Rank Group announced its first quarter financial results for the fiscal year 2025-26, with net gaming revenue reaching £210.2 million (approximately $280.9 million), a 9% increase year-over-year, primarily driven by growth in digital operations. Digital revenue from Grosvenor soared by 31%, Mecca's online operations grew by 9%, and overall like-for-like digital revenue increased by 13% to £61.6 million. In physical operations, Grosvenor venue revenue grew by 8% to £102.7 million, becoming the group's largest source of income. CEO John O'Reilly stated that the strong start to the year positions the group well to achieve its annual targets, while also responding to speculations about a potential increase in gambling taxes by the UK government, emphasizing that the group had already paid £188 million in taxes last year. Rank is leveraging new gambling regulations to add 850 gaming machines in casinos and exploring the launch of in-house sports betting.
Overall Performance and Revenue Growth
Rank Group's net gaming revenue for the first quarter of the fiscal year 2025-26 reached £210.2 million, a 9% increase from £197.5 million in the same period last year. This growth was mainly due to strong performance in digital operations and steady recovery in physical businesses.
All four core business sectors achieved growth, demonstrating the healthy development of the group's overall business structure and the rebound in market demand.
Outstanding Digital Business Performance
The digital business was the fastest-growing sector this quarter, with like-for-like revenue increasing by 13% to £61.6 million. Grosvenor's digital revenue increased significantly by 31%, and Mecca's online operations also achieved a 9% growth.
The Spanish market saw a 1% decline in revenue due to platform capacity issues, but the group stated that the problem is being resolved, and a new bingo game platform is expected to drive growth recovery in the second quarter.
Physical Business and Venue Performance
Grosvenor venue business revenue grew by 8% to £102.7 million, continuing to maintain its status as the group's largest source of income. The growth was due to a 5% increase in customer visits and a 3% increase in spending per visit.
Performance outside London grew by 10%, while the capital region grew by 4%. The Victoria Casino's performance improved after renovations were completed in July, offsetting the relatively calm impact of the summer.
Gaming Machines and Equipment Investment
The group fully utilized the new gambling regulations implemented in August in the UK, increasing the number of gaming machines in casinos. Revenue from electronic table games grew by 11%, reflecting the return on investment from recent terminal upgrades.
An increase in B1 gaming machines drove a 3% increase in table game revenue, with gaming machine revenue growing by 12%. The group plans to add 850 new gaming machines by the end of the first half of the year.
Performance of Other Business Sectors
Mecca store revenue grew by 5%, although foot traffic decreased by 1%, but spending per customer increased by 6% year-over-year. Revenue from Enracha stores in Spain grew by 5%, showing stable performance in international operations.
The group is exploring plans to introduce sports betting in UK casinos, taking advantage of business expansion opportunities provided by new regulations.
Management Comments and Outlook
CEO John O'Reilly gave a positive evaluation of the first quarter's performance, believing that the strong start positions the group well to achieve its annual targets. He acknowledged the pressure of rising costs, including employer national insurance contributions, minimum wage, and new taxes.
O'Reilly stated: "Despite significant cost increases, we are confident in achieving the group's expected year-over-year operating profit."
Tax Environment and Government Communication
The group responded to speculations in the November budget about a possible increase in gambling taxes, including a potential unified rate for remote gambling. O'Reilly emphasized that the group has paid its due taxes, contributing £188 million to HM Revenue and Customs and local governments last year.
The group is in communication with the Treasury, discussing the potential impacts of tax changes on venue operations, employment levels, future investments, and customers.
Cost Pressure and Operational Strategy
Facing increasing cost pressures, the group maintains profitability through business diversification and efficiency improvements. High growth in digital operations helps offset some of the cost increases.
The group continues to invest in technology upgrades and equipment updates to improve operational efficiency and customer experience, supporting long-term sustainable development.
Market Environment and Regulatory Changes
The UK gambling regulatory environment continues to evolve, with new rules allowing more gaming machines in casinos and potentially offering in-house sports betting. Rank Group is actively responding to these changes, seeking business expansion opportunities.
The group stated that it will comply with all regulatory requirements while leveraging new opportunities provided by the regulations to drive growth.
Investment Returns and Future Plans
Terminal upgrades and equipment investments have shown good returns, with electronic table game revenue growing by 11% as evidence. The group continues to invest in digital platforms and physical facility upgrades to enhance overall competitiveness.
The plan to add 850 new gaming machines is progressing smoothly, expected to further drive revenue growth and increase market share.
Social Responsibility and Compliance Commitment
The group emphasizes compliance with all regulations and tax requirements, having paid £188 million in taxes last year. Rank is committed to responsible gambling, ensuring that business operations meet the highest standards and regulatory requirements.
The group values its business in the UK market, committing to pay its fair share, supporting public services and community development.
