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Hello, and thank you for joining the Entain Plc Quarter 1 Trading Update Conference Call. [Operator Instructions] For now, I would like to hand the call over to the Chief Executive Officer, Jette Nygaard-Andersen. Please go ahead.
Thank you, and good morning, everyone, and thank you for dialing in today. So I'm joined by our Group CFO and Deputy CEO, Rob Wood; and our Group Director of IR, David Lloyd-Seed. We will give you a short overview of our Q1 trading update and then move on to your questions. We won't be giving much detail today on BetMGM as you will hear directly from them at the business update session next Wednesday, 21st of April. So I will firsthand you over to Rob to talk a little bit about our trading performance, and then I'll be back with additional updates from the business. Rob?
Thank you, Jette. Good morning, everyone. We're pleased to report another positive trading update this morning. The strong momentum that we exited last year with in Online has continued into the first quarter this year, and we grew Online by 32% in constant currency. So that makes it over 5 years of consecutive quarters of double-digit growth. And I think that proves that we have a winning business model driven in particular by our proprietary technology. Of course, that growth has benefited from ongoing lockdowns around the world. And so we did expect to grow very well in Q1. But nonetheless, it's pleasing to see the strong growth comes through, and we're, therefore, on track to deliver the guidance that we gave on the 4th of March. Pleasingly, the strong growth in Q1 we've seen across all our major markets. And we grew double digits everywhere, just with the exception of Germany, where we're adopting the new regulatory regimes. Interestingly, if we strip out Germany, our online NGR growth in the quarter was a very strong 44%. We did see another quarter of elevated Sports margins. Margin was up slightly versus a strong quarter last year, so still 1 or 2 percentage points higher than we would ordinarily expect. But growth was primarily volume-driven in both Sports and Gaming as our customer-focused, market-leading product carries on delivering. And as always, we believe that the strength in our product and technology means we're well placed to continue growing strongly for many years to come particularly as we benefit from the ongoing offline to Online channel shift around the world and from new regulated markets coming online. Onto Retail now and as expected, our Retail operations across the U.K. and Europe were impacted entirely by forced closures due to COVID in Q1. The timetable for easing restrictions is fluid and varies by geography, so some uncertainty remains. However, we were able to welcome customers back into our shops in England and Wales on Monday with measures in place to keep all of our people and our customers safe. And there are some additional restrictions for the next few weeks as well, which will limit the ability to get back to normal trading in the short term, but the first few days this week have been encouraging. And we look forward to getting more of our shops open as we progress through Q2. Turning now to our growth strategy into new markets, and Q1 saw the completion of both Bet.pt and Enlabs deals on the 31st of March. With Bet.pt as the rapidly growing Portuguese market, where we'll leverage Bet.pt strength in sports betting alongside our technology, gaming, content, marketing and CRM capabilities. With significant revenue and technology cost synergies to come, Bet.pt is a great addition to the Entain Group. And similarly, with Enlabs, we enter the fast-growing Baltics region. As a reminder, Enlabs is the market leader in Latvia, it's the second largest in Estonia and a top 5 operator in Lithuania. And following its acquisition of Global Gaming last November, Enlabs is also expanding into the Nordics, and it provides us with a platform to launch into new Russian-speaking territories as these markets regulate as well. So these 2 acquisitions and our organic entry into Colombia last year, being we now operate in 27 locally regulated markets, and we continue to deliver high-quality revenue streams. Of all the global operators in our sector, Entain's Online revenue has the strongest blend of geographic diversification, high regulated mix and fast growth. And it's underpinned by proprietary market-leading technology. With that, I'll hand you back to Jette.
