Entain drops out of FTSE 100 following fall in market value

Entain will leave the FTSE 100 after six years following a prolonged fall in the gambling group’s market value.

FTSE Russell confirmed that Entain and housebuilder Persimmon will move into the FTSE 250 as part of its September quarterly review. EasyJet and energy company Ithaca Energy will replace them in the blue-chip index. The changes will take effect when markets open on 21 September.

Entain owns several major betting and gaming brands. These include Ladbrokes, Coral, bwin and PartyCasino. It also jointly owns BetMGM alongside MGM Resorts International.

Share price decline prompts demotion

FTSE index membership is determined principally by the market value of qualifying companies rather than a judgement about their operational performance.

Entain’s market capitalisation stood at approximately £3.3 billion at the beginning of September. Its shares have lost around 40% of their value over the past year. They were trading more than 40% below their 52-week high.

That decline left the company below the threshold required to remain among the 100 largest eligible businesses listed in London. Entain’s removal reflects its declining market value rather than a separate assessment of its gambling operations.

The move could nevertheless affect demand for its shares. Investment funds that track the FTSE 100 may need to sell their holdings, while funds following the FTSE 250 could become buyers.

Expansion brought growth and debt

Entain entered the FTSE 100 in 2020 and subsequently attracted takeover interest. DraftKings proposed an acquisition worth approximately £16 billion in 2021 but later withdrew from discussions.

The company instead continued its own expansion, acquiring businesses across several regulated gambling markets. Online gambling now accounts for around three-quarters of group revenue, while Entain operates across approximately 30 jurisdictions.

However, its acquisition strategy also contributed to higher borrowing. Net debt has risen to around £3.6 billion, according to the Financial Times.

Entain has additionally dealt with repeated leadership changes, pressure from activist investors and the consequences of historical regulatory and legal issues.

In 2023, the company agreed to pay £585 million under a deferred prosecution agreement concerning bribery failings connected to a former Turkish business.

Portfolio changes continue

Chief executive Stella David is now simplifying Entain’s portfolio and reducing debt.

"We’ve made good progress in the first half and for the remainder of the year, we continue to make Entain sharper, fitter and better connected – with a clear focus on growth, margin expansion, and cash generation." - Stella David

The group recently agreed to sell interests in businesses operating in Poland and Croatia, indicating that further disposals could follow as management concentrates on its main regulated markets.

Its removal from the FTSE 100 represents a visible setback for one of Britain’s largest listed gambling groups. However, it does not change Entain’s licences, brands or ability to operate.

The more important question for investors will be whether the company can translate its broad international presence and growing online business into stronger returns while bringing its debt under control.