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Auf Wiedersehen: Kindred Group Exits the German Market
By Jeff Osienya Jun 17, 2022 IndustryKindred Group, Unibet’s parent company, is waving goodbye to the German market after the introduction of more onerous regulations. The Stockholm-listed operator no longer sees the biggest economy in Europe as a sustainable gambling market.German punters will have to say goodbye to Unibet, the leading sportsbook brand by the Kindred Group, as it is effectively closing shop in Germany on July 1. While announcing its exit, the company announced that it would be canceling any pending license applications and cease all Unibet operations due to what it considers a non-sustainable environment.
The ‘non-sustainable environment’ in question resulted from Germany’s Fourth Interstate Treaty on Gambling (GlüNeuRStv) regime, which came into effect on July 1, 2021. In addition, a national online gambling law was also launched in 2021, creating friction among operators and associations like the Deutscher Sportwettenverband (DSWV) which Kindred is a member.
Even as Kindred bid farewell to the German market, the company reported that its current stance might change in the future. Of course, the change of heart will only be possible if the regime opts to promote a more conducive arena for the operator to thrive. For now, however, the company maintained that the current situation makes it impossible to see the market’s long-term shareholder value. Kindred has already invested almost two years in supporting the initiative by the government to regulate the local German market, something it has claimed to be the ‘core engine’ of its growth.
A Gradual Exit Since 2021
The process of pulling out of the German market has been a slow one and started with Unibet’s partial exit in September 2021. The Malta-based gaming bigwig finally pulled the plug after several failed attempts to get the authorities to change their mind about the controversial regulations.
At the time, the operator withdrew some of its services, including cash games, single-table tournaments, and its loyalty program, save for multi-table tourneys and a jackpot tourney called Hexapros. Punters were given a heads-up to allow them time to redeem any bonus points, playthrough bonuses, and tourney tickets, which were mostly converted to cash. By taking such steps, Kindred was hoping lawmakers would reconsider the rollover taxes imposed on operators, among other things. Instead, after the new gambling law was ratified last year, the country became one of the most unconducive for both players and operators.
Unibet is not the only company to have chosen the exit option, especially after the country’s harsh rules on poker. Other operators have also left the market, citing problems in the issuance of gaming licenses and declaring the new treaty a big blow to the country’s gambling industry.
Recently, some 33 licensed operators have sued the State of Hesse for the stringent measures being meted out on them because of the sports betting rules in the treaty. The new industry rules have been condemned for putting legal operators at a disadvantage. For instance, the new treaty also stipulates a minimum stake of €1 on virtual machines and a 5-minute waiting period between spins. Despite the apparent consequences, Germany’s regulator and legislators haven’t backed down from their heavy-handed approach.
New Target Markets in North America Among Other Priority Areas
The exit from the German market marks some sort of a new beginning for Kindred as it now seeks to focus its energies on expanding to North America. With multiple US states now boasting new gambling laws, especially concerning sports betting, it’s no wonder this market would be attractive to operators. Meanwhile, the company’s business in Germany has been so limited in the recent past that it stated that the closure would have no significant impact financially. Other factors that have contributed to the bigwig’s exit from Germany include restrictions on gaming advertisement.
Kindred’s Unibet has already launched in Ontario, Canada, after obtaining an iGaming license from Ontario authorities. The company’s Country Manager Amanda Brewer reported that there was hope as Ontario is one of the fastest-growing markets in the North American region. Other markets that have already been accessed include multiple locations in Arizona, Iowa, Pennsylvania, Indiana, Virginia, and New Jersey.
With the burgeoning growth potential in the region, the Kindred Group has since declared North America as its “most important growth market” following a successful 2021. Despite tough competition from other operators, the company recorded an 11% year-over-year increase in gross winning revenues (GWR). Moreover, a new three-year contract with the Kambi Group and the acquisition of Relax Gaming in 2021 are evidence that the group has no plans of slowing down.
The Kindred Group CEO Henrik Tjärnström stated in February:
Quote“As we increase our footprint across Europe, North America, and Australia and expand our revenue from locally regulated markets, we are taking a close look at how our product suite is set up.”
He added that the Kindred Racing Platform, which has been in development for the past eight years, is already exceeding expectations and has experienced tremendous growth in the market. The platform is meant to be transformed into a full sportsbook with the help of the Kambi partnership.
Is Germany Risking its Gambling Sector with Draconian Regulation?
Gaming regulation is becoming more and more vital in the digital era, where illegal black market gaming operations are getting harder to curb. This is why several jurisdictions have been busy these last few years, passing new gambling bills and instituting regulators to implement those laws.
One question remains, though: how far would legislators go when tabling proposals to keep things under control while maintaining or even improving revenue streams for legal operators and, therefore, the jurisdiction? With operators leaving Germany and setting out for greener and more tolerable markets, it will be interesting to watch how the German regulator and lawmakers react.
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