidence as well. So with that, I think we can open it up now to Q&A.
Thank you. If you would like to ask a telephone question, please signal by pressing star one on your telephone keypad. Please ensure your mute function is turned off to allow your signal to reach our equipment. Again, that is the star key followed by the number one to pose a telephone question. We will pause for just a moment to allow everyone an opportunity to signal. We will take our first question today from Ed Young of Morgan Stanley. Please go ahead. Your line is open.
Good morning. Thanks for taking my questions. I've got two, if that's okay. The first of all, Rob, you gave some very helpful detail there on some of the aspects of where the growth had come from, but I wondered if it was possible to give a bit more on the drivers of the organic growth in online beyond the sports gaming split that's been disclosed. Were there any particularly outstanding geographies outside of Australia? I appreciate you said it was broad-based. And can you talk a little bit about what the growth has been in new customers or assets compared to high yield? To me, they've sort of pent up demand, and good results. And then my second question is on M&A. So, Shay, you referred to the strong pipeline you think is exciting.
Has COVID changed your view on M&A targets at all? Obviously, you've seen good benefits from diversification in both products and geography and online, or seen retail be impacted severely during that period. So has any of this shaped what you think you'll be looking for in terms of target profile or size? Thanks.
Should I take the first question? In terms of where has the growth come from, if we think about it in pound-notes terms rather than percentage terms, I would say four key areas. You called out one, Australia sports, undoubtedly strong during Q2. Another area, the U.K. sports brand gaming businesses, contributed significantly as well. Then U.K. gaming brands, so both Gala and Foxy performing particularly well helped, in particular by retail migration, we think, in gaming brands. Far less retail migration in sports brands, but it's been clear to see for Bingo in particular. Then the last one I would call out is PartyPoker, where all around the world, you know, we have seen, well, frankly, a doubling of activity, which has been great to see.
Clearly other areas as well, but less so, I would say Europe, and LATAM. Europe because we're still down on tennis and basketball content. And LATAM, we don't it, it's predominantly sports business, predominantly football, and local football is not yet up and running. So those are the four areas I would call out. In terms of spend per head versus FTD, you know, we have seen acquisition rates double, which has been great. But remember, though, that our brands around the world are very well established, and so the sort of pound-notes contribution from FTD is helpful, but it's not as material as the spend-per-head aspect. So most of the strength that we've seen has been from existing customers rather than new customers. In areas like Bingo, a little bit more from new customers.
In sports brands, much more so existing customers. Shay, do you want to take the M&A one?
Yeah. Yes. In terms of M&A, our appetite for M&A did not change. I mean, clearly, one of the strengths in GVC is our proven track record of acquiring businesses and then integrating them. We just concluded the Ladbrokes Coral integration, which was a great success for us and delivered a lot of value. As I mentioned, we had a pipeline of a few bolt-on things we were looking. I mean, the focus is clearly on regulated markets, buying things for the right price, which match our strategy, entering new markets and deploying our expertise. We will continue doing that, and there's no big timeline. Once we find something which makes sense, we will do it.
Clearly, it becomes more complex to do larger transactions, because less left, but clearly, we are looking now on a few bolt-ons, and we will continue doing it, but I think we're more back to normality.
Perfect. Thank you. Just one quick follow-up on that, Shay. So, no change. Would you still be looking at online and retail targets, retail-only, online-led? What's your sort of view of what the right target profile would look like ideally?
I mean, look, I don't think we can say. I mean, I wouldn't eliminate any options. I mean, clearly, digital is something we wanna grow. I mean, in general, in the world, I mean, e-commerce and digital is going faster, and this is where we wanna focus. We wanna be a double-digit business. We do see value in retail. I mean, in some regulated markets, retail is essential. It's part of the overall offering. So I wouldn't eliminate retail, but clearly, the digital is the focus. We might acquire something which has some retail element in order to accelerate our digital business. I mean, for example, U.K. is a good example.
I mean, our U.K. retail, I think it's, I believe it's a very strong enabler, strongly channeled also for our digital growth and the great numbers you've seen today.
Perfect. Thanks for that.
Thank you. We will take our next question from Stuart Gordon of Berenberg. Please go ahead. Your line is now open.
Morning, guys. Three from me. Obviously, first of all, Kenny, all the best with your retirement. Can't think of a better place in the world than Scotland to spend it. Congrats, obviously, Shay, with your appointment. Shay, you spoke about your five pillars that you're gonna move forward with as CEO, and obviously, the fifth one being responsibility, which is currently the subject of a lot of regulatory scrutiny. It's a very interesting business. I was just wondering if you could expand a little on your own thinking here and how you propose or expect taking forward the regulatory debates in key territories.
