Moody's: Europe's gaming sector on low-but-steady earnings growth

Moody's outlook on the sector will be stable for the next 12-18 months.

"Our first-time stable outlook for the European gaming industry reflects our view that revenues and EBITDA will continue to grow, although at a very modest level," says Donatella Maso, a Moody's Vice President -- Senior Analyst and author of the report.

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This growth comes despite constraints from Europe's sluggish economy and the effects of the recession in Argentina, where several European gaming companies operate, as well as rising regulatory and other costs

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Moody's projects annual EBITDA growth below 2% for the next 12 to 18 months, which is in the upper range for a stable outlook of EBITDA growth of -5% to +5%.

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Growth opportunities remain in the less mature segment of online gaming

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Gaming operators with large online businesses will be in a better position to cope with low economic growth and squeezed disposable incomes because the online segment is likely to generate high single-digit growth in the next 12 to 18 months.

Moody's expects that market consolidation, like the GBP2.3 billion merger of UK-based Ladbrokes Plc (Ba2 stable) and Gala Coral, the betting business of Gala Electric Casinos Plc (B1 rating under review), will continue as players seek scale and diversification to offset increasing compliance costs and taxes, while maintaining a competitive advantage.

Exposure to Argentina will likely pressure consolidated revenues and profits at Cirsa Gaming Corporation, S.A. (B1 stable), Codere S.A. (Caa3 stable) and Intralot S.A. (B1 negative), who have operations in the country.