Many thanks, Rob. As mentioned, we will provide more details on BetMGM next week, but I am very pleased to see that BetMGM continues to build momentum with our market share now at 19% for the rolling 3 months to the end of February for the markets in which it operates. We retain our #2 position in iGaming and are ready to challenge for the #2 position for sports-betting and iGaming across the U.S. On sustainability and ESG. Sustainability is one of our core strategic pillars alongside growth. And we continue to make further progress in all areas of our sustainability charter as well as further strengthening and diversifying our Board, committing to be carbon net-zero by 2035, we were very pleased to see all that hard work and commitment bearing fruit with MSCI upgrading our ESG rating to AA recently. And I'm also delighted that this month, we launched our Share Save plan, which will enable our people across our international operations to share in the success of our business. As you know, we believe that technology has the ability to be a game changer in terms of player protection and to deliver customer-focused, personalized levels of protection while also preserving customers' freedom. During the period, we started trials of our Advanced Responsibility and Care program, or ARC as we call it, in the U.K. Assuming these go as planned, we expect to be able to roll out up from the summer. As we've said many times, this really does change the game in terms of player protection, moving it from the industry-wide reactive approach today to one that preempts players at risk, addressing problems before they even occur. With U.K. Gambling Act submissions completed at the end of March, we remain very encouraged that the government is taking an evidence-led approach to the review. And we still certainly believe that the use of technology is the best way of solving these complex challenges. Along with other inputs, embracing our data and powerful analytics role, we believe be instrumental to player protection as the DCMS looks to make the Gambling Act relevant for the digital reach. So in summary, I am very pleased with our performance and continuing momentum. Q1 results further demonstrate the underlying strength, the resilience and the quality of earnings of our business, which is underpinned by the group's increasingly diversified geographic and broad portfolio. While we see COVID restrictions starting to ease, it is still relatively early days particularly in many of our international markets. But in spite of this, we remain excited and as confident as ever in Entain's longer-term prospects of success. With that, I will now like to hand the call over to Q&A.
[Operator Instructions] The first question is from Simon Davies from Deutsche Bank.
Two for me, if I may. Can I start off with Germany? I mean it looks like your revenues in Germany were down about 45%. Do you think that is broadly in line with the overall market? Can you talk a bit about the split you're seeing between Casino and Sports and also your expectations in terms of the potential outcome of a legal challenge to deposit limits? And secondly, can you just give us some commentary around first-time depositor numbers and reactivations and the extent to which they've been driving growth across your core markets?
Thank you, Simon. Let me hand you over to Rob to talk about Germany and our first-time deposits.
Sure. Simon, so I think your first question was how are we trading in Germany. I mean I get a slightly different number to you, but ballpark is in the right zone. How does that compare with the market? We really don't know. And I think it depends whether you're talking to an operator who is compliant versus an operator who isn't. When we look at the gaming mix versus sports, which you also asked about, as we've said previously, we put out our guidance last autumn, you'll remember. We are trading adverse to that guidance on gaming, but we're favorable to that guidance on sports. And really what we think is happening there is the gaming measures have not been so well adopted. And therefore, until we enter a phase of enforcement, all operators withdrawing the market, we think we're going to be the wrong side of guidance on gaming until that happens. On the sports side, though, we are comfortably ahead. And one of the main reasons for that is that whilst many of the sports restrictions are in place, so things like reduced markets, e-sports, bet In-Play market, no live streaming, KYC measures, that's all in play. The restriction around monthly wagering limits is not yet in play as that's subject to challenge. So there's a bit more to come in terms of regulatory impact on sports. But on the gaming side, we think there's benefit to come as enforcement steps up particularly if the new gaming cap lands on 1st of July. As expected, so overall, Germany, in line with expectations, albeit, as I say, gaming currently worse than sports. In terms of our view on the legal challenges, I mean we just have to wait and see. So as I understand it, there's 2 areas at the moment. One is the challenge around the level of the new gaming tax. And another is around the wagering limits on sports. And hopefully, we'll get a resolution on each of those in the coming months. Your other question, I think, was around the shape of digital growth, things like FTDs and reactivations. I can certainly share that, as I mentioned in the beginning, the growth was very much volume-driven. If we look at actives versus spend per head, around 3/4 of the growth was actives-driven. And if I just look at March, we had our best-ever month for FTDs in March and for actives in March. So the health of the business continues to be very strong.