Secondly, I was wondering if you could talk a little bit about the extent to which you feel having your top brands has really helped through the lockdown, in particular in helping lower marketing to costs versus the competition and how perhaps that might unfold as we come out of lockdown. And finally, just, is there any form of lock-up on Kenny's shares following his retirement? Thanks.
Okay. So I will start with the responsible gaming. I mean, GVC for a long time put responsible gaming as something which is key in our D&A. We have a number of initiatives in the business. I mean, Kenny has been clearly the face of that as a CEO, but there's been a lot going on underneath. I mean, I personally as the person who was responsible for, say, 80% of the underlying operation in the business, was involved in driving many of these activities, which touched many things we do in terms of our product, our interface with our customers, our CRM, new algorithms, as I mentioned, interventions. I mean, we deployed a raft of measures. I mean, something we talked about as well, our marketing, our approach. We have an open dialogue with regulators. We welcome that.
I think a good dialogue and clear regulation and positive dialogue with regulators is a positive. It creates certainty, and it's good for everybody, for us as an operator and for the regulators, and it's something which is within our D&A, and we'll continue doing that, so we will leverage what's already been going for some time now, and we'll continue doing it, and then GVC is and will be the most responsible brand and operation in the industry. This is the one. What was the second question?
Second one was just about how you feel having had top brands may have helped in terms of, obviously, there was lower marketing money being spent and how you see that evolving post-lockdown.
Yeah. I mean, I mean, clearly, I mean, the fact that we have the Tier 1 brands with a heritage of years of hundreds of millions of marketing spend is an advantage. This is one of the key, I mean, brands like Bwin, like Gala Bingo, international brands as well that we have. I mean, PartyPoker, of course, as well. I mean, it's recognized within customers. It's clearly to the advantage. It's an advantage that you could see it in the last period when we touched some of the spend. If there was no sport event, so it makes sense to do it. People recognize these brands. It's a clear competitive advantage for the future. I mean, I think what happened in the first during this lockdown period is many other operators cut spend. We cut spend.
Clearly, our brand is more recognized, attracts more players. I think as the lockdown and the sport event is coming back, you will see marketing spend increasing, both for us and competitors. Through our efficiencies, both in terms of marketing technologies I mentioned, and our strong marketing teams, I mean, I'm confident we'll continue to do better than others. I mean, as we've shown for the last 18 quarters, so I'm confident about that, and the last question.
I was just gonna say, Stuart, that.
Yeah?
Sorry, Stuart. I was just gonna interrupt Shay that, you know, we, we've said for some time that we expect that rate of marketing to tick down over time. And I think that the latest period reinforces that that can happen. But by the same token, we're not going to be shy in investing, going forward.
Yeah.
To keep up that double-digit growth. You know, that incredibly important for us. We want to carry on gaining share. And so inevitably, marketing spend will be higher in the second half of the year as we seem to be opportunistic. And I think the last question was on shares. I don't know if any of you would like to touch on that.
Yeah. Yeah. I'll take that one. Yeah, there are some lock-ins. I mean, I think it's the condition of my LTIPs and bonus shares that I took in, bonus obtained shares I had to get for the bonuses I've had in the last few years per the incentive plan. But look, I mean, I think it's like four times my salary or something like that. But look, I won't be selling any shares for the foreseeable future. You know, as I said, you know, this is not a one-man show. It's never been that. I've repeatedly said it to yourselves and the shareholders for many, many, many, many years. It never was. It's the result of me being very fortunate to have very, very good teams, people around me. The team that I've got now is undoubtedly the best I've ever had. It's been upgraded all the time.
Business is in good shape. I think, as I said in the call last week, that U.S. opportunity is definitely the biggest catalyst for our share price. If we deliver on it or even close to it, there's massive upside in the share price. I'll be holding onto them. You know, I'll be completely safe that Shay will nail it. If he doesn't, he'll. I'll hunt them down, you know, like, no, no. No, no. I'm not selling any shares. Business is in great shape. Great opportunities. The U.S. is a big one. Excellent team. I'll be holding onto them indefinitely. Expect to make some good money on them. That hopefully answers your question, mate.
Excellent. Thanks, Kenny.
Thank you. We will take our next question from Gavin Kelleher of Goodbody Capital. Please go ahead. Your line is now open.
