The owner of Betway says it had a “smooth” transition into the regulated market for online sports betting in Ontario and that it is aiming for the same soon with its internet casino brand.
Guernsey-headquartered Super Group reported on Thursday that second-quarter revenue fell to €320.8 million, compared to €355.2 million in the same period last year, representing a 10% decline.
Adjusted profit before depreciation, amortization, financial income, financial expense, and income tax expenses for Super Group, the holding company for online sportsbook Betway and online casino Spin, fell 30% for the three months ended June 30, to €63.6 million.
But there was also some positive news for Super Group. Monthly average customers increased by 3% to 2.7 million during the second quarter of 2022, from 2.6 million in the second quarter of 2021.
Super Group was able to hang on to customers in Ontario as well, where it was previously a “grey market” operator before officially becoming regulated and relaunching Betway in the province on August 1.
"We kept a smooth Ontario license process with the transition of Betway into the regulated regime with Spin to follow next week,” Super Group CEO Neal Menashe said Thursday during a conference call for analysts and investors.
Sports betting delivers
Despite the mildly disappointing results, Menashe chose to emphasize the company's global model strategy, strong cash position, and expected increased revenues now that its flagship brands are rolling out in Ontario after regulatory delays.
"Canada is our largest sportsbook market,” he said after the release of the second-quarter results. “We saw good growth in key markets such as Africa and Asia Pacific [and] our sports betting continued to deliver positive growth."
In response to an analyst's question, Menashe revealed that initial Ontario handle figures from Betway were encouraging.
"[Results from] Betway in the last seven to eight days [are] in line with our expectations,” he said. “So Spin's going next week [and] we've learned a lot from Betway...[which] we can implement."
Betway had been one of the largest operators in the so-called “grey market” for gaming in Ontario before transitioning into the regulated market for online sports betting in the province.
Menashe, a native of South Africa who now lives in London, was also confident that expanding operations and adding new customers in Ontario would not involve any drain on company finances the way major sportsbooks' balance sheets have remained in the red due to massive advertising and promotional campaigns.
"Given the regulatory restrictions of public advertising of bonuses in Ontario, we don't expect to see the same level of unsustainable price competition that happened in the United States,” Menashe said during Thursday’s conference call. “We remain confident from past experience that regulation will be favorable for us in the medium and long run, and we hope to see regulation introduced to Canada's other provinces in due course. In the meantime, we will continue to trade as before, and we expect that Canada will continue to underpin our 20-year track record of consistent profitability and cash generation."
Taking global aim
Like almost every other sportsbook CEO who has reflected on the impact of the current inflationary climate on earnings, Super Group's Menashe was cautiously optimistic about the future outlook.
"Despite the impact of the normalization of entertainment spending patterns post-COVID and the current headwind effects of general economic uncertainty on discretionary spending...Super Group's balance sheet remains strong,” he said during Thursday’s call.
What’s more, in February of this year, Betway announced that it had entered into a major brand licensing agreement with DGC to launch sportsbook operations in the U.S. This will see Betway eventually go live in ten states as it gains regulatory approval.
"DGC will be a tremendous addition to Super Group in the U.S. market,” Menashe said.,
In his closing remarks to industry analysts, the Super Group boss expressed confidence in his company's conservative business model, which has seen it carry no debt and undertake selection acquisitions as a niche player in various global markets in Europe, Asia, and North America.
"We generated a healthy level of revenue and EBITDA for the quarter and we remain uniquely positioned in the global online gaming universe," he declared Menashe. "We are digital only, we have a diverse global footprint across sports betting and iGaming. We are in control of our tech stack, our data, and our algorithms.”
