Super Group Redirects U.S. Strategy, Betting on Online Casinos Over Sports

Super Group, the parent company of Jackpot City and Spin, is re-evaluating its approach to the U.S. market following challenges with its sports betting operations. The company’s third-quarter earnings report revealed a projected $21.5 million loss for its U.S. sports betting operations during the latter half of 2024, leading Super Group to wind down Betway’s sportsbook presence in seven U.S. states. Despite these setbacks, the company remains committed to its online casino business, particularly in New Jersey and Pennsylvania, where its Spin brands are seeing promising growth.

In discussing the recent shift, CEO Neal Menashe expressed optimism for the group’s U.S. online casino potential, noting that online casinos are Super Group’s “bread and butter” globally. “We tried sports. It didn’t work. But casino, we’re really good at,” Menashe stated during the earnings call, adding that the group intends to continue its casino operations in the U.S. as long as they remain profitable. Super Group’s Betway brand will continue limited operations in the two states, with plans to launch two additional brands from the Spin Games portfolio in these regions, including Jackpot City.

Strong Global Earnings Despite U.S. Losses

While Super Group faces challenges in the U.S., the company’s financial results reveal strong performance in other regions. Revenue reached €402.9 million for Q3 2024, a record for the company in a third quarter, representing a 13% year-over-year increase. The company achieved a non-GAAP Adjusted EBITDA of €83.9 million, bolstered primarily by strong returns outside the U.S., where the company reported €95.4 million in Adjusted EBITDA. The North American market, mainly driven by operations in Canada, ed for €144.8 million of the total revenue, highlighting Super Group’s robust foothold in regions beyond the U.S.

CFO Alinda van Wyk emphasized the group’s focus on cost efficiency and sustainable growth, particularly in markets like Africa, which has become Super Group’s largest revenue region for the second quarter in a row. Super Group has also indicated plans to return excess cash to shareholders, with discussions of a possible special dividend in light of its strong cash reserves, which stood at €296.6 million as of September 30, 2024.

U.S. Strategy: Focusing on What Works

The strategic shift away from U.S. sports betting reflects Super Group’s commitment to profitability. The group incurred $38.6 million in costs to exit sports betting in several U.S. states, slightly less than the $49 million anticipated. However, the U.S. market will continue to present challenges for Betway as the company seeks to navigate a highly competitive environment, dominated by major players like DraftKings, FanDuel, and BetMGM. Menashe reiterated that while Super Group is committed to online casinos in the U.S., profitability remains the top priority, and any prolonged challenges may prompt additional reassessments.

Despite scaling back, Super Group’s online casinos in New Jersey and Pennsylvania are experiencing growth. The company plans to expand its casino brand portfolio in these states to capture more market share, following the successful multi-brand approach seen with Caesars in the U.S. market.

The group remains cautiously optimistic about the U.S. iGaming space, with Menashe affirming that their U.S. presence will continue “as long as it makes sense on the balance sheet.” The planned expansion of Spin brands reflects Super Group’s commitment to leveraging its core strength in online casinos while moving away from less profitable sports betting operations. Super Group’s future in the U.S. will focus on maximizing revenue in iGaming while maintaining its established foothold in more profitable global markets.

Source:

“Super Group Reports Financial Results for Third Quarter of 2024“, investors.supergroup.com, November 6, 2024.