The owner of the Unibet online sportsbook is bidding goodbye to North America after taking a long look at its gaming operations.
Stockholm-based Kindred Group PLC announced Wednesday that it is withdrawing from Canada and the United States and plans to have fully exited the markets there by the end of the second quarter of 2024, pending regulatory approvals.
Kindred also said it intends to cut more than 300 jobs and consultant positions next year that, coupled with other expense reductions, is expected to create annualized cost savings of around $50 million.
“The re-allocation of financial and tech resources towards existing core markets will improve ability to capitalise on core market potential and gain market share,” the company said in a press release.
Unibet-owner Kindred Group announced today that it plans to exit the U.S. and Canada by the end of the second quarter of 2024, pending regulatory approvals. Kindred is also slashing more than 300 jobs and consultant positions next year. https://t.co/Kwu8guncvZ pic.twitter.com/9vrUhXpwyf— Geoff Zochodne (@GeoffZochodne) November 29, 2023
Kindred added that the moves would let it embark on “growth initiatives” in those core markets, such as “additional brand extensions of hyper local casino brands” and reallocating marketing spending toward more promising places.
Wednesday’s exit announcement and planned job cuts are a product of a strategic review Kindred announced in April, which is aimed at boosting value for its shareholders. The company’s stock price is down more than 20% this year on the Nasdaq Stockholm exchange.
The strategic review launched by Kindred’s board of directors is ongoing, according to the company. Interim CEO Nils Andén suggested in a press release on Wednesday that a sale of the company could even be a possibility, noting the board “currently believes that shareholder value will be maximised through a third-party transaction.”
Kindred reported third-quarter earnings on Wednesday that showed profit after tax fell to around $16 million during the three months ended Sept. 30, compared to approximately $73 million a year earlier.
“During the third quarter, we experienced continued growth in our casino segment and strengthening positions in the key Netherlands and UK markets,” Andén said in Kindred’s quarterly report. “However, this growth was tempered by ongoing regulatory challenges in select core markets and an impacted sportsbook performance.”
Not much market share
The decision to withdraw from North America also comes as Kindred’s Unibet brand has failed to take off with consumers in Canada and the U.S.
Unibet is present in a handful of U.S. states with legal sports betting and the Canadian province of Ontario, but its market share in those places is in the low single digits, if even that. In Pennsylvania, for instance, Unibet captured 0.8% of gross sports betting revenue during October, according to Vixio GamblingCompliance Data.
Kindred reported Wednesday that its gross winnings revenue from the North American market was around $8 million for the third quarter, down 11% compared to a year earlier. The company added that earnings before interest, taxes, depreciation, and amortization from North America were approximately negative $8.6 million during the quarter.
"The long-term outlook for Kindred in North America has changed since entry," the firm noted. "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. Despite optimisation efforts in recent quarters, continued losses from our North American operations place pressure on Group profitability and targets."