{"id":7191,"date":"2022-04-28T04:29:39","date_gmt":"2022-04-28T11:29:39","guid":{"rendered":"https:\/\/wagers.com\/staging\/4285\/?p=7191"},"modified":"2022-04-28T07:33:36","modified_gmt":"2022-04-28T14:33:36","slug":"us-market-realities-drive-push-for-lighter-b2b-betting-solutions","status":"publish","type":"post","link":"https:\/\/wagers.com\/staging\/4285\/uncategorized\/us-market-realities-drive-push-for-lighter-b2b-betting-solutions\/","title":{"rendered":"US market realities drive push for &#8216;lighter&#8217; B2B betting solutions"},"content":{"rendered":"<p><em>Kambi&#8217;s latest quarterly results show the impact that big brands moving their tech stacks in-house is having on sports betting solutions providers.\u00a0 The group&#8217;s strategy to develop modular, API-powered solutions is a way to address the situation.\u00a0<\/em><\/p>\n<p><span style=\"font-weight: 400;\">The 15% and 25% drops in revenue and turnover experienced by online sports betting solution provider Kambi is indicative of broader trends in the US market and, in particular, the moves by the sector\u2019s biggest operators to focus their efforts on developing their own in-house tech stacks.\u00a0\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">To an extent the Swedish betting technology provider is unlucky to be on the receiving end of that trend and, from its perspective, has found it difficult to counter the negative narrative that has surrounded the topic ever since DraftKings announced it would migrate to the SBTech platform.\u00a0\u00a0<\/span><\/p>\n<h3>Main brand absence<\/h3>\n<p><span style=\"font-weight: 400;\">The DraftKings move happened around September 2021 and its impact can be seen from Kambi\u2019s first quarter figures: <\/span><span style=\"font-weight: 400;\">turnover was down 25% (the amount was not disclosed), revenues dropped 15% to \u20ac36.9m and operating profit was down 61% to \u20ac7.3m on an annual basis, while Kambi CFO David Kenyon said DraftKings contributed 40% of its Q1 turnover in 2021.\u00a0<\/span><\/p>\n<blockquote class=\"twitter-tweet\">\n<p dir=\"ltr\" lang=\"en\">Clarification: we&#8217;ve been told <a href=\"https:\/\/twitter.com\/search?q=%24DKNG&amp;src=ctag&amp;ref_src=twsrc%5Etfw\">$DKNG<\/a> represented 40% of <a href=\"https:\/\/twitter.com\/KambiSports?ref_src=twsrc%5Etfw\">@KambiSports<\/a>&#8216; turnover in Q121, although the group doesn&#8217;t disclose actual turnover figures.<\/p>\n<p>\u2014 Wagers.com Earnings+More (@earnings_and) <a href=\"https:\/\/twitter.com\/earnings_and\/status\/1519297532274388992?ref_src=twsrc%5Etfw\">April 27, 2022<\/a><\/p><\/blockquote>\n<p><script async src=\"https:\/\/platform.twitter.com\/widgets.js\" charset=\"utf-8\"><\/script><\/p>\n<p><span style=\"font-weight: 400;\">Equally, the group said \u201coperator turnover was up 25%\u201d in Q1 if one discounts DraftKings\u2019 migration and this \u201cproves the underlying financial performance of the business remains strong\u201d.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\"><a href=\"https:\/\/wagersearningsmore.substack.com\/p\/apr-27-kambi-clients-up-profit-down?s=w\" target=\"_blank\" rel=\"noopener\">Kambi<\/a> added that the turnover growth had been driven by the Super Bowl and March Madness and happened \u201cdespite being up against tough Q1 2021 comparatives and the temporary impact of regulatory headwinds in the Netherlands, which we expect to ease soon\u201d.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">As mentioned, Kambi is unlucky in that it is suffering from its two biggest clients wanting to do everything themselves. Barstool Sportsbook will migrate to theScore BET\u2019s in-house platform in the coming months; and the attention and questions Kambi is receiving\u00a0 as a result can not be easy.\u00a0<\/span><\/p>\n<h3>Mitigation strategy<\/h3>\n<p><span style=\"font-weight: 400;\">To mitigate against those high profile departures, Kambi has signed a number of new clients, these include NorthStar Gaming, MaximBet and the Saginaw Chippewa tribe that operates Michigan\u2019s Soaring Eagle Casino &amp; Resort.\u00a0<\/span><span style=\"font-weight: 400;\">It has also launched with Rush Street Interactive, Unibet and LeoVegas in Ontario and can boast of having Rush Street Interactive as its biggest client now.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">There are caveats to these developments however, and the obvious observation to make is that none of existing or new clients will compensate for losing DraftKings and, at some point in the coming months, Barstool Sportsbook.\u00a0<\/span><\/p>\n<h3>Modular flexibility<\/h3>\n<p><span style=\"font-weight: 400;\">One industry observer commented on social media that Kambi should be credited for redirecting its efforts towards providing operators with a modular, API-led offering. The new product should\u00a0 give it more flexibility when it comes to signing clients, especially if they don\u2019t want a full turnkey solution.\u00a0<\/span><\/p>\n<blockquote class=\"twitter-tweet\">\n<p dir=\"ltr\" lang=\"en\">We should not underestimate how courageous it is for <a href=\"https:\/\/twitter.com\/search?q=%24KAMBI&amp;src=ctag&amp;ref_src=twsrc%5Etfw\">$KAMBI<\/a> to reinvent its biz model.