Good morning, Kenny, rather than Shay. Just a few for me, please. Just on gross win margin, you've obviously hinted they were very good in the period. Can you just give any sort of sense for how much of it is results-driven, so if it were results-driven, how much of it was structural, how much of it was product mix, people betting on stuff they, they didn't know as much about, etc., etc.? If there's any insight on that. Just on retail, and the kind of. I know it's a very short period.
Can you just give any sort of kind of insight into how sports are doing, SSBT machines are doing, and then as well as that, do you think there's a significant benefit just given how sport has come back and the betting on it on live TV, etc., etc., and more sport content year on year, just in the initial performance from retail? And then just finally, any comment on dividends?
Sure. Shall I take that? I'll have a go at that issue, though. On GGR, hi Gav. On GGR margin firstly, Australia, given its relative size during Q2, was the biggest driver why margins were strongly up year on year. Why were they up? Undoubtedly, favorable results. Key racing events like the Sydney Carnival went in our way. And also a little bit of product mix within the Australian margin as well. Sports is typically significantly lower margin than racing just in normal times. And clearly, racing was the dominant mix during Q2. There's a bit of product mix there. There's also a host of management initiatives which are ongoing to you know a degree of structural improvement. Australia, the number one driver. Outside of that, football results generally have been positive in June.
That's helped us everywhere, U.K. in particular, not racing but football in the U.K. The only other thing I would add is there are, as volumes drifted to other sports like U.S. racing. You know, the familiarity point I think is partly relevant, but actually it's just because over-rounds are generally higher on things like U.S. racing. It's less competitive and there's fewer concessions around it, you know, things like BPG. So it's not so much familiarity in my view. It's more the way that those products are traded, but I think that's the third point. I think number one is Australia. Number two is football margins. Then number three, a little bit around minor sports being higher margin than the mainstream sports. So that's on margin.
Why don't I touch on retail and then Shay, feel free to chip in.
Yeah.
Let's take U.K. first. U.K., the stronger element has been the machines. You know, really interesting to see volumes get back to pretty much where they were very quickly, which is encouraging to see. Sports lagging that, somewhat. But I'd say that's not surprising given the program. It's good, but it's not as full as where it would ordinarily be. And therefore, with that in mind, when you think about European retail, that was a little slower to get up to full pace, because it's much more a sports business. So it didn't have the machines aspect driving revenues. So it was slower during early June. And then as sport, in particular, football has ramped up, it's back up to somewhere close to pre-COVID levels.
It is difficult to make comparisons year on year given, you know, we're now in the summer with loads of football and we didn't have that last year. It's also difficult to make comparisons against budget, which is budget has a euro in it. So typically, we measure our activity versus the Q1 levels. And as I said earlier, we're inside of 20% down now across our retail estates and trending in the right direction. And the third question, Gav, you want me?
Was on, given.
Yeah. Just add two things on retail. I mean, the team has been doing amazing work on retail opening. Clearly with the, as Rob mentioned, I think we've been more pessimistic thinking that, when retail is back, numbers will be awful will actually positively surprise. Well, volumes are coming back and it's moving to the right direction. I mean, we still have social distancing and the schedule of the sports is still a bit moving targets. But I think overall, as Rob mentioned, it's very positive. Go on, next question then. Sorry.
Sorry. My last question was on any comment on dividends going forward.
Yes. Dividends. It's too early to have a firm view on the second half of the year. We'll revisit this topic at our interims. You know, I think you'd have to say, given we still have uncertain times in front of us, it's more likely that dividends would resume in the first part of 2021 rather than second half of this year, but we will come back to that point at the interims.
Perfect. Thanks a million, guys. And best of luck on the retirement, Kenny.
Cheers, mate.
Thank you. We will take our next question from Simon Davies of Deutsche Bank. Please go ahead. Your line is open.
Yeah. Morning, guys. Three from me, please. Firstly, just on Australia, obviously particularly strong and you highlighted the margin performance. Can you give us a bit more detail about quite how strong it was? How significant were other factors, in particular, the closure of Tabcorp shops during the second quarter? Secondly, just on U.K. retail, there's been some pretty alarming numbers out there in terms of high street footfall. Are you significantly outperforming that in terms of footfall, or is this all about increased spend per head? And lastly, just on U.K. online, any impact in the period or notable from the credit card ban?
