EGR Power 50 2022: 10-6
Proudly sponsored by
10. Betsson
Financials : Revenue for the first nine months of 2022 climbed 11% YoY to €556.7m, while EBITDA amounted to €121.2m, which was a dip of 2% YoY on the same period in 2021
Strategy & impact : Gaming still dominates the product mix at 68% of Q3 2022 revenue. Predominantly through acquisitions down the years, the firm boasts around 20 brands, most of which are casinos
Geographic reach : Holds licences in 19 jurisdictions globally. Has thus far avoided the bun fight in the ultra-competitive US to tap largely unexploited regions such as Latam, CEECA and Africa
Influence & leadership : A mainstay of the sector, whose roots stretch back to 1963. Pontus Lindwall, who has been in charge since 2017 (his second spell in the role), lives and breathes Betsson
While many European operators are buffeted by regulatory headwinds – leading to flat or disappointing financial results – Betsson has bucked the trend by racking up impressive quarters of sustained growth, reflected in its shares surging 69% in the past year. Q3 saw new highs for group revenue, operating profit (EBIT) and casino and sportsbook performance, which followed Q2 highs for revenue, sportsbook revenue and casino turnover fuelled by growth in Latam and CEECA (Central and Eastern Europe and Central Asia).
In fact, CEECA is now the largest region by revenue (39% in Q3), followed by the Nordics (27%) and Latam (19%). What’s particularly impressive is growth has been delivered despite losing access to the Netherlands from October 2021. (The company is still awaiting licences from the regulator.) Meanwhile, Germany’s stifling regulations and disappointing channelisation rate mean the operator has decided to apply for just one igaming licence there, for the Rizk brand.
In Italy, where a new sportsbook has been released (StarCasinò Bet) and live casino bolstered, the firm renewed its sponsorship with Serie A giants AC Milan and has added five new football clubs to its partnership roster: Salernitana, Palermo, Roma, Sassuolo and Torino. Western Europe’s “shining star” was how CEO Pontus Lindwall recently described the Italian business. Solid gains have been made in Croatia where Rizk occupies a podium position in the market two years after launch, while Greece is already delivering healthy returns assisted by Betsson’s sponsorship of Super League 2, football’s second tier in the country.
In what looks an astute move, Betsson has eschewed panning for gold in the highly competitive and expensive US market. The firm is currently only live with its in-house sportsbook in Colorado (Betsafe), although this is primarily about showcasing its B2B capabilities. Instead, Betsson has planted its flag in Latam.
The operator has a majority stake in Colombia’s Colbet (rebranded to Betsson) and owns Inkabet, a leading brand in the western part of the region, including Peru where online gambling is set to be regulated. Betsson has a foothold in Brazil and in Argentina and, just recently, soft-launched in Mexico. Judging by Betsson’s progress, the sacking last year of Lindwall – who was subsequently reinstated after a shareholder backlash – now seems an even more peculiar decision by the since-ousted chairman.
9. Kindred Group
Financials : GWR (B2C) for the first nine months of 2022 was £747.8m, a fall of 26% YoY. Underlying EBITDA tumbled 70% YoY from £304.5m to £90.1m
Strategy & impact : The focus in recent years has been on a more balanced portfolio and a shift from .com to .local, resulting in 79% of Q3 GWR generated from locally regulated markets
Geographic reach : Western Europe is Kindred Group’s largest region, accounting for 56% of Q3 GWR, followed by the Nordics (29%) and Central, Eastern and Southern Europe (10%)
Influence & leadership : First launched 25 years ago (then Unibet), the online bookmaker went on to become one of the most successful companies to emerge from Sweden. Arguably leads the way with safer gambling
Kindred Group has had what you could describe – if you were being harsh – its annus horribilis, the same year this stalwart of the sector turned 25. Don’t get us wrong, this is still a well-run outfit with a strong management team and a solid portfolio of brands, à la Unibet, 32Red and Maria Casino, but the financial reports this past year haven’t made for pretty reading. Being shut out of the Netherlands clearly had a material impact as H1 B2C revenue plunged by a third.
The Stockholm-listed firm’s luck turned to some degree when it was awarded a Dutch licence and rolled out Unibet.nl on 4 July, with the launch hailed by CEO Henrik Tjärnström as a “major milestone”. Although Kindred had spent nine months on the sidelines, its return beat most of its pre-Dutch regulation rivals to the punch as Unibet sought to regain its crown. Daily average gross winnings revenue (GWR) rose from £258,000 in the first six weeks of the quarter to £476,000 in the last six weeks of the quarter, while there were 137,000 active customers throughout Q3. Tjärnström said the country is “exceeding our expectations” and that the Q4 2022 target is 15% market share, followed with market leadership by 2023.
