Unibet Q4 Earnings Show Perils Of US Sports Betting Expansion

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Kindred Group took a nearly $8 million EBITDA loss on its US operations in Q4, the Unibet-parent company announced this week.

The Swedish firm launched its Unibet brand in New Jersey and Pennsylvania during the quarter incurring costs around licensing, marketing and operations.

Kindred CEO Henrik Tjarnstrom said the loss was in line with internal expectations and the business was showing good momentum for future quarters.

“The US is a big opportunity and we are fully committed to that,” Tjarnstrom said. “But we’re also being very honest and saying that it comes with investment and that investment is frontloaded in the first quarter of going live.”

He said revenue was “picking up” and the group expected fewer losses from the US business in future quarters.

How Kindred costs compare to other operators

William Hill US yesterday upgraded its 2019 EBITDA outlook to break-even, but it is the exception rather than the rule.

FanDuel expects to lose $58 million in 2019, while Fox Bet has projected losses of $40 million. According to recently-filed IPO documents, DraftKings lost $114 million in the first nine months of 2019.

Against this backdrop, Kindred’s run-rate of -$32 million doesn’t look so bad, although it is present in only two states, unlike its rivals.

Tjarnstrom noted that Q4 loss also includes one-off launch costs including a “couple of million” to work out a marketing campaign to establish the Unibet brand in NJ and PA.

How is Unibet doing so far?

In the brand’s first month of action in PA sports betting in November, it managed $1.9 million in handle after launching via an agreement with Mohegan Sun Pocono

It is live in NJ sports betting on Hard Rock’s license but its numbers are harder to isolate thanks to the state’s reporting methods. Unibet operates as one of Hard Rock’s three skins, along with Bet365 and a self-branded platform.

Wider issues for Kindred

Kindred shares fell 18% today following the trading update as the operator slashed its overall 2019 EBITDA outlook to $35-42 million. That’s down from the previous Bloomberg consensus of $60.5 million.

US investment, poor sports results in France and regulatory issues in Sweden and the Netherlands drove the downturn, the company said.