The next question is from Kiranjot Grewal from Bank of America.
Okay. Just a couple of questions from me. Firstly, on Australia, could you potentially offer us more color on the performance? How did the performance start up there as the shops reopened? Could you give us some more detail around how much of your Online revenue came from the U.K. in Q1? And then could you potentially give us any updates on your thoughts on the Jan regulation development from here? I think we'd originally anticipated in H2, we might start to see some return of gaming. Has that changed at all, in your mind?
Thank you. I think that's 3 questions for you, Rob, Australia, shops opening, Online revenue, U.K. share and any update from Jan regulation?
Yes. Okay. Yes, let me take those. So Australia has continued to trade well during Q1. The level of growth we're seeing is broadly similar to what we achieved across the whole of 2020. And I know they had some challenges with some loss raising fixtures due to weather. But nonetheless, continue to be pleased with Australian results, some pressures over a year ago, obviously, out of COVID now, but nonetheless, lapping things like government stimulus last year. Will be interesting to see how that impacts the numbers, but we continue to be happy with the performance in Australia. U.K. mix, well, U.K. in Q1 grew at a similar level to the whole of Entain, so therefore, mix of U.K. unchanged, likely to be around a 35%, something like that. And German regulation, as I mentioned in the last question, we are optimistic around enforcement. We think that's a really important next phase. Whether it's by the sports gaming authorities or the tax authorities or payment service providers or content providers, there has become a point where the compliant operators start to see some benefit as those that are currently making hay walls and chimes either depart the market voluntarily or are instructed to do so. So that's really to be seen, and we hope to see some progress on that front over the second half of the year, but we'll just have to wait and see.
The next question is from Edward Donahue from One Investments.
A couple from my side, if possible. Just going back to Germany, if the tax allowed to be introduced, as an appeal is in process as of July, with regard to the comment you made earlier?
Rob, do you want to continue with Germany?
I can try. I mean my understanding is that we're working on the basis that the tax will come in on the 1st of July, and that will come in at the 5% level on turnover. So we're gearing our operation to be ready and fully compliant with those measures. Is there some risk that it doesn't come in? I would have thought unlikely, but we do expect it to come in, yes.
Right. And obviously, you probably don't want to say anything on BetMGM, so -- but it was more the phrasing with regard to, I think, you wanted to say ready to challenge for the #2 position for sports betting and iGaming across the U.S. It's -- does that imply a material change in battle approach?
No. So right now, we are waiting for the March numbers to come in, and it looks very encouraging. If you look to our February numbers and the last 3 months rolling, we have a very strong #1 position on iGaming. 3 months rolling on sport, it's also ticked up a little bit from January. So we're very encouraged that we are getting close to #2, but we'll have to see when we have all the March numbers. There has been some analysis out there that expect that we might hit the #2. So that's how you should interpret that statement.
Splendid. And my last question was, and excuse my ignorance here, but on the guidance for this year, that was including the football events and potentially the Olympics or not?
Yes.
Rob, do you want to comment on that?
Sure. Yes. So guidance really is based on everything that we expect the fixture program to look like for the year. So yes, it includes the Euros, as I should say though, the Olympics is a virtual nonevent from a betting perspective. It always has been, and I wouldn't expect it to be any different this time around.
Okay. And my last question, apologies, is just with regard to your commentary on the U.K. estate. How much of that is open? And just what does the restrictions in place at the moment imply?
Rob, can you take these?
