Kindred cites ‘encouraging’ Dutch performance for Q4 casino growth

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Kindred has witnessed a 25 per cent increase in its casino gross winnings revenue in the fourth quarter, citing an “encouraging performance” from the Netherlands. 

Publishing its full-year report, the firm revealed that its gross winnings revenue for casino and games during Q4 totalled £173.3m (2021: £139.4m), while active customers within the last quarter experienced a rise by 21 per cent. 

Excluding the Netherlands, which had no activity during the fourth quarter in 2021, casino and games gross winnings revenue remained flat when compared to the previous year’s quarter while active customers came in two per cent higher.

Western Europe dominated the gross revenue, bringing in £94.2m when compared to 2021’s fourth quarter, a 50 per cent year-on-year spike. The Nordic region was next on the list, totalling £50.9m for Q4 2022, flat from the same quarter prior. Central, Eastern and Southern Europe amounted to £20.1m, a five per cent increase and other regions witnessed a 27 per cent rise with £8m. 

Commenting on the core markets and continued growth in the Netherlands, Kindred’s CEO, Henrik Tjärnström, stated: “Several core markets continued to perform well during the quarter, with solid activity in France, Sweden, the UK and the Netherlands contributing to total revenue of £305.5m, an increase of 25 per cent compared to the same period last year. 

“The Netherlands continued to exceed our expectations with daily average gross winnings revenue of £600,000 and we remain firmly on track to being the number one operator in 2023.”

Looking closer into the casino vertical, gross winnings revenue from poker and other products in the fourth quarter of 2022 amounted to £14m, an increase of 16 per cent when compared to the same period a year prior.

Moreover, poker and bingo gross winnings revenue and active customers also increased by 19 per cent and 14 per cent respectively during this quarter when compared to the same period last year.

Delving into poker and other product’s performance within the Dutch market, gross winnings revenue in the region witnessed a 50 per cent spike when compared to Q3, 2022. 

During the fourth quarter of 2022, further improvements were made on Kindred’s poker offering by the release of a new improved multi table tournament schedule with various new unique selling points. 

In addition to this, a new version of the Banzai cash game has been released with new graphics and innovative features which has performed well during the quarter.

“The casino and games product segment grew 25 per cent in the fourth quarter from the same period in 2021, with encouraging activity across most of our markets including the Netherlands,” expressed Tjärnström. “Our active customer base in this segment grew 21 per cent, highlighting our strong product mix given it was such an important quarter for sport. 

“During the quarter, new integrations with suppliers also resulted in new content being added to our portfolio, and the live slots offering launched 15 new unique slots to our customers.”

Excluding the reclassification for the first three quarters of 2022, Relax Gaming’s total revenue for the fourth quarter of 2022 amounted to £11.3m, an increase of 18 per cent from the third quarter of 2022 and 64 per cent from the fourth quarter of 2021 (when adjusting both comparatives for the above reclassification).

Kindred noted that the previous year comparatives were slightly distorted due to some affiliated Relax operators exiting the Dutch market from October 2021, however the firm noted strong revenue growth was also attributable to the success of the Dream Drop jackpot feature launched last year, which continues to perform well across all Relax Gaming operators. 

During the fourth quarter of 2022 an amount of £40.8m has been released from the total contingent consideration balance previously recognised at the Relax Gaming acquisition date based on assessment of performance for the 2022 financial year.

However, despite these figures in casino, Kindred’s CEO stated Q4 figures overall “fell significantly short” of its “ambitious expectations”. 

He explained: “The first ever World Cup held in Winter did not manage to offset the decline in sports activity both before and during the event, and regulatory changes in Belgium and Norway also negatively impacted revenues. 

“Although normal during a World Cup quarter, an increase in marketing investments, totalling 26 per cent of Gross winnings revenue, also pressured profitability in the short term. 

“However, this resulted in the second highest active customer base ever of 1.83 million, which is expected to improve activity at the start of 2023.”

Kindred also noted in its report its regulatory sanctions for the fourth quarter last year. On November 23, 2022, the firm received a warning and sanction fee of SEK 10.9m (£900,000) from the Swedish Gambling Authority for deemed shortcomings in its work against money laundering and financing of terrorism from January 2019 to February 2022.

Though the company insisted “improved processes” have been put in place since the investigation, the report has revealed that a provision of £7.1m has been put aside for a fine that Kindred expects to receive following reviews by the UK regulator. This amount, according to the firm, is based on current discussions with the UK Gambling Commission as Kindred awaits the final outcome.

Tjärnström concluded by looking to the future and noted that, while the geographical uncertainty and cost-of-living challenges remain, the actions the firm is currently taking, along with the large customer database from the fourth quarter, will “strengthen” its path towards its 2025 targets.