Unibet is leaving the Ontario online gambling market before the end of the second quarter of 2024.
Its parent company, Kindred Group, announced on Wednesday that it is exiting North America entirely citing the hyper competitiveness of the market. Kindred plans to focus on its operations in Europe and elsewhere.
Beyond Ontario, Unibet is currently legal in six states — New Jersey, Pennsylvania, Virginia, Arizona, Indiana and Ohio.
Unibet is the second high-profile operator to exit the Ontario online casino, poker and sports betting market since it launched in April 2022.
Coolbet announced its departure in April, just one year after launching. Dermot Smurfit, the CEO of Coolbet’s owner GAN Ltd., said the operator left because it had difficulty competing with the number of operators and the amount of promotional money being spent by competitors in what he said was, “the most competitive market in North America.”
Ontario is currently home to 52 legal online gambling operators, by far the most of any jurisdiction on the continent.
Kindred also eliminating 300 jobs
Kindred said in a release that the cost-cutting move includes a “reduction of over 300 employees and consultants.” A month ago, Amanda Brewer, Kindred’s Canada country manager announced her departure after two years with the company.
The company estimates the exit from North America and the employee reductions will result in annualized gross cost savings of about $69 million Cdn.
“The cost reduction actions announced today are both necessary and decisive,” said Nils Andén, Interim CEO of Kindred Group in the release. “While it is never a desire to inform valued colleagues of redundancies, this puts us in a stronger position to secure long-term growth for Kindred across our locally regulated core markets. We can now focus our resources and tech capacity towards strategic initiatives and selected markets where we see clear potential to grow our market share.”
Earnings + More: reported that the Kindred board now believed shareholder value “will be maximized” by a sale of the business. It said closing the North American business, reducing employees and other costs would be “complementary” to the process.
Kindred reported it had already exited its market access agreement in Ohio at a one-off cost of $6.9 million Cdn.
Kindred down 11% in net revenue in NA year-0ver-year
As part of the announcement that it was leaving North America, Kindred reported its overall third quarter “gross winnings revenue” or net revenue from all online gambling in North America was about $11 million Cdn, which marked an 11% decline year-over-year.
The company cited thin sports betting margins for the revenue fall.
In Q3, Kindred reported its cost of sales was down some $10 million, its marketing was down $9.3 million and its administration expenses were down $3 million, leading to an underlying EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) that was a loss of $11.2 million.
Kindred Group reported the rationale for exiting North America as follows:
- Negative cash contribution today undermines opportunities for value creation in core markets.
- Highly competitive market pushed out meaningful profit contribution beyond an acceptable time frame.
- Re-allocation of resources enables increased focus on existing core market footprint, where we see more attractive return on investment prospects
Worldwide, Kindred was down 13% in sports betting net revenue, but up 11% and 9%, respectively, in online casino and poker revenue.
Kindred’s Q3 earnings saw revenues fall 2% to $490 million.
Ontario gains one operator, loses one operator
Kindred’s news came the same week Lucky Casino went live in Ontario. Lucky Casino is distinct from the Lucky Days Casino that launched in Ontario in November of 2022.
PlayCanada keeps a list of Ontario’s live operators.