Yes, let me. So all shops in England and Wales are open, which is the vast majority in the U.K. There's still a few hundred across Scotland and Northern Ireland not yet opened. The restrictions are more impactful on the sports side, something -- if you think that we can't screen live events and there's no furniture and customers are not allowed to stay beyond 15 minutes, the whole idea of these restrictions is to discourage dwell time. And that's what they do. So the -- we're only a few days in, of course, but sports has started slowly as we expected. Gaming on the other hand, even though 2 machines have to be turned off, so that there's sufficient gap between 2 machines that are on, but the gaming numbers have recovered really pleasingly, probably an element of pent-up demand there. So early days, but we're pleased with what we've seen so far. And hopefully, the restrictions will be lifted on 23rd of May in the U.K. and Wales. And the Scottish shops are due to open later this month.
The next question is from Joe Thomas from HSBC.
I was just wanting to ask a couple of things. One was on the margin, the sports gross win margin, which obviously remains strong, and it's been persistently strong. And I know you said, Rob, it's 1 to 2 percentage points ahead of where you'd expect it to be. But I mean there's been a lot of news around the starting price and so on. And I'm just wondering, to what extent you're starting to see a structural tailwind because of some of these things now, and so a little bit more visibility around that. Second thing was just on ARC and whether you could spell out the extent to which you're expecting it to be a drag on revenues and profits. And forgive me, but is that to be rolled out beyond the U.K.? So it's kind of -- it's an Entain-wide initiative? Or is it just focused in the U.K. at the moment? And then finally, I was going to -- spelling out the restrictions in retail. I have not had the joys of betting shops since lockdown has been lifted. But is the state running -- is it profitable at the moment under these restrictions?
Yes. Let me take the second one on ARC first, and then I'll hand over to Rob to speak about sports margins and retail. So ARC is a, you could say, it's an advanced program, and that's about the way that we go about player protection in general. So what we'll be doing now is we'll be trialing the program over the next couple of months. And then we expect to roll it out with a focus on U.K. and our U.K. brands during this year. But then certainly, it's an international program, so we'll be rolling out to other markets then thereafter. And listen, it's still early days. As I said, we're going to trial it now. So we don't expect this to have any material impact. What we did say in November, is that when we launched our sustainability charter, we would be looking at potentially a GBP 40 million EBITDA impact annualized, and half of that will be from closure of markets that are not regulating anytime soon, and the other GBP 20 million would be for various IT initiatives. But of course, when I look at ARC long term and our strategy here, this is really something that should drive quality of earnings. So if you're better at protecting your customers, if you can be proactive, making sure that you actually help them with a good way of using our products, that should turn into lifetime value and thereby quality of earnings. So -- but what we have in our models is the GBP 40 million we talked about last year, of which GBP 20 million relates to various IT initiatives on an annualized basis. Rob, do you want to talk about sports margins and a little bit more detail on retail opening?
Yes, happy to. So question specifically, are we benefiting from structural tailwinds, the answer there is no, we don't think so. There have been some changes into U.K. racing around things like the SP mechanics, you're right, but that's pretty minor in itself when you're just looking at U.K. and you're just looking at racing. When you aggregate across the whole group, it's immaterial. The main drivers, we think, of the elevated margins that we've seen during the COVID period, one has been favorable results, so just more volatility in the results and less favorites winning, and that typically favors the bookies. And the other is this concept of more retail-type betting in the online environment, so the sort of lower stake, higher multiple-type bet, that's higher margin. And that's, therefore, changing the mix of Online. Interestingly, if you look at the U.K. and Italy, where channel shift is at its greatest for us given we have such a strong retail presence, those are the territories where the margin increase has been higher. So we're pretty confident that, that retail-type mix of betting in the online environment is the driver of elevated margins. And therefore, as retail reopen and sports results normalize, we would expect margin to trend back to broadly where it was. There are some minor structural upside. You've mentioned one. There are several others, but generally speaking, we expect to moderate back to where we were. And to your question around retail profitability, the answer is, while we're trading with these restrictions, then no, it's not profitable. It's better than it would be if we were shut, so it's an improvement. But it's not profitable. In the U.K., breakeven or profitability is somewhere close to 80% of where we would otherwise be. So now we do have to get to that sort of level before the U.K. is profitable. You might remember last summer, we got back to within single digit, so well in excess of that threshold. And we fully expect to get well in excess of that threshold as well this time around. But right now, when we have these restrictions, then it's not profitable. Just for interest, the threshold for profitability then drops in Belgium and drops again in Italy as you move away from a fully owned model in the U.K. to a fully franchised model in Italy. So the threshold for profitability is much, much lower in Italy. But again, we do expect retail to get back to somewhere close to where it was pre-COVID, maybe 10% less, something like that, and that's highly profitable still.
