Kindred to pivot to multi-brand prioritization US strategy amid Iowa exit
Unibet sportsbook operator admits delays in obtaining New Jersey platform technology certification but suggests Q1 2023 launch date
Kindred Group will exit the Iowa market to refocus its efforts on pursuing states only where it can operate a multi-brand approach, the operator has confirmed.
The Hawkeye State exit will take place in Q4 2022, with Kindred looking to markets which allow both online casino and sports betting.
It will reduce the number of operational markets for Kindred in the North American market to seven, inclusive of New Jersey, Pennsylvania, Indiana, Virginia, Arizona and Ontario (Canada).
Kindred will launch in Washington State in Q1 2023, following the groups’ partnership with the Swinomish Tribe, which was revealed earlier this week.
The pivot comes amid rising expenditure in the US market, as revealed during the firm’s Q3 2022 report, with Kindred confirming gross winnings revenue (GWR) of just £277.8m, down 5.63% from the £298.4m achieved in Q3 2021.
In the US, GWR rose from £6.8m to £7.8m, however cost of sales, marketing and administration expenditure all slipped into negative figures for the Q3 period.
Consequently, Kindred reported an EBITDA loss of £9.8m arising directly from its US operations.
Despite the negative impact of the Iowa exit, Kindred CEO Henrik Tjärnström reaffirmed his confidence in the “important long-term growth opportunity” that is the US market.
“We have been working from a position in investment across our state footprint, and what we’ve been saying all along is that it will take a few years to get to profitability in the US,” Tjärnström said.
“We, of course, have regrouped and refocused our efforts during the last 18 months to really focus on our multi-product states but we’re still in the investment phase also across those ones,” he added.
Tjärnström confirmed Kindred’s expectations that the US market would be contribution negative for the firm in 2022 due to the investment, but suggested that from 2023 onwards “gradual improvements” would be made.
As revealed at the firm’s capital markets day, Kindred has said it hopes to be EBITDA contribution positive or near to breakeven across its entire US footprint by 2026, something reiterated by its CEO.
“We’re very confident that this is a good investment still for the longer term, and we know exactly what we need to put in place and we are doing that,” Tjärnström said.
“We see already now with the existing setup some positive signs of developments, and we’re expecting those to become more visible over the coming quarters already,” he added.
One area where Kindred’s investments are currently being utilized is New Jersey, where the firm is currently plotting the launch of its own proprietary technology platform, as well as obtaining a license to operate in the Garden State.
New Jersey is seen by many as the ‘gold standard’ for US igaming regulation, serving as an important barometer for the suitability of an operator to conduct the vertical in other states.
Kindred initially submitted the new platform for certification by the Department of Gaming Enforcement (DGE) in June with an expectation to launch during Q3 2022, however Tjärnström admitted the firm was encountering delays and had been “ambitious” with its timetable.
The Kindred CEO cited delays in working with the DGE as well as other partners and stakeholders in the lead up to going live as requiring the most effort in the process.
“Unfortunately, we could not put that in place for the third quarter, but it’s progressing. We’re confident that we can do it in the next couple of months, but of course as we’re nearing Christmas, it could well run into the New Year as well, but that’s the timeline we’re working towards right now,” Tjärnström explained.
“As soon as we get that clarification, we’re expecting to go live in the early part of next year, that’s the latest we expect right now. At the same time, we’re working in parallel with the second state [Washington] launch, and that’s not impacted by the first one in a sense.”
He continued: “We have the hardware installed and the platform is sort of there, but its not possible to switch it on just yet.
“We are optimistic that this will give us better opportunities in the market where we can provide the local team with the backing of the full group, and also more significantly improved tools and aspects of running the business as well,” Tjärnström added.