Spin Palace, Jackpot City Owner Super Group To Quit US Market
Company that also owns Betway will pay up to $40 million to exit after struggling in two states
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The owner of casino brands Spin Palace and Jackpot City will exit the U.S. market — and will pay as much as $40 million to do so, blaming “recent regulatory developments” and a failure to get a good enough return on its investment.
Super Group — also the owner of Betway, which itself quit the U.S. market last year — said it would leave the U.S. iGaming market “following a comprehensive evaluation of its global priorities, the evolving regulatory landscape, and the U.S. unit’s financial performance.” Its Spin Palace and Jackpot City brands are active in New Jersey and Pennsylvania.
The exit will cost the business between $30 million and $40 million in restructuring costs.
The two casino brands had struggled to gain a serious foothold in the market. During the first five months of the year, Spin Palace and Jackpot City combined to make $10.4 million in revenue in New Jersey. That’s less than 1% of all online casino revenue in the state.
In Pennsylvania, revenue is published only by land-based licensees, and Super Group’s brands operate with the same land-based partner as the Cordish Companies’ PlayLive. Combined, Spin Palace and PlayLive made up just 2% of the market over the past 12-month period through June.
The decision comes 11 months after Super Group pulled Betway out of the sports betting market, claiming there wasn’t a “long-term path to profitability.”
‘Recent regulatory developments’
Neal Menashe, Super Group’s chief executive officer, said the decision to leave the U.S. online casino market would allow the company to focus resources on other markets instead.
“This is a difficult decision, particularly because our U.S. team has worked hard and made progress over recent quarters,” he said in a statement. “Nonetheless, recent regulatory developments combined with ongoing assessment of capital allocation requirements have led us to believe that our stringent hurdle for return on capital will likely not be met in this market any time soon.
“We therefore intend to focus capital and resources on markets where we see the greatest opportunity for scalable, sustainable, profitable super growth, with a disciplined emphasis on operational efficiency.”
While Menashe did not single out any particular regulatory development, the decision to leave the market comes soon after New Jersey passed a tax increase for online casino and sports betting. Online casino revenue is now taxed at 19.75% under the state’s new budget, up from 15% under the previous tax regime.
Super Group Chief Financial Officer Alinda Van Wyk added that “various strategic exit options are under consideration,” suggesting Super Group has not yet decided whether to sell its sites, close them down or find another option.
Success outside the US
The decision to leave the U.S. comes despite success elsewhere for Super Group, which revealed in the same announcement that it was increasing its non-U.S. full-year revenue and earnings guidance. Adjusted earnings before interest, tax, depreciation and amortization for the group’s non-U.S. operations are now expected to be $480 million, up from $457 million. That’s still not quite enough to offset the cost of leaving the American market.
Super Group’s U.S. online casino exit mirrors the failures of fellow global operators Evoke (formerly 888) and Unibet owner Kindred to gain a significant foothold in the American market in either sports betting or online gaming. Both announced that they were leaving the U.S. market last year. While Evoke continues to operate, Unibet’s sites have closed.
