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Kindred Group and Caesars Entertainment have forged a US market-access partnership initially covering two Midwestern states.
The deal will allow Kindred’s subsidiary Unibet to apply for online gaming licenses in partnership with Caesars’ land-based properties in Indiana and Iowa.
Caesars operates dozens of hotels and casinos in the US and elsewhere under the Caesars, Harrah’s, and Horseshoe brands. It will additionally merge with Eldorado Resorts later this year, further expanding its portfolio.
Unibet is a major brand in western Europe and Nordic countries that has only recently made its first forays into the US market.
At the moment, the agreement between the companies only involves sports betting in those two states. It does cover online casino gaming as well, should one or both legalize it in the future.
Kindred also says that the deal has the potential to be extended to additional states.
In Indiana, Unibet will partner with Horseshoe Hammond. In Iowa, it will be Harrah’s Council Bluffs. The group’s technology provider will be its own spin-off company, Kambi. Under the terms of the agreement, these partnerships will remain in place for at least 10 years.
The deal is online-only and nonexclusive. Caesars already operates retail sportsbooks in both states. It expects to launch an Indiana online sportsbook under its Caesars Sports’ brand, and may do so in the Iowa sports betting market as well.
Although Caesars has a Harrah’s property in Philadelphia, the deal does not apply to Pennsylvania. Unibet has already gone live there in partnership with Mohegan Sun Pocono.
Also conspicuously absent from the deal is any mention of Illinois, despite the fact that it has legalized sports betting and Caesars owns property there. Illinois online casinos could be a reality within a few years as well.
Several other states could come into play in the future, too. Missouri and Maryland, for instance, are both home to Caesars-owned properties and are considering sports betting legislation.
Once the merger with Eldorado is complete, Colorado may become a possibility for Caesars. Sports betting is already legalized there and expected to go live this year. Eldorado owns two properties in the state — Isle Casino and Lady Luck Casino — both located in Black Hawk.
The day after announcing the Caesars deal, Kindred held its earnings call for Q4 2019. The presentation mentioned the deal and laid out a timeline for launch in the two states. It said that it expects to launch in Indiana sometime in Q3 this year.
There are already three online operators up and running in the Hoosier State: DraftKings Sportsbook, FanDuel Sportsbook, and BetRivers. Several more should also be launching this year alongside Caesars Sports, including Fox Bet, and BetMGM.
Online sports betting is also up and running in Iowa, but Unibet will hold off on launching there until Jan. 1, 2021. Until that date, the law requires in-person registration in order to use an online sports betting app. For that reason, PointsBet is the only online brand yet to have launched its app there.
The other Iowa sportsbooks currently available are operated directly by three of the state’s land-based casinos: Hard Rock Sioux City, Q Casino, and Elite Casinos. The Australian brand BlueBet Sportsbook expects to make its US debut there in 2022.
Despite the deal with Caesars, Unibet still needs to apply for and receive its own license in each state before it can go live. Both states have already begun issuing licenses, and Unibet had no trouble securing approval in New Jersey and Pennsylvania.
Regulatory delays are nevertheless a possibility, so for now these timelines to launch remain estimates.
As mentioned, the Caesars deal includes provisions for Unibet to launch such a product alongside its sportsbooks in Iowa and Indiana. Unfortunately, though, it’s likely to be years before residents of those states can expect to see such a product.
Indiana Gov. Eric Holcomb has indicated that internet casino gaming could eventually come to his state. He doesn’t expect a push for legalization until 2022 or 2023, however.
The state is currently reforming and expanding its land-based casino industry, and that will remain the priority until at least the end of 2021. Allowing a year for the legislative process and another for regulatory red tape that would have the first online casinos launching in 2024 — even under an optimistic scenario.
Iowa is an even bigger question mark. There’s some public pressure for the state to look at other forms of gambling now that sports betting is legal, but its legislators have been quiet on the issue so far.
Unibet currently offers its online casino product in New Jersey and Pennsylvania.
Kindred has been going through something of a rough patch for the past two years.
Its stock (STO: KIND-SDB) hit an all-time high in February 2018, but share values have dropped over 60% since. The group faces regulatory headwinds and declining revenues in its European operations and likely hopes that new markets in the US will help turn things around.
So far, Unibet has been struggling to establish a foothold.
In both New Jersey and Pennsylvania, its market share for online casino revenues is in the low single-digit percentages. Its sportsbooks are even smaller. Unibet’s total US revenues for 2019 were just over $2 million; meanwhile, it spent close to $6.5 million on marketing. Its monthly revenues did increase by 90% from December 2019 to January 2020, however, so the situation is improving.
Having a major brand like Caesars as its land-based partner might help. And gaining access to new states certainly will. Even so, the response from the company’s investors was tepid. Kindred’s stock bounced 4.8% on Wednesday morning following the announcement before correcting to close up just 2%.
For Caesars, the deal has little downside.
By allowing Unibet to operate a sportsbook in partnership with its properties, it will receive a cut of revenue with little effort required at its end. Meanwhile, its options for other online partners are limited, since most of the major players have other deals in place. GVC has established a wide-reaching partnership with MGM Resorts, for instance, while DraftKings and others have market-access deals with Penn National.
Caesars’ stock (NASDAQ: CZR) also responded positively to the announcement, but to an even lesser degree than Kindred’s. It rose by around a half percent soon after trading began on Wednesday, and held even afterward.