After Catena Media and Better Collective released their quarterly reports in early November, it’s fair to say there was a North-American-shaped elephant in the room. Despite several states launching online sports betting markets in recent years, the momentum has slowed down in ways that many in the industry hadn’t anticipated. Generally describing the US gambling market as ‘slow’ would be disingenuous, as several operators reported revenue doubling within a year, but this doesn’t paint the entire picture.
Better Collective
In Better Collective’s Q3 report, revenue had increased 8% year-on-year to €81m ($85m), but this equated to -6% in organic revenue growth compared to the positive 16% organic growth recorded in Q3 2023. “During Q3 we have experienced changing dynamics in the US market, which hashanged the outlook,” explained Jesper Søgaard, Co-Founder and CEO. “The impact on Q3 and the outlook led us to lower our financial targets for the year, marking the first downgrade since becoming a listed company in 2018.”
Europe and Rest of World (RoW), revenue increased by 15% to €62.2m, and the operating profit grew 42% to €23.5m. Despite accounting for 77% of the group’s revenue, these regions couldn’t fully offset the US results. Revenue in the US fell 12% to €19m, but the operating profit dropped 161% to -€1.6m. “Although the first state in the US has been operational for six years, it is effectively only three years mature for most states,” Søgaard continued. As for what caused this, the company was clear and straight to the point: “Better Collective has experienced market changes, requiring strategic flexibility, as overall partner activity has decreased.”
Catena Media
Catena Media also reported a similar trend. Overall revenue decreased by 33% to €10.7m when compared to Q3 2023 and adjusted EBITDA fell 58% to €1.3m. As North American revenue accounts for 89% of this company’s revenue, the downturn was trickier to get away from. Revenue from the US declined 29% to €9.5m and sports in particular dropped 60% from €4.6m to €1.9m. “In sports betting, it was disappointing that we did not see the usual boost from the start of the NFL season in September,” Manuel Stan, CEO of Catena Media, reflected. This was partially because there was no state launch during this Q3, unfavourable algorithm updates and also a softer impact from large esports events than expected.
“We have been operating at a loss in sports for an extended period due to products that have not been optimally managed,” Stan continued. “In addition, the organisation was scaled for a faster rate of new state launches than we have seen in recent periods. We have adapted the organisation to these realities, and in Q3 continued to take actions to return to profit by adjusting the cost base.”
The state of North America
The best environment for an affiliate is a competitive one and that simply isn’t there in the US at the moment.
So, what unique challenges is the North American market facing that could account for this loss of momentum for affiliates? Well, there is a lack of competition. Most sports bettors know exactly who FanDuel adn DraftKings are, so why would they need an affilaite to help them find them? Operators are emerging at the same pace as the states themselves. In Massachusetts, there are 10 licensed operators and seven online sportsbooks, Pennsylvania has around 20 online casinos active while New Jersey has around 29 online casinos from various operators on the whitelist. That might seem like a lot, but in comparison, there are 2,719 businesses registered with the Gambling Commission and 149 of these are classed as remote casino operators. Affiliates have the opportunity to work with dozens of casinos, bookies and even sometimes the slot studios themselves, but this range simply isn’t there in the US.
Many of the states are dominated by the big operators: DraftKings, FanDuel, Rush Street Interactive, Caesars and BetMGM. This means that it’s relatively easy for players to check offers, markets and games libraries themselves without necessarily feeling like they need to look for reviews or third parties in the process. In Europe, there’s always a new casino site launching with fresh ideas, new niches or targeting a specific audience. This means that even if players are signed up with a few UK online casinos, there’s always the chance for a new one to launch that appeals to bingo, keno, poker players etc – the opportunities are endless. However, many of the US businesses are finding that many of the players are already signed up to many, if not all, of the casinos available to them. There isn’t an opportunity for new companies or ideas to enter the market easily. The best environment for an affiliate is a competitive one and that simply isn’t there in the US at the moment.
The future
By no means does this make North America a dead market, it just means that it’s going to be a potentially very quiet one, at least for the minute. Going forward, Catena Media has stated it will continue incorporating social and sweepstakes casinos into its portfolio “especially as online casino gaming is yet to regulate in the majority of US states.” Meanwhile, Better Collective has deaccelerated its Brazil momentum but is expecting a “highly competitive market” once it launches due to the “approximately 100 sportsbooks [that] will be granted licences.” Until then, Better Collective will continue to integrate its recent acquisitions, Playmaker HQ and AceOdds, into its portfolio as part of diversification and development efforts. As for the North American industry, it looks like it’s going to continue simmering away on the back burner for a little while longer.
