Kindred Group has sacked 75 employees but says the trimming of the workforce isn’t COVD-19 related.
The Nordic online gambling company, which has a presence in Australia, plans to make 75 staff redundant. The Times of Malta newspaper broke the news on Friday. It revealed the cuts affect the company’s 13 global offices, including Australia.
A spokesperson said the company isn’t publicly revealing who faces the sack and why, but did confirm the redundancies will commence before the end of April.
“We have not disclosed the number of nationality in each location but in Malta it is a small group out of the 75 employees who are at risk of redundancy and these individuals are spread across most of our markets. This action follows previous communication regarding the group’s financial performance during 2019 and subsequent action to increase efficiency and reduce operational costs across the business. The decision is not related to the current COVID-19 situation.”
Kindred Group’s Poor 2019 Financials
The group published its poor 2019 results in February. Kindred’s revenue for 2019 increased by 1% to £912.8 million ($1.787 billion). It’s earning, however, plummeted 36% to £130 million ($245.5 million). Pre-tax profits suffered even worse, falling 55% to £67.1 million ($131.4 million).
Lower sports margins contributed to most of the falling profits. Kindred said it hoped a good 2020 European Championships would bolster the current year’s figures. That won’t happen, however, as FIFA postponed the football tournament until 2021 because of COVID-19.
Sweden’s online gambling situation continually changes with the government frequently changing legislation. The Scandinavian country was responsible for £6.6 million in lost earnings.
One recent change relates to offering bonuses to Swedish customers. Only new customers can receive bonuses. Kindred fell foul of the this and receive a SEK100 million penalty. Has this fine ultimately resulted in job losses? Spelinspektionen, Sweden’s gambling regulator, stated it considered revoking Kindred’s operating license.
Kindred also fell foul of Australian gambling rules and received a $25,000 fine. Liquor & Gaming NSW issued the fine after Kindred Group’s Unibet ran several adverts in 2018.
One advertisement read “Deposit $20, Bet with $100.” Another read “Earn $50 CASH For Each Friend You Refer!” Australian gambling adverts don’t all the encouraging of prolonged or frequent gambling. They are also not meant to attract new customers.
Kindred CEO Speaks Out
Henrik Tjarnstrom, the CEO of Kindred Group, spoke out about his decision to lay off 75 staff.
“Kindred is known across the industry for its strong culture and great team spirit. Having to put good colleagues at risk of redundancy is a very tough and painful decision, but unfortunately necessary as we adapt to new market realities. What we have communicated to our teams today will always be a last resort and we will of course ensure our friends at Kindred who have been put at risk will receive the full support they need and deserve.”
It’s only a week since Tjarnstrom said the effects of COVID-19 will be short-lived. He also claimed the virus could be a good thing financially for Kindred.
Tjarnstrom said Kindred’s reduced sportsbook turnover is being “partially compensated by solid growth in revenues from other products.” £2.2 million ($4.3 million) is Kindred’s current daily average revenue . This is 10% less than throughout 2019.
He also said Kindred is poised to reap the benefits of gamblers flocking online. “Social and behavioural changes that are already happening will accelerate the migration from offline to online”, said Tjarnstrom.
GVC Holdings Reveals COVID-19 Cost
Gambling giant GVC Holdings has revealed the potential cost of COVID-19 to its business. It warned shareholders its EBITDA for the current year could be £150 million less than anticipated. Nobody knows how long sports will remain banned, making difficult to work out the true cost.
It said EBITDA falls by £45 million to £50 million ($88.1 million to $97.9 million) each month of the lockdown. This includes monthly staffing costs of approximately £20 million ($39 million).
The company makes a lot of its money from sporting events. Some 45% of the group’s revenue stemmed from betting on sporting events. Online net gaming revenue saw 43% some from sports betting.