Kindred UK

Henrik Tjärnström: UK White Paper a window of opportunity for Kindred

Kindred Group has a history of navigating regulatory changes across Europe, Group CEO Henrik Tjärnström informed investors in a webcast this morning, and remains confident in the face of impending reforms in the UK, Belgium and the Netherlands.

A very British future SBC News Henrik Tjärnström: UK White Paper a window of opportunity for Kindred

Answering a question from SBC following the group’s Q1 trading update, Tjärnström remarked that the upcoming UK White Paper on the Gambling Act review – due for publication on Thursday 27 April according to some reports – presents an opportunity for the company.

From Kindred’s view, the operator has built up knowledge of dealing with regulatory changes in France, Denmark, Belgium, Sweden and the UK itself, and in the latter market has established a presence as a ‘middle’ firm with a level of agility and adaptability.

“We have an opportunity to actually gain market share both from above, from larger operators, and because further sort of regulatory changes in the UK will most likely mean that customers are spending more and more across more operators.

“We see that could be a potentially good opportunity for us to both take market share and continue to take market share from above but also from below, as smaller operators will struggle to comply with the complex regulatory situation.

“I think we have a really good position in that sense. We also have a very profitable position already at these kinds of market shares that we sit on round 3-4% market share. We expect that to be a good thing.”

Ahead of the UK’s regulatory reckoning, Tjärnström asserted that Kindred has set itself up well for any changes by bolstering its responsible gambling standards.

These measures – the firm notably further cut down its share of revenue from harmful gambling this week – have left it ‘broadly compliant’ with whatever the White Paper may bring, Kindred’s CEO remarked.

Answering a question from a Morgan Stanely investor, Tjärnström reiterated Kindred’s status as a ‘mid tier operator’ in the UK, conducting business ‘under the larger operators in the market’ – which can assume to be the likes of Entain, bet365 and Flutter.

Despite this, he reaffirmed to the shareholder that Kindred has the agility and fast reaction time that its larger competitors lack to pull through following the White Paper.

Kindred’s Dutch dash

Unsurprisingly, Kindred’s Netherlands operations were of particular interest to the company’s Stockholm-investors during the webcast. In its Q1 results, the firm had placed a heavy emphasis on Dutch business, which proved to be the major growth driver of its European trading.

During his breakdown of Q1 business, Tjärnström shared that Kindred has built up market share in the Netherlands of around 20%, securing a number two position in the country, and anticipates to take the leading number one spot by the end of the year.

However, the Netherlands – much like its British counterpart across the North Sea – is currently in the midst of political change regarding gambling, just 24 months into its newly launched online market.

Of note, policymakers under the leadership of Legal Protections Minister Franc Weerwind are pushing forward a wide reaching ban on various forms of advertising, due to come into force on 1 July, 2023.

Tjärnström kept faith in Kindred’s experience and adaptability, saying: “If anything, the situation that we got used to in the Netherlands prior to September 2021, was very limited marketing opportunities, competing more on experience and product, and that sort of helped us in that sense in that reality. 

“Given the strong position we have, and that we’ve had this ramp up and time to get into the market, gives us confidence that we can handle further restrictions if they’re coming.

“Again, we have been mentioning and also urging that restrictions on the regulatory system or regulated system is often to the benefit of or the black market, which is clearly in no one’s interest. There needs to be a balance here between sort of restrictions and generalisation as well. 

“Ideally it’s an opportunity for regulated operators to really put their brand out there and attract customers to the regulated offer under strict control, rather than to allow customers or push customers more on to the black market, which can happen if there’s too restrictive restrictions put in place.”

Completing the picture

Whilst the Netherlands has been an apparent gold mine for Kindred, the country’s neighbour to the south has proven to be a thorn in its side, as has Norway.

Responding to the query from Morgan Stanley, Kindred’s CEO lamented that there ‘are all sorts of headwinds’ from Norway, although never going into a full breakdown of the facts and figures.

What we do know of Kindred’s Nordic experience is that its Trannel subsidiary is facing some regulatory wrath in the country, facing daily ‘coercive fines’ for the Lotslift authority – this could well be one of the headwinds referred to by Tjärnström.

Meanwhile, difficulties have also emerged in Belgium – which like its Dutch neighbour is also adopting marketing restrictions on 1 July – but Tjärnström maintained that Kindred’s position in the market is on the up.

He said: “There are positive signs in Belgium, with revenue from 1-23 April 10% higher than the daily average revenue during the first quarter. This is a step in the right direction.”

Finally, the CEO also shared some insights into Kindred’s US operations, responding to one interested investor who questioned when the group’s North American business will become profitable. 

Kindred’s approach is to implement a ‘one platform strategy globally’, he said, pointing to the recent licence approval secured in the igaming fortress state of New Jersey, as well as a retail sportsbook detail with a Washington State tribal casino operator.

“The North America platform rollout is expected to have a positive impact immediately on customer experience, metrics like acquisition, and also retention and overall experience and that will gradually turn into growth in revenues and then indeed, over time, also profitability,” he said.

“We have yet to see really what kind of effect we’ll see in real time for our own technology there and what we can achieve, but right now, we’re still reiterating what we mentioned at the CMD (Capital Markets Day).”

Looking ahead, the CEO stated that Kindred is trying to focus on growth in locally licensed markets as opposed to the ‘ markets’ – those he referred to as black markets in one answer – after reporting the fourth strongest quarter and second strongest first quarter in its history.

He concluded his presentation: “We’re making solid progress across the key value drivers in the coming years, and we see here again, the solid growth across all regions in the first quarter offsetting the temporary headwinds we’ve seen in Norway and Belgium, which is normal from time to time. 

“When we address those headwinds, we are returning the markets to growth over time which we indeed also have shown previously.

“Also, for the Dutch market. we’re on track to become the market leader with strong development in the first quarter and gaining market share since re-entry.”

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