Kindred also launched in Ontario on day one of the market going live in April; the province contributed to more than 10% of GWR for its North America division in Q3. To the south, the US is viewed as a “long-term growth opportunity” where breaking even isn’t anticipated until 2026. Unibet, which was live in six online states, has, like many, struggled to crack America and, thus, Kindred has thrown in the towel in Iowa in Q4 to concentrate on states with online casino and not just solely sports betting as it looks to leverage its two decades of igaming and cross-selling experience.
Kindred must be commended for continuing to be a torchbearer for safer gambling amid its wide-reaching sustainability agenda. There is also the target, albeit probably an over-ambitious one, of the business deriving 0% of GWR from harmful gambling by the end of 2023. It has been a struggle to push below the 3% barrier, with the latest proportion from high-risk players being 3.8%, but Tjärnström recently told EGR Intel Kindred was on a “long-term journey”. On 0%, he insisted: “It is ambitious, but it needed to be ambitious.”
8. Tipico
Financials : Tipico opened its books exclusively to BDO and the accountancy firm noted another solid performance for the trailing 12 months to the end of June 2022
Strategy & impact : To use high-profile sports sponsorships for brand awareness, while its in-house tech is right up there with the best. A great deal of focus trained on ESG initiatives
Geographic reach : Occupies a dominant position in Germany (over 50% market share). Expansion into the US has been limited so far but further state launches are in the works
Influence & leadership : Tipico doesn’t shout its success from the rooftops but instead has quietly gone about building and iterating a first-class proprietary online sportsbook and igaming business
Starting life as a single betting shop in Karlsruhe, the third-largest city in the German state of Baden-Württemberg, Tipico grew to become Germany’s largest sports betting operator with an online presence supported by omni-channel gains via its network of 1,300 owned and franchised betting shops mainly across Germany, along with a few dozen outlets in neighbouring Austria. The firm has a 50%+ market share in Germany and says it handles a peak of more than 50,000 financial transactions a minute and processes up to eight million bets on any given Bundesliga matchday.
Based out of ‘Tipico Tower’ in the seaside town of St Julian’s in Malta, Tipico is another privately owned company which likes to keep its cards close to its chest when it comes to the performance of the business and operations, although key metrics have once again been shared, on a confidential basis, with BDO for these rankings. The operator, which has been majority owned (around 60%) by CVC Capital Partners since 2016, uses sport to elevate its profile, a prime example being the partnership with Bundesliga powerhouse FC Bayern Munich, now extended until the 2024-25 season. Tipico also champions ESG, whether it be safer gambling efforts, reducing its carbon footprint or D&I, such as increasing the proportion of female employees to 30% by 2023.
In October, the company became the latest to receive an online slots licence in Germany as part of the Fourth State Treaty on Gambling (GlüNeuRStv). The award meant Tipico could offer slots at Tipico.de and Goldrummel.de to complement its licensed sports betting domains. Meanwhile, the advancement into the crowded US market is a work in progress, with Tipico Sportsbook still only available in Colorado and New Jersey (casino too). Nevertheless, launches in sports betting-only states Iowa, Indiana and Ohio are in the pipeline.
In June, CNBC reported Fanatics was in talks to buy Tipico as a means for the sports merchandise heavyweight to accelerate its expansion into sports betting. The news outlet suggested both sides were at an impasse over the price, yet nothing concrete ever materialised and so we don’t know if a deal was close or if it was a bunch of baloney. One thing is for sure, owning your own tech stack, trading capabilities and having the online gambling know-how Tipico possesses will make you the subject of M&A speculation.
7. DraftKings
Financials : Revenue for the first nine months of 2022 reached $1.39bn, a jump of 38%. Adjusted EBITDA losses contracted from -$671.9m to -$548.2m YoY
Strategy & impact : A North American operator able to leverage its brand and enviable DFS database. Aiming to be an integrated ecosystem for sports betting, sports content, DFS, casino and NFTs
Geographic reach : Even though the Boston-based brand isn’t all that well known outside North America, CEO Jason Robins has indicated expansion overseas some time in the future will be required
Influence & leadership : A founder-run business that was in the right place at the right time when PASPA was struck down. Is driving innovation with its in-house tech capabilities
This year marked a decade since DraftKings first launched, after three ex-Vistaprint staffers – Jason Robins, Matt Kalish and Paul Liberman – spotted an opportunity to capitalise on the then-fledgling daily fantasy sports (DFS) space. Today, the Nasdaq-listed company is up near the top of the US online sports betting and igaming market, yet its shares have gone in the opposite direction and have crashed 60% this past year, resulting in its market cap shrinking to under $7bn, compared with a giddy 2020 peak of $32bn. That audacious $22.4bn takeover offer for Entain seems a distant memory now.