Sure. Thank you, Simon. Let me have a go at those. So, Australia margin, it was up over two points stronger year on year. So, you know, very material. In terms of the impact of retail closing, you'd have to say there's very little evidence of that benefiting. I know the guys did some analysis recently which showed that only 2% of our active in the last couple of weeks were customers acquired in the three weeks following the retail closures in Australia. So it doesn't appear to have been material. Nonetheless, the guys still introduced some new features, new promotions which replicate retail betting so that we're ready to welcome those customers and hopefully retain those customers. But all the data suggests that the vast majority of that 76% Q2 growth that I referenced is coming from existing customers.
But I would add reactivated customers as well. Then on the last question around a few more questions, one on retail footfall, it does feel like footfall in our shops is stronger than what you read for the market in general. It is quite hard to measure that, though. Of course, we don't have footfall counters in retail. We have, for instance, seen that bet size, so sort of bet per slip, if you like, is up materially. But we think that's a reflection of partly product mix, and partly SSBT mix, which you know is stronger as people sort of keep their distance from others, and also just adding more bets to the page. So we don't think there's too much to read into that. But bet per slip is up. What else?
In terms of U.K. online credit card impact, you know, we have to say it, it appears to be negligible. We did anticipate that as I talked about in March, given that such a high mix of customers who used credit cards also had debit cards registered. So we didn't expect there to be a material impact, and we haven't been able to quantify one. So, it does look like the impact is negligible.
Right. Many thanks.
Thank you. As a reminder, if you wish to ask a question, please signal by pressing star one on your telephone keypad. Our next question comes from Monique Pollard of Citigroup. Please go ahead. Your line is open.
Good evening, everyone. Congrats on the good results and congrats on the new role, Shay. We'll be sad to see you leave, Kenny. Just two remaining from me, please. The first is whether you could give some update on the U.S. Shay, you know, obviously that's one of your key priorities and you were clear that you'd do whatever it takes to be the leader in that market. Just wondering how quickly we could expect to see market share ramp up in markets like New Jersey and Pennsylvania, you know, particularly as we go into September and the fourth quarter of the year, and then the second question was just on the betting on minor sports. So, you know, I know there's been increased betting on esports but also other minor sports.
As the main sports have started to come back, have you seen that betting on minor sports drop off, or has that continued to be strong much in the same way that online gaming has sort of continued from strength to strength?
Okay.
Okay. I'll start with,
U.S.?
Yeah. I'll.
Yeah. Yeah. I'll start with the U.S., so I mean, we've mentioned it a few times. I mean, I've been. I am very, very involved with what we're doing with our U.S. business, and we were working very closely with the team and with MGM, putting all the building blocks in place, and I truly believe that we are in a position to be the leader in this market, 'cause we have all of these ingredients, and we talked about it in the past as well. We have market access, and now we actually set up in a place, I think, pretty much for the last two, three months, that we are and we will continue to be first to market in every new state which opening. We've been first to market in Michigan and in Colorado.
And this is key to be early and basically to grab market share very early. We have very unique technology and products. I think Kenny discussed about it last time as well, is that we localize our products and we are in a very good place now in terms of taking time, you know, to tune the funnel and to localize the product to the US. And we are in a very good place there as well. We started to work in terms of tuning of both our marketing technology, both in terms of traditional marketing but also working with MGM in terms of converting playing for players from M life, which is again, it's an amazing database. And also the Yahoo partnership is now going to a new level.
The main thing is that also, I mean, I think the only thing we were missing until now, and we announced it as well, is to be more aggressive with marketing. I mean, I mean, we couldn't be able to grab as much market shares as DraftKings or others or FanDuel in terms of we are spending much, much less than them. This is one thing that we're now ramping up. We feel that we are ready. We feel that the product is ready. I believe the answer to your question is that in the next few months, we should see increase in our market share pretty much in all the states that we are active. It will be interesting, and we will see progress from now through the end of the year and early next year.
And then on that.
And then from your perspective.
I mean, I'll give a view from what I've seen, and Shay and I, if we've had any more color. So esports and table tennis, and virtuals to a degree were probably the main beneficiaries during that period of reduced sporting activity. From what I've seen, esports has carried on, whereas table tennis has tailed off. But you've got to say, you know, they're still relatively small components of the larger offering. So, you know, I don't think we're going to see a massive amount of uplift as a result of these sports gaining popularity during the COVID period. You know, that's my view. I think they're quickly dwarfed by the mainstream sports coming back online. Shay, is that what you've seen as well?