[Operator Instructions] The next question is from Gavin Kelleher from Goodbody Capital Markets.
Just 1 for me and just following up from your answer, Rob, in relation to the U.K. and Italy. If you look at -- I think you noted that the U.K. growth was about 35% in Q1. Have you any kind of insight into how much of that growth was driven by retail closure? Given you've seen the margin benefits from retail-type betting or what you're seeing from your omnichannel-listed customers, do you have any sort of clue on how much of the 35% or thereabouts growth in the U.K. came because retail was closed?
Thank you, Gavin. Rob, you want to continue with comments on potential channel shift, retail to digital?
Yes. I can try. Gavi, it's a really tough question, though, and I wish I could give you something more precise. It is hard to measure. But we would guess at around 20% to 30% of what we would ordinarily expect to take in retail has found its way into our Online platform. So in aggregate, materially down, of course. And what does that equate to in terms of online boost, because it's not a million miles or 50-50, it's a similar sort of number in terms of benefits to Online. And of that uplift in Online roughly 20% to 30% benefit, it will be interesting to see where it settles back to, but we would expect there to be a degree of permanent channel shift or accelerated channel shift, if you like, as a result of COVID. So not all of that revenue will go back to retail in the U.K. We're broadly breakeven, therefore, from that perspective, maybe slightly adverse. But given that Entain globally is predominantly online, we're most definitely net beneficiaries of accelerated channel shift. I'm not sure that's as specific as you like, but yes, it is hard to measure the answer to the question you're asking.
No, that's helpful. And just on the ARC rollout, just so I'm clear, have you started to trial that with customers as far as that's starting now? And when will the mass market in the U.K., let's say, see the kind of ARC tools being implemented at a customer level? When will it be fully rolled out across the U.K.?
So for the ARC program, we are trialing it over the summer. And we're waiting for the results, but that will take a couple of months. And if the results are as we expect them to be, we will start rolling out over the U.K. brand after summer. And so this is something that will happen this year, and then we are looking to international markets thereafter. We have, as you know, rolled out our affordability checks starting, I think, in November, and they are now live across the 14 U.K. Online brands. And of course, ARC has some elements to that also in terms of, you could say, advancing our approach to our affordability checks also.
The next question is from Michael Mitchell from Davy.
Two, if I could. First of all, Rob, just to follow up on your comment from an earlier -- your answer to an earlier question in terms of record first-time depositors in March, I'd be interested in your view on why is that? I mean given the 12 months we've come through in terms of online activity, that was kind of a surprising comment to me. And for how long would you have to see kind of those levels of FTDs continuing before there's upside risk to your thoughts in terms of 2021 revenue growth for the Online division? That's the first question. And then second one, yes, if I go back to ARC again, please, and excuse me if say something about this wrongly, but do you have any sense of what the DCMS or the regulator thinks of ARC in terms of how comprehensive or rigorous it is? And I guess, an understanding really of kind of how far along the kind of pathway which creates more owners regulation or change regulation does bring you in terms of kind of addressing that.
Yes. Thanks, Michael. Good question. So let me start with a little bit more detail on ARC and DCMS and then hand you back to Rob for the FTDs. So listen, we continue to be encouraged by DCMS looking at this from an evidence-led approach because that's really what we need to do. As you know, the submission for the U.K. Gambling Act review closed at 31st of March. And at some point, we expect the submission to be made public. And we put ours in also with our recommendation, and that included a very thorough run-through of our approach to both affordability checks and to player protection really going from a reactive approach to proactive approach. So we're having ongoing discussions. And I think as the government and DCMS have said they want to take an evidence-led approach to this, I feel very encouraged by this. And I don't think this is really the way that the industry needs to move. And honestly, I think that U.K. has an opportunity to lead here globally. So to answer your questions, we are having good discussions. We are doing what we can to both explain what we can do and give examples of how this could work in the industry. Rob, do you want to comment a bit on the FTDs for March?
