NEW YORK - Super Group (SGHC) Limited (NYSE: SGHC), the holding company for online betting and gaming brands Betway and Spin, announced today its decision to shut down its sportsbook operations in the United States. This move comes as a result of an extensive internal review, leading the company to conclude that the sportsbook is not on a sustainable path to profitability in the US market.
The closure will affect Super Group's sportsbook presence across nine states where it currently operates. Despite this, the company plans to continue its iGaming operations in the US, specifically maintaining two iGaming brands from its Spin portfolio, including Jackpot City, in New Jersey and Pennsylvania.
Neal Menashe, CEO of Super Group, stated, "As a global business, we constantly evaluate the optimal use of our resources across all markets in which we operate. We have recently concluded an extensive review of our U.S. operations and, at present, we do not see a long-term path to profitability for the sportsbook product."
Super Group anticipates incurring costs related to the sportsbook closure, details of which will be disclosed in the next quarterly earnings call scheduled for early August. However, these costs are not expected to impact the company's capital allocation or operating plans. Furthermore, Super Group's non-US earnings will reportedly remain unaffected by this decision.
The majority of Super Group's revenue comes from iGaming, and the company's strategy reflects this focus. Menashe added, "The vast majority of Super Group's revenue is generated in iGaming and, in line with that strategy, we will continue to offer our leading casino product in New Jersey and Pennsylvania. We are open to expanding our U.S. footprint if the right investment or strategic opportunities arise."
Super Group is a global entity, holding a portfolio of licensed online sports betting and gaming businesses. It has a significant presence in Europe, the Americas, and Africa, and has been ranked number 6 in the EGR Power 50 for the last two years.
In other recent news, Super Group has announced the commencement of a dividend program, declaring an initial cash dividend of $0.10 per ordinary share. This move is seen as a testament to Super Group's financial robustness and its ability to balance rewarding shareholders while still pursuing growth opportunities.
The company has also reported a strong start to 2024, with record-setting Q1 revenue and adjusted EBITDA outside the U.S. Super Group's total revenue ex-U.S. reached a record high of EUR374 million, a 13% increase year-over-year, while its adjusted EBITDA ex-U.S. also hit a record at EUR69 million.
The company is in full control of its sportsbook software technology and is considering expansion in Africa along with potential M&A opportunities. Super Group is also evaluating its U.S. strategy, with options ranging from a full exit to recalibrating its state-by-state presence.
The company has successfully migrated onto the Betway Global Technology platform and is actively monitoring the Brazilian market for potential long-term profitability.
InvestingPro Insights
In light of Super Group's recent decision to close its sportsbook operations in the U.S., a closer look at the company's financial health through InvestingPro data suggests a mixed picture. With a market capitalization of $1.58 billion and a high P/E ratio of 50.72 for the last twelve months as of Q1 2024, investors may be pricing in future growth expectations. This is further evidenced by a significant revenue growth of 13.93% during the same period, indicating that the company's remaining operations are still expanding.
Two noteworthy InvestingPro Tips for Super Group (SGHC) include the company's strong cash position relative to its debt, which could provide flexibility in navigating the U.S. sportsbook closure, and a high shareholder yield, which may appeal to investors looking for returns. Additionally, Super Group's ability to cover its interest payments with cash flows, as well as its profitability over the last twelve months, suggests a stable financial foundation.
For investors considering the long-term prospects of Super Group, these insights could be crucial. Moreover, those interested in a deeper analysis can find additional InvestingPro Tips by visiting InvestingPro. There are 5 more tips available, which could provide a more comprehensive understanding of the company's potential. To access these insights, use coupon code PRONEWS24 to get up to 10% off a yearly Pro and a yearly or biyearly Pro+ subscription.
The company's next quarterly earnings call, which is scheduled for early August, will likely shed more light on the financial impact of the sportsbook closure. With an InvestingPro fair value estimate of $4.2, investors will be keen to see how the company's strategic shift aligns with market valuations.
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