Yes. Yeah. Exactly. I mean, during the lockdown, when sports schedule has been canceled, clearly, we worked with the product and the content team to try to put other alternative sport content, esports, virtuals, and other minor sports. This has been the focus. We actually have been surprised of the acceptance of players for this content. And as football and other major sports come back, clearly, customers went back to the major. But actually, it's still, I mean, some of the customers still like this. Clearly, it's become a smaller portion, not that significant, but it's more than what it used to be in the past. So I think there is a potential there. I mean, don't expect it to become a major, but there is a potential for this to grow over the future.
Understood. Thanks, Rob.
Thank you. We will take our next question from Kim Jacobs of Bank of America. Please go ahead. Your line is open.
Shay, two questions from me. Both on the retail side, are you seeing benefits from winning new customers as not all of your competitors' stores have opened? And are you expecting that the retail market could fundamentally change as a result of COVID, you know, in the longer run? And the second one comes back to marketing spend. I know the marketing spend should sort of tail down over the next few years, but should we expect a notable ramp up in H2 year on year as you attempt to retain some of the customers you've won during the lockdown period? Thank you.
I'll take a share.
I'll just navigate that, Shay, and then.
You're good. You're good. Yeah.
It's so hard when we can't see each other, is it? We're in obviously in different rooms. So from what I've seen on retail, yes, you know, we have benefited from our competitors not being fully open. Really, that's only one, though, in William Hill. Betfred and Paddy Power have opened all of their estate. I think William Hill, at last count, still had 196 not yet open, and I wouldn't expect that they will all open. So therefore, there will be some benefit for us. We also, I would have expected, to have some benefit from things like AGC not being open until 4th of July. So some benefits, but you know, not particularly material in the grand scheme of things. In terms of what does retail look like going forward, it is a little too early to say.
I'm not expecting revenues to be so far adrift of where they once were that there'll be a fundamental restructure of the retail estate. I really don't think that will happen.
Okay.
Our expectation is, you know, we continue with our BAU 2%-3% trimming of the estate going forward. But let's reserve judgment on that for a few more months until we can fully assess the impact. In terms of marketing spend in the second half of the year, I would expect somewhere in line with our original guidance of 22%-23%. That would be a couple of points up year on year. You know, normally you spend more in the first half than the second half. So I think in terms of year on year, we'll spend more in the second half of this year. Overall, across the full year, you know, I'd be surprised if we're anything other than below the guided range of 22%-23%, back in March.
Not massively below, but a little bit below. Remember, it's only really April and May where we saw significant savings in marketing given sport was ramping up, well, from late May with the Bundesliga, then U.K. racing 1st of June, and then football sort of mid-June onwards. June was still a full month of marketing spend. So it's only two months out of 12 where we saw significant reductions.
That'd be perfect. Thank you.
Okay.
Our next question will come from Ted Wu of J.P. Morgan. Please go ahead. Your line is open.
Good morning, guys. Thank you for taking my questions. Are you able to give an indication of what online EBITDA was in H1 and potentially the marketing ratio in H1 and what that contributed to EBITDA in H1? And secondly, the surge in gaming NGR during the first half, during Q2 in particular, how much of that do you see sticking? Does it just create a tough base for the next year in terms of that activity subsiding? And then, finally, I suppose, is there any update on German regulation? And how do you anticipate that impacting the business over the next year or two? Thank you.
Okay. Should I have a go at the trading ones, so you'll see our divisional betting breakdown in the interims in a few weeks' time, and I can say, as I've already said, margin was high as you've seen that, and marketing rate was low, you know, potentially even sub-20% given over six months as I've just said were low. So online betting is strong in H1, and we wouldn't necessarily assume the same in H2, as I said in my opening comments. In terms of levels of online gaming, it's almost a million-dollar question for us as we move into the second half of the year. You know, clearly, they peaked during Q2 before sports returned. Sports have come back.
We have seen a tailing off, particularly in the sports brands, as you'd expect, but in general as well. Key question is how far do they fall? Right now, they're still comfortably ahead of pre-COVID levels, which is fantastic, and you know, our hope and expectation is that they settle ahead of pre-COVID levels as well, but I would anticipate them falling further from where they are today.
In terms of German regulations, Kenny, we haven't heard much from you. Do you want to take that one? Otherwise, I'm happy to do it.
Rob, I've officially retired from German regulatory questions, except, no, I'm just giving my grand finale. I've been talking about it for how long? 13 years, so I might as well just keep talking about it. No, look, the German regulatory situation is pretty much not much really has developed since the last updated year. We are, you know, I think it's pretty much in limbo, to be honest with you. We expect the new licensing regime to be put in place. I think our best timescales now are sort of Q2 of next year, where we will have sports betting licenses. And we are also, as we've previously communicated, fully expectant to be able to get some sort of gaming licenses as well.