Yes, happy to. Michael, so FTD is very strong in March and really strong through Q1, just record March. And we're seeing strong FTDs pretty much everywhere, which is the really pleasing thing. So clearly, COVID, lockdowns, lack of alternative things to spend your leisure money on is continued main drivers of it. But if we look at a different territory, U.K. continue to be above average, and we suspect that's because of the strength of our retail brands, so an element of channel shift happening there. So when you get things like Cheltenham, for instance, in March, a lot of customer come out to bet on Cheltenham, but they can't do it in a retail environment this year. And hence, that helps FTDs as well. Plus the strength of the offering that we packaged up with Cheltenham, we think was particularly successful in the Ladbrokes brand. But we see strong FTDs everywhere. I look at Brazil, for instance, LATAM was one of the strongest performing areas. I read a stat that Brazil FTDs in March made up -- accounted for 1/4 of all the actives. That's phenomenal. And that's just a sign that Brazil just keeps going and keeps going, which is fantastic for us. Australia are seeing strength in FTDs right now, potentially thanks to the Mark Walberg-led campaign over there. There's no areas of weakness. So that leads you to think that the general environment, and COVID impact on retail is likely to be -- and lockdown and that lack of alternative things to spend money on, those are still likely to be the main drivers for strength in FTDs I suggest. And I think you also asked around guidance and whether this strength sort of lends us to a different conclusion for the outlook for the year? No, I don't think so. I think I did in my opening comments that whilst we're really pleased with our Q1 growth, we did expect Q1 to be strong. In absolute terms, revenue per day in Q1 is pretty similar to Q4, so a continuation, and we expected that. And of course, we all know, as we progress through the year, that we'll have headwinds in the online environment as lockdowns ease. And we've got some -- we'll have some -- we'll lose that margin halo effects that we were talking about earlier in the call and tough fixture programs to annualize against from the prior year, et cetera. So continued to be cautious about online trading as we move out of lockdowns but a strong start to the year, as we expected.
The next question is from James Rowland Clark from Barclays.
I know there's only been a few days of pubs and restaurants reopen and U.K. betting shops reopened. Do you have any stats or sort of color that you can share about online gambling activity in the last few days? Secondly, just on U.K. regulation, you said that you'd expect the DCMS to share their findings from the submissions soon. Do you have any timing that you can share with us on that? And then finally, just on ARC again, is that going to be rolled out to BetMGM as well as U.K. and the rest of the Online divisions?
Thank you. Let me start with U.K. and ARC, and then Rob can think about the last 2 days of retail opening. So on U.K. regulation, no, we don't have a date for that. I think it's in due course. And then we're expecting that there will be some sort of white paper coming out potentially in the autumn maybe by the end of the year. So any impact will likely be on legislation for next year. So I think probably before summer is the best we can -- or the closest we can get to that. On ARC I mean within U.S. is still -- it's still in early stages. We talk about it a lot and that fantastic momentum, but it's still early stages. States have different approaches to regulations here around age and around checks and so forth, so we'll have to see when and how that becomes relevant. So I think right now, the focus is really on U.K., which is the more mature market, and then our international market. And then as the U.S. mature, we'll look at what is the best approach here. And that will, as I said, likely also has to be on a state-by-state basis. Rob, any further color of the last 2 days of retail/digital to share?
While you were talking, I did have the chance to open up a U.K. digital report. And I can see the first 3 days of the week, we're slightly ahead of forecast. So there's nothing in the numbers that suggest it's been materially positive or negative versus expectations, so nothing that we've seen so far to draw any insights on, so sorry, James.
