Kindred Struggles With UK Affordability Checks

April 29, 2022
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Kindred Group’s problems in the Netherlands were no surprise, but its first-quarter earnings also turned up weakness in France and the UK, where gains were curbed by the online gambling company’s efforts to adopt affordability measures.

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Kindred Group’s problems in the Netherlands were no surprise, but its first-quarter earnings also turned up weakness in France and the UK, where gains were curbed by the online gambling company’s efforts to adopt affordability measures.

So-called underlying EBITDA fell 77 percent to £24.5m, while gross winnings revenue fell 31 percent to £242.4m.

UK gross winnings revenue fell 21 percent in part due to big spenders baulking at affordability checks.

New British customers are “assessed for financial vulnerability and limits placed accordingly”, the company said.

Other online gambling operators have reported affordability limits affecting play by high-rollers, with 888 Holdings saying it is reducing affordability check triggers in the UK from £2,000 to £500 last year.

For Kindred, French problems stemmed from increasing competition and “increased marketing restrictions”, the company said.

The impact of the Netherlands exit was “more severe than expected” but is of “temporary character”, chief executive Henrik Tjärnström told analysts on Thursday (April 28).

The company applied for a Dutch licence on November 29 and expects approval by the end of June, the CEO said.

He said the company was “not satisfied” with its North American performance, where costs have been high due to high levels of bonusing and promotions.

The company expected to be “reducing our offer” and concentrating “on a few select states”, he said.

First-quarter loss was £9.1m in the US and it would be “realistic” to figure losses this year would continue at the same rate as last year, he said.

The company did not mention Germany in its conference call, but its application for a sports-betting licence there has been stalled since February 2020.

“We are exploring all possibilities that could help us accelerate this prolonged licence procedure which, to our detriment and for reasons not entirely clear to us, is taking uncommonly long,” a spokesperson said.

The company expects a decision soon, they said. It has also applied for a virtual slots and poker licence, none of which have been issued yet.

At rival Betsson, EBITDA fell only 7 percent to €33.4m, while revenue gained 8 percent to €170.2m, the company said.

Betsson shares rose 7.8 percent on Thursday to 62.14 Swedish krona, while Kindred shares fell 1.5 percent to SEK82.98.

Betsson said western European revenue fell nearly 44 percent from the year-ago period, due to pulling out of the Dutch market plus restrictions in Germany imposed since last year.

But Latin American revenue nearly tripled to €36.8m.

Separately, Kindred said its revenue from harmful gambling decreased to 3.3 percent, from 3.9 percent a year ago.

The company said it recorded improvement in behaviour in 83 percent of customers who received interventions, the highest total ever.

Kindred said it improved its manual interventions with high-risk players, which led to fewer players triggering alerts.

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