Smarkets in temporary “pause” to US expansion plans
London-headquartered betting exchange and sportsbook operator suspends US market plans pending return with a “better and stronger” product
Smarkets CEO Jason Trost has confirmed the decision to “temporarily pause” expansion of the business further into the US market, pending a potential return next year.
Making the admission as part of the firm’s UK Companies House Annual Report and Account filing, Trost acknowledged the progress made in launching the SBK sportsbook in Indiana, but suggested a halt was necessary while the business dealt with international issues.
“While we acknowledge the challenges encountered in our international expansion during 2022, we have made the decision to temporarily pause our US expansion. However, this is not a goodbye to the American market,” Trost wrote in his notes accompanying the report.
“We are committed to reengaging with better and stronger product, and we remain optimistic about the opportunities it [the US market] holds. Our focus for 2023 will be narrower and centred on product development,” he added.
Trost’s comments regarding product echo those made in September 2022, when the Smarkets CEO moved to criticize the operator’s marketing blitz in the US market, suggesting that product would be the defining factor in any US success.
Smarkets is currently live in Colorado having concluded its first US market-access deal with Full House resorts in 2020, later launching in Indiana in April 2022, and with plans to launch in Iowa.
The business named its first US general manager, Sheldon Hanai, in June 2022, pledging to open a US hub in Washington, DC in July to aid its US expansion. The status of these plans remains unknown.
Founded in 2008 by American Trost, the privately owned business, headquartered in London, undertook a strategic review in Q4 2022, resulting in 22 employees being made redundant in January across the firm’s London, Malta, and Los Angeles offices.
In its 2022 annual report, Smarkets reported revenue of £18m ($21.8m) for 2022, a fall of 11% year on year (YOY) from the £20.2m generated in 2021.
The firm’s losses before tax amounted to £17.7m ($21.5m) in 2022, down 6.5% from 2021, with Smarkets’ gross profits slumping 29% to £9m ($10.9m).
Smarkets’ cost of sales increased 21% YOY to just over £9m during 2022, however administrative costs fell to £27m over the same period. In addition, customer funds on deposits also decreased by double-digits in percentage terms, falling 18% YOY to £24.8m.
The business is also facing a potential tax bill of £12.8m for historical additional taxes unpaid between 2012 and 2017. link
“The economic conditions of 2022 necessitated a thorough review of our operations, leading to a significant cost-cutting exercise in Q4,” Trost detailed in his remarks.
“Unfortunately, this resulted in the loss of talented individuals as we sought more efficient ways to operate and reduce costs. Our efforts in cost reduction, coupled with revenue increases, have transformed us into a leaner organization and put us on a clear path towards profitability.”
The Smarkets CEO continued: “Although the past year was filled with obstacles, I am immensely proud of the company’s continued productivity and the efficiencies we have achieved.
“Our commitment to fixing the betting industry remains steadfast, and while the journey has been challenging, it has also been a remarkable turnaround to reach the point where we stand today,” he added.