It's a big ask, but I guess what the forecast is presumably for a drop in online activity versus March.
Yes, but not materially so. So to say these are 3 days of trading, so I'm comfortable with what I'm seeing so far, but obviously, we'll be monitoring it closely in the weeks to come.
The next question is from Ivor Jones from Peel Hunt.
Can I ask you to talk about the countries that are getting organic investment and which are going to be important in these discussions in 12 months' time? You mentioned Brazil briefly, but Netherlands, other Latin American countries, what are the emerging markets that are going to pop up above the parapet? Secondly, I'm kind of looking for you to try and give me an easy soundbite to crystallize something very complicated. You said previously that responsibility measures are GBP 20 million of EBITDA drag. How will you want the outsiders to pick up the change in what the company is doing in terms of responsibility? Is it that we don't take spending over a certain level every month, we don't take spending until we've done a particular type of affordability check that demonstrates how responsible we are? How can we crystallize that into a way of describing a change in responsibility? And then the last thing, when we last spoke, I think you've said that the company had around GBP 60 million plus of aggregate government support. I guess that's gone up with another few months of the furlough scheme, and you were considering whether to repay it. Have those considerations reached a conclusion yet?
Thank you. Let me start off and then hand over to Rob. So in terms of countries and organic, I mean, there are several regions that we are looking at. You mentioned Brazil. Certainly, LATAM is a focus area for us. Brazil is very encouraging. We're waiting here for the next step from legislation. We are already #1 in the market. So we are following this closely. We took a license in Colombia. That's another interesting market for us, certainly not as big as Brazil, which we expect to be similar to any U.S. state, Colombia is much smaller, but it's also part of a very exciting region here. And there are other markets in LATAM where we are expecting progress. Then, of course, we closed our Enlabs acquisition, which will see us into the Baltic states or seeing us into the Baltic states, which are seeing high-growth there. They have opportunities also to relaunch in Sweden and potentially further into the Nordics. So that's another area. And then of course, you have the different countries that are in some sort of regulatory process that we are looking at. So Enlabs, we're also looking at potentially new Russia-speaking markets. So certainly, many opportunities where we have launched or are gearing up and expecting regulation to happen very soon. Canada, we also mentioned when we spoke about -- when you spoke to the full year results early on, and here we are in close contact with the regulators in the Ontario region. So many new organic growth areas for us to look at throughout the year and into 2022. In terms of the responsibility measures, I mean we haven't been specific. And as I said, for example, with the affordability checks and putting up on top of that, which is really a personalized approach to it, this is very early days. We're trialing it now. So in terms of how that would play out and if we can split it up, we don't really have any insight to that as of yet. So what we've said is that the GBP 40 million that we talked about in November, the way that we approach this is around 50-50. So GBP 20 million is around closure of markets that are not regulating, and the other GBP 20 million is really a pool of the different RG measures. I don't know. I'll hand you over to Rob now on. And Rob, of course, if you have other comments to how to treat the 20 million RG's pool.
No, nothing further for me to add on that. And on furlough, the Board continued to keep the situation under review. The virus is improving, of course, but it's still with us, so no update on that, no conclusion is reached.
The next question is from Edward Donahue from One Investments.
Apologies, back in. Just with regard to comments you made with regard to the submission on the U.K. regulatory dialogue. Is it a fully joined up approach from the industry? You were talking very much we, as in reference to Entain. Is there any divergence with regard to the industry per se?
So on the gambling active view in the industry, we have an industry body, CCT, where we work together on -- sorry, DTC, where we work together on different approaches both to affordability, sponsorships and so forth. And we are coming together on a number of these areas. I think most of us also agree that a cap approach to this, so a one fit all model, is certainly not the best way forward. So we have a number of areas where we are cooperating and bringing one message to the regulator. But I mean, obviously, the different companies also have different areas that they focus very much on. So there are some consequences here. But we are trying to coordinate, and we are trying to bring, you could say, coordinated approaches to the DCMS where it's possible.