<\/p>\n<p>The platform MTS won\u2019t work in the US. Developing a modular approach to the US mkt is a must. The US has a different power constellation than Europe (5 power leagues vs 80+).<a href=\"https:\/\/twitter.com\/earnings_and?ref_src=twsrc%5Etfw\">@earnings_and<\/a> <a href=\"https:\/\/t.co\/1gVT2gNe1y\">https:\/\/t.co\/1gVT2gNe1y<\/a><\/p>\n<p>\u2014 QuantCappers (@QuantCappers) <a href=\"https:\/\/twitter.com\/QuantCappers\/status\/1519306672191250434?ref_src=twsrc%5Etfw\">April 27, 2022<\/a><\/p><\/blockquote>\n<p><script async src=\"https:\/\/platform.twitter.com\/widgets.js\" charset=\"utf-8\"><\/script><\/p>\n<p><span style=\"font-weight: 400;\">In terms of timings, Kambi CEO Kristian Nylen said it should be ready by early 2023, although he added that it mustn\u2019t in any way cannibalize or devalue the quality of the group\u2019s turnkey solution.\u00a0\u00a0\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">The group has also expanded its Bet Builder coverage to the NHL and MLB and said it would have NBA bets ready for the start of next season.\u00a0\u00a0<\/span><\/p>\n<p><img fetchpriority=\"high\" decoding=\"async\" class=\"alignnone size-full wp-image-7193 aligncenter\" src=\"https:\/\/wagers.com\/staging\/4285\/wp-content\/uploads\/Kambi-chart-.jpg\" alt=\"\" width=\"919\" height=\"373\" \/><\/p>\n<p>&nbsp;<\/p>\n<h3>In-house vs. outsourced<\/h3>\n<p><span style=\"font-weight: 400;\">Returning to the issue of in-house vs. outsourced technology platforms, Kambi\u2019s current main client Rush Street Interactive is showing that it is possible to perform well in the US with a third party platform.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">However, while RSI operates a Kambi-powered online sportsbook, its main vertical is online casino and as the analyst team at Wells Fargo has pointed out, as sports seasonality approaches, its <\/span><span style=\"font-weight: 400;\">GGR mix is likely to edge towards icasino, where it has shown resilience with around 25% market share in Pennsylvania and around 7% in New Jersey and Michigan.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">In addition, RSI owns its online casino\/igaming tech stack and, referencing the Boyd-Pala Interactive deal, Wells Fargo said this gave it \u201cscarcity value given the evolving digital gaming ecosystem\u201d.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Unsurprisingly, for Kambi boss Nylen the outlook is positive and European operators are looking \u201cat what they have in-house and they struggle to keep up with competitors\u201d.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">\u201cFor that reason we\u2019re very positive about the future. The market has (also) become less competitive now than a few years ago, especially with SBTech disappearing as B2B suppliers. There will be new entrants, but we have a unique position as a top tier supplier.&#8221;<\/span><\/p>\n<p><span style=\"font-weight: 400;\">In the US however, Kambi\u2019s redirect and new modular focus is a sign that it is addressing a market that is developing with leaders that have most of their tech stack in-house and smaller operators likely to look for \u2018lighter\u2019 B2B sports betting offerings. \u00a0 <\/span><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Kambi&#8217;s latest quarterly results show the impact that big brands moving their tech stacks in-house is having on sports betting solutions providers.\u00a0 The group&#8217;s strategy to develop modular, API-powered solutions is a way to address the situation.\u00a0 The 15% and 25% drops in revenue and turnover experienced by online sports betting solution provider Kambi is [&hellip;]<\/p>\n","protected":false},"author":8,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"nf_dc_page":"","footnotes":""},"categories":[1],"tags":[590,664,958],"class_list":["post-7191","post","type-post","status-publish","format-standard","hentry","category-uncategorized","tag-draftkings","tag-kambi","tag-rush-street-interactive"],"_links":{"self":[{"href":"https:\/\/wagers.com\/staging\/4285\/wp-json\/wp\/v2\/posts\/7191","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/wagers.com\/staging\/4285\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/wagers.com\/staging\/4285\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/wagers.com\/staging\/4285\/wp-json\/wp\/v2\/users\/8"}],"replies":[{"embeddable":true,"href":"https:\/\/wagers.com\/staging\/4285\/wp-json\/wp\/v2\/comments?post=7191"}],"version-history":[{"count":11,"href":"https:\/\/wagers.com\/staging\/4285\/wp-json\/wp\/v2\/posts\/7191\/revisions"}],"predecessor-version":[{"id":7203,"href":"https:\/\/wagers.com\/staging\/4285\/wp-json\/wp\/v2\/posts\/7191\/revisions\/7203"}],"wp:attachment":[{"href":"https:\/\/wagers.com\/staging\/4285\/wp-json\/wp\/v2\/media?parent=7191"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/wagers.com\/staging\/4285\/wp-json\/wp\/v2\/categories?post=7191"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/wagers.com\/staging\/4285\/wp-json\/wp\/v2\/tags?post=7191"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}