Online sports betting company Kindred Group PLC is looking to get its North American business out of the red by 2026, as the bookmaker aims to play the long game with its business in Canada and the United States.
A capital markets day presentation published on Wednesday by Kindred, which owns online sportsbook Unibet, said its "roadmap to profitability in North America is to break even” during 2026.
Kindred's reasoning for its North American approach to date is that it will be a “marathon rather than a sprint” in the market, the presentation says. The European company trails bigger rivals such as DraftKings and FanDuel in North American market share, but it still sees a path to profitability for its online sports betting and casino gambling business on the continent.
“Mid single-digit market share objective [is] sufficient for profitability and breakeven for gross contribution by 2026,” the document says.
The timeline comes as investors in publicly traded gaming companies such as Kindred have grown more interested in profitability, leading some firms to more clearly map out their plans to achieve positive earnings. It also comes as anxiety about an economic recession has swirled around the industry, with higher prices and interest rates raising the risk of less consumer spending on discretionary activities like gambling.
And Kindred has been losing money on its North American operations. The company reported negative earnings before interest, taxes, depreciation, amortization, and other costs of £7.4 million from North America for the second quarter of 2022, which was a slight improvement over the first quarter's loss of £8.5 million.
“The decrease from the first quarter of 2022 is primarily attributable to increased revenues in the US market and is despite the initial market pressures from the Ontario launch which has caused a slight decline in the contribution from the Canadian market from the previous quarter," the company reported.
Partnership pillars
Kindred’s stock price is down more than 10% this year in Stockholm, where the company's shares are listed. However, being a "Top 10" operator in North America was listed as one of the five "most significant value drivers" for the company in the coming years, according to Wednesday's presentation.
In addition to its presence in the United Kingdom and Europe, Kindred and Unibet are currently live in five U.S. states — Arizona, Indiana, Iowa, Pennsylvania, and Virginia — as well as the Canadian province of Ontario.
The Unibet owner is eyeing further North American growth in states such as Illinois and Ohio and added in the presentation that it is seeing "green shoots of normalization" in the market. That follows heavy spending by bookmakers on advertising and promotions to carve out market share for themselves.
Delighted to announce our renewed partnership with #NFL 2018 Super Bowl winners @Eagles. The partnership lasts until the end of the 2025/26 season & will include Official Partner Online Casino, Official Partner Casino, Official Partner Online Games & Official Partner Sportsbook. pic.twitter.com/e7cluj3brE
— Kindred Group (@KindredGroup) September 8, 2022
Still, Kindred suggested that it will increase its partnership activity "to increase scale and ceiling" of its opportunity in the North American market.
A recent announcement by the company highlighted this approach, as Kindred and the NFL's Philadelphia Eagles extended a collaboration until the end of the 2024/25 football season, making Unibet the team's official casino, online casino games, and sportsbook partner until then.
"Our partnership with the Eagles has been a key pillar in Unibet’s strategy in Pennsylvania since the entry in the market and will continue to be an essential piece going forward,” said Manuel Stan, senior vice president of North America for Kindred Group, in a September 8 press release.
Take it to the house
The insights into Kindred's North American plans were just part of what the company discussed during the investor day in London on Wednesday, as the Malta-domiciled company unveiled 2025 financial targets of more than £1.6 billion in revenue, among other things. Kindred's full-year revenue for 2021 was approximately £1.26 billion, meaning it is looking to grow its receipts by over 25%.
Other priorities for the company are gaining more market share in its core markets in Europe and continuing work on its in-house sportsbook platform. Kindred currently leans on tech-provider Kambi Group Plc to help provide its online sports betting capabilities, but the former wants to take full control of its wagering business over from the latter.
“Building on the solid market foundation established in North America as this region matures and focus on customer experience increases,” is another priority that Kindred gave to investors.
