Kindred’s US Future Becomes Further Muddled With CEO Resignation

If you feel like you have a good understanding of what the future will entail for the Kindred Group in the United States, there are probably some investors on the NASDAQ Stockholm market who would love to hear from you. Right now, the company is in the “fluxiest” of states.

Wednesday saw another member of the company’s C-suite announce an immediate departure. Amid other announcements that the company has made over the past year, it’s hard to read where things might be headed. Current market conditions complicate the situation even further.

Tjärnström steps down from CEO position

On Wednesday afternoon (US time) Kindred issued a news release stating that now-former CEO Henrik Tjärnström tendered his immediate resignation. The company’s board of directors appointed Nils Andén to fill the vacancy on an interim basis.

Tjärnström’s exit comes about two days after Kindred similarly announced the upcoming departure of its chief financial officer Johan Wilsby. Wilsby will remain in that position until sometime this fall. Kindred is searching for permanent replacements for Tjärnström and Wilsby.

That isn’t a
ll Kindred is searching for, though. Last month, Kindred announced that it hired Morgan Stanley to conduct a strategic review of its operations. The company made clear that when it comes to possible actions after the review is complete, nothing is off the table. That could include a sale.

While Kindred might not be a household name among players on the US online gambling scene, it’s different in Europe. The Kindred Group’s 11 brands enjoy a significant share of the online gambling market in multiple European nations.

Unibet is the only brand that Kindred has used to make a foray into the US so far. Unibet Casino operates in New Jersey and Pennsylvania, with New Jersey being a very recent launch. To date, Kindred has not secured market access for its online casino into any of the four other states with legal real-money online casinos.

Unibet also offers online sports betting in five US states but has pulled back there. While its reason for doing so might be sound, it only further mystifies the overall situation.

Unibet seeking profitability in its US operations

Like for any other business, offering online gambling in the US for the Kindred Group was intended to make money for the company. Like with most other companies engaged in that business, though, turning an actual profit has been elusive.

In April, a press release from Kindred regarding its first quarter 2023 earnings featured Tjärnström speaking about how that was going for Kindred.

“North America is seeing positive developments, with gross winnings revenue increasing to GBP 8.0 million and a declining negative underlying EBITDA contribution of GBP 5.5 million,” Tjärnström stated. “On 14 April we received approval from the New Jersey Division of Gaming Enforcement for our proprietary Kindred platform, which we are expecting will go live in mid-May. This is great news and will provide Unibet customers in New Jersey with an enhanced experience and give us better control of performance and the customer offering.”

Toward that end, Kindred shut down its online sportsbook in Iowa and, according to Matthew Waters of Legal Sports Report, scaled back its marketing spend across the US. In exiting Iowa, Kindred leadership said it wanted to focus on states with online casino possibilities.

That’s where the confusion begins.

Kindred’s US profitability strategy unclear

Currently, Unibet remains operational in three states without legal online casinos. Also, Iowa has seen more action in its legislature regarding possibly legalizing online casino play than two of those states for which Unibet still offers sports betting only (Arizona and Virginia).

While Indiana has taken steps in that direction as well, if focusing on online casino is the play, then using the resources that Kindred is currently spending on its Arizona and Virginia sportsbooks to get into Michigan and/or West Virginia might seem more in line with that strategy.

It’s possible that Kindred’s leadership simply didn’t think Iowa was a long-term play even if the state does eventually legalize online casino apps. It might also believe that Arizona and Virginia could someday go that direction and having a presence in those states will prove worth the current expense.

Another possibility is that Kindred has decided it’s time to cut its losses.

Complicating this situation even further is current consolidation of the US online gambling market. Fanatics has just announced a tentative purchase of PointsBet’s US operations. Rush Street Interactive might be a prime acquisition target in the near future.

From this perspective, the entire point of the Morgan Stanley review might be to gauge an asking price for Kindred’s US operations or the entire company. If that’s the case, then the sudden departure of Tjärnström fits quite well. Essentially, Tjärnström just got a jump on the search for his next professional role.

The bottom line is that right now there’s nothing to read regarding Kindred’s US future but tea leaves. Tjärnström’s resignation adds another layer to that reading.