The Kindred Group is taking “necessary and decisive” actions to exit its positions in North American markets by the end of Q2 2024.
Kindred owns 11 online gambling brands worldwide, including Unibet, which operates an online sports betting app in Virginia, Arizona, New Jersey, Pennsylvania, Washington State and Ontario. It expects to fully exit operations in all states, including Virginia, by the middle of next year, as long as regulatory processes permit.
Results never came in Virginia for Unibet
Unibet was the seventh sportsbook to go live in the Commonwealth, doing so on April 28, 2021.
In some senses, it never had a chance to compete with giants like DraftKings Virginia, FanDuel Virginia, and BetMGM Virginia, which opened three months earlier and had already established greater brand recognition.
The Virginia Lottery does not announce individual operators’ sports betting revenue figures, meaning we can’t know for sure how much Virginia contributed to these losses.
However, Virginia sportsbooks set a record for handle in October with $571.4 million wagered, following a $520.3 million handle. September’s handle grew by 26% year-over-year and was eighth-best among legal US markets.
By all accounts, Unibet failed to keep up with this growth. Other states’ performances confirm this claim, too.
- Pennsylvania – Unibet’s $7.7 million handle In October was only 0.9% of the state’s $829 million total.
- Indiana: Unibet accepted less than $687K of the state’s $429 million in October wagers (0.16% market share).
- Arizona: September’s $605.2 million handle was Arizona’s best on start to a football season record, but Unibet accounted for less than $600,000 of all wagers or only 0.09% of the market share.
A year ago, Kindred pulled Unibet out of the Iowa market after underperforming. It also decided against attempting to compete in Illinois and Ohio, two top-five US markets.
Efforts better spent elsewhere
Virginia online sports betting has been live for nearly three years, and it’s quickly reaching maturity. In business, maturity is the third stage of four in an industry’s life cycle, following introduction and growth.
It represents a time when the market consolidates, effectively serving to correct it after the excitement of launching wears off. During this time, the competition increases, which drives out the weaker competitors.
Kindred saw the writing on the wall with Unibet’s uphill battle to stay competitive in US sports betting markets. Meanwhile, the brand remains a top brand in over 100 countries and is just one of the many online gambling brands within Kindred’s portfolio.
So, it decided officially on November 29 to “accelerate profitable growth,” starting with its removal from North American markets. The Q3 report said:
“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.”
Why chase losses in North America when you can focus on winning elsewhere?
Growth and cost reduction initiatives
The Kindred Group’s report continued that sustained North American losses put pressure on its overall profitability. By exiting, it can focus its resources on its “core market footprint,” namely in Western European and Nordic countries, which combine for 86% of its gross winnings revenue (GWR).
Looking ahead, Kindred will implement growth initiatives in its select markets. Plans include reallocating financial and tech resources, growing its hyper-local casino brands and creating new content to differentiate itself.
Similarly, its exit from North American markets comes with cost reduction initiatives. The company expects to lay off more than 300 employees and says it will save GBP 40 million – or $50 million – annually.
“The cost reduction actions announced today are both necessary and decisive. While it is never a desire to inform valued colleagues of redundancies, this puts us in a stronger position to secure long-term growth for Kindred across our locally regulated core markets. We can now focus our resources and tech capacity towards strategic initiatives and selected markets where we see clear potential to grow our market share,” said Nils Andén, interim CEO of Kindred Group.