Unibet Shuts Down its Operations in North America
Kindred, the parent company of Unibet, has become the latest sports betting company to announce its exit from the US and Canadian markets. The company made this known in its interim report for the third quarter of 2023.
Plans for the shutdown of North American operations for Kindred are underway and are scheduled for completion by the end of Q2 2024. In addition, the company will be cutting 300 jobs as it intends to save over $50 million annually, starting from 2024.
Consequently, Unibet will no longer be operative in the six markets where it previously provided sports betting services. These states are Arizona, Indiana, New Jersey, Pennsylvania, Virginia, and Ontario in Canada.
Strategic Review Earlier in the Year Triggered Business Closure
There had been signs of a potential exit from Kindred. About a year ago, the company announced that it would be taking a different approach to the US market come 2023. Among its proposed business strategy was pulling out of its sportsbook operations in the US to focus on states that offered online casino gaming by the side.
In January, Kindred informed investors that it would reduce its marketing efforts until it launched an upgraded betting platform in its market. Although Henrik Tjärnström, the then-CEO announced that the launch would happen “in the coming weeks,” there would be no launch until several months after the disclosure.
The platform eventually went live in New Jersey and Pennsylvania in May and July, respectively. For most spectators, this series of events indicated that Kindred was facing serious business challenges.
Later on in April this year, Kindred announced that it would be undergoing a strategic review. It further revealed that the review will consider the prospects of selling part or all of the company.
In an unexpected turn of events, the report of the review suggested that pulling the plug on North American operations would be the company’s best option.
“The long-term outlook for Kindred in North America has changed since entry. The competitive nature of the market means significant resource is needed to close the gap to market leaders and at our current capacity this is untenable,” the report concluded.
Despite efforts to improve and optimize business operations, including launching its new platform, Kindred continued to face considerable losses. The company also failed to meet most of its targets as its prevailing situation affected profitability.
Investors Short Company on Stock Market After News
When investors got a whiff of Kindred’s plan to exit the US, they sold their shares. The stock exchange in Stockholm closed at 88.92 Swedish Krona, approximately US$8.49 and 4.18% lower than 13 times its average daily volume.
However, this was not the only loss that the company has suffered in recent times. Kindred experienced a fall of 11% in its gross winnings revenue in Q3 2023 compared to the previous year. Its marketing expenditure also dropped by 19% in the same quarter relative to 2022.
Kindred revealed that the marketing spend “undoubtedly contributed to lower revenues.” Nevertheless, its earnings before interest, taxes, depreciation, and amortization (EBITDA) loss increased due to the “measured approach to investment levels and reducing losses in the market.”
The company further predicts that its cash flow will take a hit in the fourth quarter of 2023 and later in 2024. Therefore, an exit from the North American market is the best decision for long-term profitability.
Kindred has begun taking steps to ensure a smooth shutdown of its US operations. Among others, it recently paid $5 million to pull out of a sports betting access agreement with Penn Entertainment in Ohio.
Head of Sports Betting and DFS
Matt’s love for sports betting and daily fantasy sports, coupled with a deep understanding of football, hockey, and baseball, shapes his innovative thoughts on Hello Rookie. He has a B.S. in Aeronautical Computer Science and a M.S. in Project Management.