Q&A: Kindred’s CEO on UK growth and “premature” Dutch panic over possible slots ban
Nils Andén also divulges how the Kindred Sportsbook Platform is progressing following the Swedish operator’s Q1 results presentation
The post Q&A: Kindred’s CEO on UK growth and “premature” Dutch panic over possible slots ban first appeared on EGR Intel.
It has been a little more than two months since Kindred Group confirmed Nils Andén as permanent CEO, having led the business on an interim basis since May 2023. Yesterday, 24 April, marked his second quarterly results presentation since that confirmation, with the boss now firmly in the hot seat.
The press release accompanying the group’s Q1 report described the opening three months of 2024 as a “solid start to a transformational year”. Flat revenue of £307.7m was met with 24% revenue rise in the Netherlands and a 20% spike in the UK on the back of casino-heavy play. A weaker quarter in the Nordics, which saw a 15% decline in revenue, offset this growth in two of the firm’s core markets.
Still, “transformational” is the key word for Kindred’s 2024. The Unibet and 32Red parent company is due to be acquired by French giant La Française des Jeux (FDJ) in a £2.1bn deal later this year, with the controlled exit from North America making good progress ahead of a planned full departure by the end of Q2.
Here, Andén touches on the business’ core markets, including the recent uproar from the Netherlands over a potential ad and online casino ban, as well as headway being made on the in-house Kindred Sportsbook Platform. The CEO consistently makes reference to “confidence” when speaking to EGR and, ahead of a whirlwind year for the business, that confidence may well be the crucial element for success.
EGR Intel: There was flat group revenue year on year (YoY) but some strong figures for specific geographies, including in the Netherlands, UK and Romania. It is a case of using those as a blueprint for success in your other markets?
Nils Andén (NA): I think that’s a very good way of putting it. We have had an outsized focus on the UK and the Netherlands over the last two years, and I think what we really figured out there can be described as a blueprint for our other markets. We’re not sitting on the sidelines, we’ve started that process. But, like everything in this industry, the cadence is a bit slow. So, it takes a while to see the impact.
I think once you start changing the approach or adopting new strategies, it’s a six-to-nine-month delay at least before you really start seeing the result of efforts. That is really the focus for us now. We feel we have a very good set up and very good local strategy in those markets so we’re shifting that across the territories.
EGR Intel: Can you share your thoughts on the potential ad ban and online slot ban in the Netherlands, especially given FDJ management’s comment that it’s of no concern to them at this point of the acquisition?
NA: I would say it is a little bit premature. There are motions in parliament but then there are many motions being asked and opened in the Dutch parliament, like 5000 a year, and it’s ultimately up to the government to decide what they do. It would be a pretty big reverse of the gambling reform that took place only two years ago. We are comforted by the fact that the ministry objected to these motions.
And I think it’s also fair to say that, even though the new government hasn’t formed yet, three out of the four parties in the potential new government actually voted against the bans. So, I think it’s a bit premature. We will see what happens.
Ultimately, what the gambling reform in the Netherlands set out to do was, of course, [deliver] a high degree of channelisation, tax revenues and player protection. I think banning on product line goes against all of those three overarching ambitions. In terms of impact, I think it’s way too early to say. We have to wait and see. The devil is in the detail with these things.
EGR Intel: UK revenue was up 20%. Given what we have seen from other operators in that market, that sort of growth is only being enjoyed by the likes of Flutter, so can you lift the lid on operations there?
NA: We have a very solid strategy in the UK, and I think it has paid off. We have shown above market growth and this is not a one off; we have shown that for the last six years so it is a continuation of the work we do in the UK.
The overall effort [to acquire] mid-level customers has seen operators that have that focus reap the benefits in the last couple of years. Looking forward with the adoption of the white paper [proposals], what we want, irrespective of market, is a level playing field so all operators can work on the same criteria. We’re confident in our UK trajectory. We pivoted towards the mid-value segment and that’s been the key success criteria for us.
EGR Intel: Do you expect this level of growth to decline significantly following the slot stake cap implementation later this year – £2 for young adults and £5 for those 25 and over?
NA: We don’t think it’s going to have a material impact. If you look at the UK market as a whole, the stake limits combined with the affordability framework go hand in hand. With very strict affordability limits that exist and will exist in the UK, I think it’s a natural progression that stake limits go down. For us, I don’t think it’s going to have a super material impact.
EGR Intel: Finally on the UK, can you shed any extra light on the ongoing Gambling Commission investigation into the business, as detailed in your annual report?
NA: It’s fairly normal day-to-day operations for the UK that you have ongoing licence reviews. It’s a normal procedure. We are working closely with the Gambling Commission to ensure they are satisfied with the way we operate.
EGR Intel: The Q1 report notes the North America exit is progressing well and due to be completed by the end of Q2. Could there be any unforeseeable issues here, such as a difficult market-access agreement annulment or customer claims?
NA: You never know of course but at the moment we’re very comfortable with the progression. We have signed or agreed on exits in all US states bar one, and I don’t foresee any major upsets there. It has been a very orderly exit so far. We aim to be operationally out of the region by the end of Q2 and I don’t think there is anything that will impact that. Of course, there’s always some tidying up to be done with the company in terms of returning customer funds.
EGR Intel: If the timeline wasn’t met and you are still operating in North America post Q2, would this be an issue for the company?
NA: I think there’s no major concern. We have closed three states already and we are well on the way to closing the remaining states. If something happens that would delay one state a little bit there would be very little impact on us.
EGR Intel: How is the Kindred Sportsbook Platform progressing? Last time we spoke you confirmed it had been rolled out in a test market, so is there any light you can shed on its performance?
NA: So far we’re very pleased in terms of the core metrics such as uptime, bet settlement times and offering. We are quietly confident that we’re progressing according to plan and we will probably onboard more customers than we had initially planned on prior to the Euros, just to make sure we get the necessary traffic and volumes through the platform. That would be the next step. We’re constantly developing new features, but just making sure that we have enough volume going through is the next step. We might roll into some of the smaller markets but none of our major ones before the Euros.
EGR Intel: On the other hand, casino has proven a strong vertical in Q1, with actives up 6% compared to group average of 3%, and some core markets are described as being casino-driven. How has this come about for Kindred?
NA: It’s a continuation of a trend. I also think its driven a little bit by the markets; I’m not sure its particularly product driven. The UK and the Netherlands, which are the two fastest growing markets for us, have a larger proportion of casino revenue than group average. I think it is more a reflection of the underlying market growth at the moment.
EGR Intel: Finally, the brief trading update for Q2, up to and including 21 April, has shown revenue up 8% minus the US, so is this the trend you expect to see throughout the remainder of year?
NA: I would love to see that. It is a strong start to Q2 for sure, both in terms of actives and gross win, but we want to caveat that. The sports betting margin is higher than our long-term average and it’s on par with the full Q2 last year. So, we’re happy with the start but there has been a slightly higher than normal sports betting margin.
The post Q&A: Kindred’s CEO on UK growth and “premature” Dutch panic over possible slots ban first appeared on EGR Intel.
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