Okay. And the last question, I promise, is just back to the U.S. Since you last talked, the new administration has actually passed another stimulus bill, which actually sees a significant amount being paid to state treasuries. Has that changed in any way the level of dialogue or the pace of potential opening of some of those states? As they've had a level of funding that towards the end of last year certainly wasn't expected?
So that's a state-by-state approach. I think in most states, they are certainly looking to see how they can improve their budgets. So I think there is, you can say, a move that we need for funding is something that the legislators take into account when they're also looking at the different bills. But I should say that, for example, in Texas, they have the flooding, so now it looks like in Texas, there will be a little bit of a delay as they are focused on, say, making sure that the budget and the bills that are approved there are really dosing to those types of areas. But I would say, in general, though, the process is ongoing in many states, and we're seeing those being put forward as part of the budget processes.
The next question is from Richard Stuber from Numis.
Just one question from me. Obviously, very strong online growth this quarter and also for the last sort of 5 years. Do you have any sort of comments on the reliability of the Tax Act across the group or in particular markets, whether it's also held as expected? And secondly, so I guess in terms of operating leverage on Online and how we think about it, are there any sort of step-up investments in the lights of customer services as people move online or is just largely automated now, and therefore, your platforms are so far -- is highly scalable?
Yes. And we had a very good proof point on our tech stack with the Grand National because this is really the first time where we had let books and call on, say, the Entain platform for that big an event. And it held out beautifully, it was very, very strong. We had no issues there, and the performance was very good, where I saw in the press that some of our competitors had some challenges with the performance. Uptimes are good. We can take even further transactions and so forth. So certainly very encouraged with the migration that I think was finalized here before summer, and we're now seeing the benefits of that. And then you asked about operational leverage. Was that also pertaining to the tech platform or...
Yes. I guess just Online generally, I guess, a small marginal increase in top line in Online, basically down to the earnings line. But as [indiscernible] see any changes in operating leverage guidance, I guess, is the question.
You were breaking up a little bit at my end. Rob, I don't know if you want to take a shot at that on operational leverage on the Online business, if you could hear the question.
Yes, I think I heard enough first time around. We just lost you second time around there, Richard. So the answer is, yes, absolutely, we continue to invest in our tech stack. It's our crown jewel, so don't expect OpEx to decrease. But OpEx is not going to increase at the same rate as contribution, we don't think. And therefore, we do get positive operating leverage and EBITDA margin accretion as a result. When it comes to investment in technology, part of it's about things like innovation, making sure that we're consistently at the forefront and preserving our future relevance and pursuing the opportunities. And part of it is also around ARC. You've heard a lot of more -- talked this morning around the importance of ARC and what we want to do with that not just for Entain's benefit but for the industry's benefit. And that requires investment as well. But by the same token, we also -- I touched on it last autumn. We also see further opportunities for efficiencies particularly within technology as we sort of conclude the synergy program from the Ladbrokes Coral acquisition. And we move into the next phase of sort of synergistic and efficiency opportunities, which will help fund investment into things like innovation and ARC. So I think the key point is, whilst we will always invest in our technology stack and grow our capabilities, I wouldn't expect cost growth to inflate at the same level as our contribution. And hence, we have a positive model from an operating leverage perspective.
Thank you. There are no further questions, so I will hand back to Jette for closing comments.
Okay. And thank you all for dialing in and listening in this morning. As you've heard, Entain continues to go from strength to strength. There's excellent momentum in both our core business and the U.S. through BetMGM. So pillar for growth from new markets also continue to progress, and we have an exciting future ahead of us. By now, most of you don't need reminding that the BetMGM business update is next week on the 21st of April, which will provide more color and details around our success in the U.S. And meanwhile, if you have any other questions, do get in touch with David and the IR team. Thank you, and goodbye.
Thank you. This now concludes today's call. You may disconnect your lines.