In an unexpected development, Kindred announced the withdrawal of its brands (mainly Unibet) from the Norwegian market. This may sound like a big surprise for those unfamiliar with Norwegian legislation. It is indeed unusual for a successful company like Kindred to withdraw from a seemingly liberal market like that of this Scandinavian country. Moreover, Norway is a country where online gambling has immense popularity, with close to $300 million in revenue for 2023. So, yeah, there’s some serious playing going on there.
However, several events took place in these few years, leading to Kindred being forced to accept specific rules imposed by the Lotteri- og stiftelsestilsynet (the national gambling regulatory agency) or leave the market.
After several years of legal battle, which we are sure included elements of lobbying at the political level, the result is known. This won’t go down well with players since Kindred sites are popular. Also, the company will lose a significant source of money. In Norway, on the other hand, the greatest dissatisfaction can be felt by the media, which received high sums of money for advertising by this company.
What Does This Mean for Kindred
Kindred Group (ex. Unibet Group) was founded in 1997. This is one of the biggest European online gambling operators. This Malta-based company has branches in several locations, including the UK, US, and Sweden. Interestingly, Kindred Group is listed on the Stockholm Stock Exchange.
Regarding Kindred’s revenue, this company had over 1 billion dollars in the past few years. The question now is whether the decision of the Norwegian gambling authority will significantly affect revenue starting in 2024. They are having an easier time operating their business under other licenses, which is why they most likely went into this “pros and cons” mode, where operators have also done their homework and decided to go for what’s best for them and their users, be it your occasional slot machines players, or more regular sportsbook fanatics.
Even though Kindred didn’t share the information about its revenues in this market, Lotteri- og stiftelsestilsynet revealed that Trannel, Kindred’s subsidiary managing its operations in Norway, had an annual gross profit of around 40 million dollars in 2021.
So, we can’t say that this move will ruin Kindred, but it will impact its profit. That is something that Henrik Tjarnstrom, Kindred’s CEO at the time, said back in January 2023. Namely, he mentioned the company’s problems in Norway as one of the reasons their profits were lower than expected (the new limits on the Belgian market and the FIFA World Cup were mentioned as other reasons).
Of course, strengthening its position in the European and Australian markets is another essential element of its business strategy. When it comes to the US and Canada markets, it is a major component in the expansion plans. Unlike in Europe, where in some countries you can work without a national license (as was the case with Norway until a while ago), the rules are much stricter in the USA and Canada.
Through Unibet, Kindred Group is currently present in the Canadian province of Ontario and the US states of Pennsylvania and New Jersey.
Interestingly, the management emphasizes that the expansion of the North American market is focused on slow progress, which means that they are not in a race to secure licenses in as many states and provinces as possible in the shortest time. This cautious approach is wise because too many big players are in this heavily regulated space.
What Can Kindred Learn from its Norwegian Adventure
The saga of Kindred in Norway began in April 2019. That’s the period in which Lotteri- og stiftelsestilsynet, the Norwegian gambling regulatory body, decided to tighten the rules.
Online casinos that had licenses from other countries and bodies (Malta Gaming Authority, UK Gambling Commission, etc.) were tolerated in Norway for a long time. They operated without a license, but players could make deposits and withdrawals without problems.
One of the reasons this happened was the inability of the regulatory body to impose bans on financial transactions, access to domains, advertising, etc.
With the legal changes of 2019, Lotteri- og stiftelsestilsynet received greater powers and finally got the opportunity to communicate on an equal footing with foreign casino operators such as Kindred Group, which, as we said through Trannel International and Unibet, was one of the leading casinos in Norway.
Instead of accepting the demands, Kindred Group sought justice through the courts and other bodies they hoped would rule in their favor. Its subsidiary pointed out that it has a license issued by the MGA and that Norway is part of the European Economic Area and should respect the obligations undertaken. However, the regulatory body indicated that its status is compatible with EEA rules and that it has the right to require offshore operators offering real money casino games in their territory to be licensed with a license issued by them.
Then there were several twists that went in favor of Lotteri- og stiftelsestilsynet. For example, they were authorized to impose daily penalties on the operation of Unibet and other online casinos from the group. These penalties cost around $120,000 daily and are not based on the company’s revenue in Norway in the previous year. As mentioned, the estimated revenue was about $40 million.
After a month of this decision being made in September 2022, Kindred managed to pause the decision. However, in 2023, they faced the same penalties again and decided to leave Norway entirely on 1 January 2024.
This was not the only reason to make such a decision. In addition, Norway has banned advertising so-called illegal casinos in public. The regulatory body has also been given the power to block domains that do not comply with its decisions and is still trying to work with Norwegian customers. Finally, in an agreement with the banks, payments to and from unlicensed offshore online casinos were blocked.
Who’s Right and Who’s Wrong
Is this fair? The answer depends on several things. The fact that every European country can insist on licenses is not unusual. Still, greater harmonization of the regulation is needed. The cost of the licenses should not be too different (considering the market potential), and there should not be other criteria for granting licenses.
Norway is not part of the EU, and that plays a role in this matter even though within the European Union itself, there are drastic differences in online gambling regulation from country to country.
One can say that this showdown was focused exclusively on the Kindred Group, which until now was present with several brands in this market — Unibet, Mariacasino, Bingo, and Storspiller. However, the decision does not apply only to this company and its products.
On the contrary, many other well-known brand names were affected, such as Betsson, ComeOn, Bet365, Nordicbet, and Betsafe. According to initial information, they will all withdraw from the Norwegian market.
Time will tell if they are right. However, initially, they want to send a message that they disagree with how this was carried out. Second, there are concerns about the cost of licenses and other costs associated with operating legally in this Scandinavian country.
We think it will take some time for the impressions to settle. There is enough data on how profitable the Norwegian market is. There are also numerous analyses of what can be expected from it. We think most operators will return after making a good plan and calculations. After all, the latest predictions are that companies in this sector will reach a revenue of over 738 million dollars by 2027.