We expect there will be some sort of restrictions on the products we're able to offer, maybe even some sort of restrictions on limits. There will be some sort of haircut on the EBITDA in Germany from our current as a result. We don't expect it to be particularly material, and it certainly won't outweigh the benefits of being able to say that we are 100% fully regulated and taxed in Germany rather than at the moment where we have this sort of cloud, not a cloud, but uncertainty, around the casino and the poker part of our German business. You know, if I could, I'd love to be able to be more specific, unfortunately, or have more clarity. Unfortunately, for the last 13 years, I've not been able to.
But I do think we're. I've said over the last couple of years, we are definitely in the next 12 and 18 months, we will have clarity. We will have a fully licensed for all products. There will be some limitations on product offering. There will be probably some limitations on stake limits and, you know, possibly, on both sports and on gaming. There will be some sort of haircut to the EBITDA, as a result. It will certainly not outweigh the benefits and the re-rating that we should get on our German earnings. And it should also open up additional marketing channels, particularly around gaming, which we're not really able to exploit at the moment apart from cross-selling. So, it's looking positive. It's still a little unclear.
It's all it should be cleared up within about 18 months, and you know, the million-dollar question is, will we ever have to close down all casino and poker? Absolutely not. It will be regulated. It will be taxed. It's taxed at the moment, actually, in terms of VAT. There will be a haircut, but it's all plus-plus for the business in terms of market valuation.
Thank you.
Thank you. Our last question today will come from James Rowland-Clark from Barclays. Please go ahead. Your line is now open.
Hi. Good morning, everyone. Most of my questions are being asked, but I've just got three short ones. There was a notable increase in the pricing that you were pricing the Premier League at on Coral and Ladbrokes brands. I just wondered if that's a significant strategic change in strategy to sort of target more recreational customers. So any color there would be helpful. And Rob, you mentioned discretionary spend risk for the latter part of this year. I just wonder where you think you would see the greatest risk from that to your business. Is that online or retail, and is that online gaming or sports betting? And finally, just on the U.S., I wondered if you would or will report U.S. separately going forwards. Thank you.
Okay. So I'd take so the discretionary spend one until I'm thinking about competing leisure activities. So I think it's both online and retail, retail in the sense that as more and more restaurants, for instance, open up, cinemas, etc., there's more competing spend. Likewise online if people are out and about more. So it really was a general comment, James, you know, nothing particularly in mind, but I would say all products, all channels, must have some exposure. On U.S. reporting, we will certainly get more granularity over time. I think quite when we do that's not been planned through as of yet. But I think, you know, rest assured, just because it's a JV and it therefore only appears as one line in our P&L, it doesn't mean you're only gonna get one line of detail.
You know, we will do more and more progressively more detail on the US going forward. On pricing strategy in the Premier League, Shay, I don't know if you're aware of any deliberate attempts to.
No.
Price more recreationally?
No, I'm not aware of any change of strategy of our pricing. I mean, clearly, we said a few times that we are more and more aiming to acquire this recreational players. I mean, this is the focus. But I'm not aware of any pricing. I mean, again, from time to time, we might do a different ad hoc specific pricing changes, again, based on specific campaign or strategy. But there's nothing strategic that we're planning to change in terms of the pricing that I'm aware of.
Great. Thank you.
Thank you. That will conclude today's question and answer session. I would like to turn the conference back to our hosts for any additional or closing remarks.
Okay. Thank you all for your questions and joining the call today. Overall, it's been a strong performance, and the first half demonstrating the strength of our business model and our diversification by product, brand, channel, and market. As important as demonstrating the quality of our people. While there remain some uncertainties across the world, we can look forward with confidence. Many thanks for your time, and I look forward to meeting you all in due course.
Thanks, everybody.
Thank you. Bye. Thank you.
Yes. Yes.
I'd just like to say before you switch me off, look, I've really enjoyed, well, sparring with you about answering your questions over the last fucking years or whatever it is. You've always been very, very fair as far as I'm concerned, and tried to answer them as honestly as I could, most of the time anyway. I've thoroughly enjoyed working with all of you, and I wish you all the very best in the future. Stay safe and healthy, and don't give Rob and Shay too much of a hard time. So goodbye. God bless.
Cheers.
Cheers, my friend.
Thank you. Thank you, Kenny. Thank you. Bye.
This will conclude today's conference call. Thank you all for your participation. You may now disconnect.