Kindred Group looks to slow and steady progress amid “crowded” US market

Kindred Group has committed to a two-year program of investment aimed at bringing its fledgling US operations back into profits after 2024.

In the Stockholm-listed operator’s Q4 2021 financial results, Kindred reported gross winnings revenue of just £6.2m, down 22% year on year from Q4 2020’s £7.9m figure.

As an explanation for the 22% decline, Kindred cited the normalisation of the US operational environment after the Covid-19 pandemic and what it referred to as “tough competition” in its active US states.

Kindred’s cost of sales, marketing, and administration expenditure from the US market all generated negative figures in the last quarter of 2021, leading to the firm reporting a negative EBITDA contribution of £9.3m from the US.

Kindred also revealed that a conscious decision was made during Q4 to scale back on large bonus offers to US customers, instead of looking at fine-tuning the offering.

“Kindred continues to adopt a measured approach to marketing by not providing unsustainable customer incentives, allowing the group to continue to work on the fundamentals and scale up once we have our product offering and brand in place,” the firm wrote in its full year 2021 report.

“North America remains our most important growth market and we are expanding according to plan.

“While competition in the US remains tough, we can see the strength and quality of our diversified product mix in states that offer both sports betting and casino,” it added.

Elaborating on this in an interview with EGR, Kindred CEO Henrik Tjärnström pinpointed the US as a future growth market but suggested the firm would not look for rapid growth.

Instead, the Kindred Group CEO highlighted 2022 and 2023 as a period of significant investment in the US market, aimed at delivering profits by 2024.

“We are used to being smaller players in a crowded market,” Tjärnström told EGR. “We are treating North America like we did when we entered the already well-established UK market in 2012.

“We are not looking for fast expansion, instead focusing on building a strong position.

“Through acquisitions we have access to a strong portfolio, and we can now focus on improving the experience for customers. We are confident that will pay dividends down the line,” he added.

A central pivot of the longer-term growth strategy in the US is Kindred’s transition to an in-house-developed proprietary technology platform, a process which will begin in Q1 2022, with a launch pigeonholed in the key New Jersey market during Q3 2022.

The in-house sportsbook operation will align with the Kindred Racing Platform (KRP) – the group’s racing offering which is already developed internally. A new marketing strategy has also been developed to further highlight this new platform to players.

“We have been working on our proprietary platform for a long time and see huge opportunities in terms of customer experience, marketing and customer data analysis, product integration, and cost efficiencies, as well as safer gambling improvements,” Kindred said.

“Once we have launched the platform in New Jersey, other states will follow,” the firm added.

One casualty of this transition is Kambi, which has provided proprietary sports betting to Kindred since its earliest days as a Kindred subsidiary.

Kambi, which was spun-off from the main Kindred business as a separate entity in 2014, has signed a partnership deal with its former parent company until 2026, at which point Kindred will fully transition to in-house proprietary tech.

The client loss is Kambi’s second major loss in the space of six months following Penn National Gaming’s announcement that it would transition to its own in-house proprietary tech platform in September.

Elsewhere, Kindred has revealed its ambition to expand into the soon-to-launch Ontario igaming and sports betting market, having submitted an application for a local license in November for its Unibet brand.