Q&A: Kindred Group's CEO on Dutch travails and KSP's staggered rollout

Having been made permanent CEO of Kindred Group in February 2024, the subsequent few months has been an especially busy period for Nils Andén and the Swedish operator – from the shutting down of the North American arm to regulatory headwinds in key European markets. Then there’s the small matter of Kindred being acquired by Française des Jeux after the French online giant tabled a £2.1bn public tender offer earlier in the year.   

Yesterday, 24 July, the Unibet and 32Red parent company revealed during its Q2 results presentation that Euro 2024 inspired Kindred’s highest tournament revenue ever (£183.6m in turnover), alongside a 7% year-on-year (YoY) rise in overall revenue to £327.6m and a 32% increase in underlying EBITDA to £73.6m.

It was also a notably positive performance for Kindred’s locally regulated markets, while the Western Europe segment’s gross winnings revenue (GWR) was up 16% driven by gains in the Netherlands, Belgium and France. Indeed, GWR in France surged 41% YoY as Kindred’s Unibet capitalised on increased sports betting activity.

Speaking to EGR, Andén dismissed concerns over a potential ban on both slots and gambling advertising in the Netherlands and was equally relaxed when it comes to affordability checks soon to be implemented in the UK.

EGR: Firstly, it was another strong quarter for Kindred, how are you feeling?

Nils Andén (NA): Very good. I think it was a good quarter for Kindred. Of course, it was really nice to see that we’re growing revenue, and even maybe more pleasing that we see an even stronger growth on our underlying EBITDA, with 32% growth compared to last year. That’s very good. We’re very pleased with the performance this year to date.

EGR: Active customers were up 12%, so what do you attribute that increase to? Purely, the football?

NA: We had the Euros for the last two weeks of the quarter. It is fairly normal to see an uptick, particularly in actives during the big championships. We’ve seen similar trends when we had the World Cup two years ago and previous Euros.

But I think it’s also important to remember that was a strong quarter for us actually leading up to the Euros as well. I think a combination of a strong end to the big football seasons and then, of course, the Euros drives a lot of activity.

EGR: While Western Europe performed particular well for Kindred, how concerned are you about a possible ban on slots and all advertising in the Netherlands – a market where Unibet is the leader? Likewise, the coalition government’s plans to hike GGR tax from 30.5% to 37.8% from 2025?

NA: Yeah, the Netherlands, there’s lots of things happening, as you mentioned. We are in favour of a sensible and robust licensing regime. We are doing all the preparations we can to be ready for when the new affordability limits [€700 a month thresholds for over 24s and €300 a month for those aged 18 to 24]  come into force on 1 October now know what they are, and we know what we operationally need to do to be able to manage that.

I think we’re fairly confident, being a market leader in the Netherlands, that we can continue to build a market-leading position. But of course, there’s a change to the underlying and operational conditions in the market.

As for the tax increase, we are yet to see the confirmation of what that will look like. We will know once the new government’s budget is proposed, which is I think later in Q3 but there’s always a risk with this.

Our concern here is any leakage to the black market in the Netherlands, as the licensed operators continue to try to operate a competitive offering as possible. But we are pleased with performance so far in Netherlands, and we’re quite confident that we can continue to build on our position there.

EGR: In Q1, Kindred outlined plans to exit North America by the end of Q2. Is that still the case?

NA: Yes, the North American exit is now, sort of, operationally completed, so we don’t take any more bets. There’s, of course, a little bit of a tidy up to do in terms of making sure all customers get their money back if they haven’t withdrawn them, but operationally we have now fully exited from North America.

EGR: What does leaving North America mean for the business in terms of freeing up capital and resources to use elsewhere?

NA: There were two key reasons for us to exit North America. One was that we needed to free up resources to really be able to focus on our other core markets. I think we’ve seen this year what the effect of that is; we’re now starting to see some really good growth, particularly in our locally regulated markets where we are putting the majority of the focus.

The other reason was we saw that the path to profitability was very long in North America as a smaller operator, with the operating conditions and the investment levels in that market. I’m very pleased to see that we are able to utilise both resources, but also capital in our other markets and see good returns on it.

EGR: Last quarter, the Kindred Sportsbook Platform (KSP) launched in a test market capacity. Do you have any update on how it fared in Q2?

NA: We’ve actually gone live in a couple of test markets now, prior to the Euros, and we’re very pleased with development so far. We’re progressing pretty much bang on all our timelines for the longer rollout. We plan to roll out KSP across all our markets, but it’s a phased roll out, so it’s going to take a few more years in until we’re rolled out.

But we’re very happy that the project is progressing exactly to plan, and we’ve had some positive customer feedback. Most importantly, the sportsbook platform is functioning as we want it to function from a performance perspective.

EGR: What have you learned in terms of what does and doesn’t work with KSP?

NA: I think it is maybe a little bit too early to draw big conclusions from that, but I think the overall logic behind KSP still remains true. We see that we get an increased flexibility in terms of how we can price markets. It’s definitely differentiated, not only the product offering, but the totality of the customer experience, in the sense that we have built that into our rewards tools and into our customer journeys to a much larger degree than we’re able to with a third party.

EGR: Next month, the first round of UK affordability checks will be implemented, so how much of an impact do you expect that to have at Kindred and do you have any plans to minimise the effect before deposit limits are further reduced early next year?

NA: In the UK, we are eagerly awaiting the implementation of the white paper. I think we are all waiting a little bit to see what the new government says. We are very comfortable with our position in terms of the affordability limits that we already have in place. I don’t foresee any changes to that once the white paper gets fully implemented.

I think it was good to see that industry code was agreed with the Gambling Commission, and I think it’s a step forward for the market, but we do want to see the white paper fully implemented as well. From our perspective, we have no major concerns with what is outlined. We have already adopted the majority of those changes that the white paper entails.

EGR: Your revenue from high-risk players decreased to 3% in Q2, the lowest that metric has been recorded since this data was first published in Q1 2020. How difficult is it to get this percentage below 3% and is ‘zero’ truly ever achievable?

NA: I think with the way we measure it today, zero is probably a very, very tough number to get to, given that we constantly get new customers, and it takes a little bit of time to build up a risk profile on those customers. We try to do it as early as possible, but I think operationally, we know we have more we can do.

We can continue to invest in collaboration with researchers to really find out what works. We have, over the last couple of years, really worked hard to ensure that the control tools are visible and, most importantly, very well understood by our consumers, which increases the effectiveness. I think that is a journey, so I would definitely not be surprised if we can get it to below 3%. But 0%, I think with the way we measure, this is mathematically impossible.

EGR: What are the core focus areas at Kindred for the remainder of 2024 and what challenges do you anticipate?

NA: We have set out a clear strategy. We want to grow our locally regulated market, in particular. We want to grow everywhere we operate, but the core focus is really around our locally regulated markets and continuing to excel and take market share in those. That is the core focus, together with continuing the rollout of KSP and reaping the benefits of that, both operationally but also from a revenue perspective.

We are also continuing to look at more hyper-local brands, we’ll see if anything happens this year, but that is part of the overall strategic focus for us. We saw marketing investments have been sort of flat-ish, but we’re fairly happy with that, because we have reallocated a lot of our marketing investments where we see the best growth opportunities, and I think we see the effect of that.

In terms of challenges, the regulatory environment in Europe continues to be challenging, and there are and can be surprises around that. We try to mitigate that as best as possible with the fairly widespread markets we operate in, but I think that this continues to be one of the core challenges for this industry.