The halving in DraftKings’ valuation since the 2021 edition of EGR Power 50 is one reason why the firm slides three spots this year. Even though the stock market is sceptical about DraftKings’ path to profitability (adjusted Q3 EBITDA was -$264.2m), its proprietary sportsbook is live in 19 online states (more than any other operator), meaning it is available to almost 40% of the US population. There have also been conspicuous UX upgrades to the DraftKings Sportsbook app this year, particularly around parlays, including parlay insurance in case one leg lets you down, and the ability to void a leg without voiding the entire bet slip.
Same-game parlays (SGP) have been rolled out for UFC, as well as pre-packaged SGPs and the option to combine multiple SGPs across different games. In fact, the online parlay bet mix surged 1,700 basis points YoY in Q2. Also, social elements including a ‘friends dashboard’, social betting groups, friends’ bet feeds and a ‘spectator’ mode have been gradually added to differentiate and boost retention. The Boston-based operator is trying to stand out with Web3 technologies too, reinforced by the release of Reignmakers, an NFT-based fantasy sports game that builds on the DraftKings Marketplace for NFTs.
As for igaming, which is a growing part of the business where available, DraftKings achieves favourable CPA rates from cross-selling sports betting and DFS users, which partly explains why gross revenue jumped 35% YoY on a same-state basis in Q2. The internal games studio continues to bear fruit, with ~60% of total casino handle from the dozens of in-house titles. Meanwhile, the acquisition of casino-centric Golden Nugget Online Gaming (GNOG), completed in May, taps into different cohorts, especially females and high-spending casino players, or those turned off by sports. Win-win
6. Super Group
Financials : NGR for the first nine months of 2022 dipped 2% YoY to €967m. Meanwhile, operational EBITDA slumped 28% YoY to €167m
Strategy & impact : To plaster the Betway brand (55% of Q2 revenue) across live sport via high-profile sponsorship deals, a strategy being replicated already in North America. Prolific esports sponsorship targets a different demographic
Geographic reach : Holds licences in more than 20 jurisdictions globally, excluding the US. Has been scored down slightly, though, due to its over-reliance on unregulated markets
Influence & leadership : A business that has tended to go under the radar despite Betway’s ubiquitous branding, Super Group’s head-turning ascent up the EGR Power 50 list certainly isn’t down to just good fortune
Comprising Betway and Spin, a multi-brand online casino, Super Group sweeps into the top 10 of the EGR Power 50, helped by the fact its public listing last January, via a SPAC merger, provides increased visibility into the firm’s performance. While its shares on the New York Stock Exchange have floundered since an April high of $11 and are, at the time of writing, trading below $3, NGR of over €630m for H1 2022 – broadly in line with H1 2021 – is one reason why Super Group scored particularly highly in the ‘financials’ category.
On the other hand, the exposure to unregulated markets hampered its final position to some extent. The Americas – primarily Canada – is where most of the group’s revenue is generated (47% of NGR in Q2), so transitioning to a licensed operator in Ontario after the market went live last April meant Super Group had the brands to be a power player in Canada’s most-populous province. The remainder of Q2 revenue came from the Rest of the World (23%), Africa (20%) and Europe (10%), with Africa and Asia-Pacific highlighted as two regions showing “strong growth” as groupwide average active players rose 3% to 2.7 million.
Super Group still forks out fortunes on marketing, to the tune of €177m in H1. Indeed, prominent sports sponsorships have underpinned Betway’s advertising strategy ever since its emergence in 2006 and, today, it boasts over 60 brand partnerships. The front-of-shirt sponsorship with West Ham United – a deal that stretches back to 2015 – is one of its most high-profile tie-ups, although Betway also sponsors a host of football clubs across Europe as well as UK horseracing and teams in cricket, the NBA and the NHL. Partly down to sponsorship, Betway is also embedded in the esports scene to a greater extent than any other operator in the EGR Power 50.
In September, Super Group snapped up a majority stake in profitable UK-focused online casino business Jumpman Gaming. Furthermore, the acquisition of Digital Gaming Corporation (DGC) is expected to close shortly, opening the door to Super Group entering regulated US sports betting and igaming states. With DGC, a brand licensee of Betway live in seven states after having secured market access in up to 12 in total, Super Group’s progress in the US could determine whether it improves on its sixth position next year.