Super Group Limited, the parent company of Betway and Spin, has announced a strategic shift following an in-depth internal review. The company plans to exit the U.S. sportsbook market, closing operations in the nine states where it is currently active. Despite this exit, Super Group will continue to maintain a strong iGaming presence in the United States, particularly through its Spin portfolio, including Jackpot City in New Jersey and Pennsylvania.
Strategic review and decision:
CEO Neal Menashe explained the rationale behind the decision, stating, “As a global business, we constantly evaluate the optimal use of our resources across all markets in which we operate. We have recently concluded an extensive review of our U.S. operations and, at present, we do not see a long-term path to profitability for the sportsbook product.”
Super Group’s strategy will now focus on iGaming, where the company has seen the majority of its revenue generation. Menashe added, as Business Wire reports, “The vast majority of Super Group’s revenue is generated in iGaming and, in line with that strategy, we will continue to offer our leading casino product in New Jersey and Pennsylvania. We are open to expanding our U.S. footprint if the right investment or strategic opportunities arise.”
Super Group expects to incur costs related to the closure of its U.S. sportsbook operations, with more details to be provided during the next quarterly earnings call in early August. These costs, while significant, are not expected to affect the company’s capital allocation or overall operating plans. Non-U.S. earnings, which have historically been strong, will remain unaffected by this strategic shift.
Betway’s current position and challenges:
Betway, the sportsbook brand under Super Group, currently operates mobile sports betting in nine states. Despite this presence, the company has faced challenges in capturing significant market share. For instance, in Arizona, where Betway launched in February 2022, the company accumulated a handle of $25.6 million, representing less than 0.2% of the $14.8 billion wagered through sports betting apps in the state. This limited success is echoed in other states, with varying hold percentages and gross revenues.
Betway’s promotional spending has notably impacted its gross winnings in states where promotional revenue is tracked. For example, in Arizona, a 9% hold this year was offset by promotional bonuses and credits totaling $437,936, which represented 66% of its $662,500 in winnings. Similarly, the promotional spend in Ohio was nearly 66% of its $365,900 year-to-date revenue despite not being deductible.
Despite the planned sportsbook exit, Super Group remains open to future opportunities within the U.S. market. The company will focus on strengthening its iGaming brands, Spin and Jackpot City, in New Jersey and Pennsylvania, leveraging their established presence to drive growth and profitability.
Industry reactions and market movements:
According to industry reports, Super Group’s decision has been met with varied reactions within the industry. The company’s stock traded at $3.16 on the New York Stock Exchange as of 11:15 a.m. EDT on the day of the announcement, showing little change from its opening price of $3.17. This stability suggests investor confidence in the company’s strategic pivot towards iGaming.