Kindred Queried On Future Dutch Prospects

October 4, 2021
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Analysts have quizzed Kindred Group on when it might be able to get back into the Dutch market, as newly licensed operators struggled with a technical blunder.

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Analysts have quizzed Kindred Group on when it might be able to get back into the Dutch market, as newly licensed operators struggled with a technical blunder.

The conference call on Friday came as the overall licensing launch was delayed due to technical problems with CRUKS, the Dutch nationwide self-exclusion system.

Kindred and its Unibet brand were scheduled to leave the Dutch market on Friday, as the market opened for ten companies that have gained licences, including incumbents Holland Casino and Nederlandse Loterij.

The Stockholm-listed company expects to file a licence application next month and is hoping to gain approval before the end of June next year, said chief executive Henrik Tjärnström.

But he said it was too hard to predict when it might recover its market share or Dutch profitability.

Kindred’s thriving French experience suggests that it can recover from a complete break, Tjärnström said, as after leaving the market in 2010, it was able to renew its customer base and gain market share from 2012.

But Kindred might also decide that other markets are more appealing than the Netherlands, such as the US, he said.

When the Swedish market disappointed after its opening in 2019, Kindred shifted some resources to more promising regions, Tjärnström said.

“It’s fair to say we will also have a decision [to make], how much we want to invest, how quickly we want to get back to profitability,” he said.

Big names such as Flutter’s PokerStars, Entain’s bwin and PartyPoker, LeoVegas and 888 have all had to withdraw from the Dutch market, after minister Sander Dekker urged an enforcement crackdown that ended operators’ assumption they could operate passively while waiting for a chance to apply for a licence.

Tjärnström would not talk Dutch market share, but its estimated £12m monthly EBITDA shortfall without Dutch revenue suggests that it had a leading market share, at least among listed online operators.

That estimate of shortfalls implies that in the first half of 2021, it got about 30 percent of its EBITDA from the Netherlands.

The company at first suggested it might not leave, citing a “lack of clarity” in the minister’s statements, but it announced its planned departure overnight on Thursday and held a conference call on Friday morning to explain the impact.

However, those companies granted permission to stay in the Dutch market endured a rocky opening weekend, after problems with the CRUKS self-exclusions system.

The Netherlands Gambling Authority (KSA) said in a bulletin on Saturday that the issues had been resolved, but further problems were reported throughout the weekend.

State-owned Holland Casino said it was delaying its entire product launch until Monday evening to allow the system to be repaired.

CRUKS has undergone “insufficient testing”, the operator said in a statement.

Overall, the Dutch market may have been profitable for big brand names — although not a growing market — given that operators could retain past customers without spending any money on advertising or marketing.

Entain said it expects to lose £5m a month in EBITDA, or a £60m annual run rate, until it can return to the Dutch market.

Entain's 2019 data pointed to £60-£70m in net gaming revenue, which suggests that nearly all its net gaming revenue from the Netherlands was flowing through to EBITDA.

888 Holdings said it has also withdrawn from the Dutch market, but plans to apply in the next few months.

In recent periods, the Netherlands represented about 3 percent of revenue, and the suspension of that income is not expected to be significant, 888 said.

Only ten of 29 companies that applied for a licence in April were granted approval to launch on Friday, but chairman Rene Jansen said that some approvals are still pending and other companies are not eligible to apply yet.

“Strict conditions must be met and strict testing is carried out,” he said. “But there will certainly be more licence holders.”

The regulator also said it is holding a consultation on licensees’ responsibility to collect and analyse player data to try to head off problem gambling habits early, plus contribute anonymised data for research into gambling addiction.

The consultation runs through to November 1.

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