XLMedia has reinforced its belief in its operational strategy in the US despite the lack of market openings causing a downturn in both revenue and EBITDA in H123.
Management previously warned that the lack of marketing openings against the strong 2022 comparatives of New York’s sports betting launch would lead to a decline in revenue and earnings.
These warnings to investors came to fruition as total revenue for the first half of the year fell by 34% from $44.5m in 2022 to $29.4m, whilst EBITDA also dropped by 38% to $6.5m (H1 2022: $10.6m). North American sports betting revenue almost halved to $16.2m compared to $30.2m in H122.
The firm reiterated this week that the ‘timing, number and scale of new state launches’ contributed heavily to the differences in revenue year-on-year.
A statement from the firm read: “North America saw several operators limit their marketing spend, reducing customer acquisition activity around the Super Bowl and the offseason, as they reviewed marketing tactics in the evolving US market. Together, the Massachusetts and Ohio launches did not reach the same scale as New York’s launch did in 2022.”
With New York being the fourth most populous US state and Ohio being just the seventh, the comparative was destined to be a challenge for affiliates, but what was not expected was the regulatory regime in Massachusetts, which posed a threat to affiliates.
The Massachusetts Gaming Commission was close to banning affiliate activity in the state but compromised to allow CPA agreements but not rev share deals.
These conditions, XLM stated, resulted in a less successful launch than originally anticipated, but noted that it expects an uptick in activity ahead of the NFL season. Looking ahead, the affiliate explained that it is looking ahead to the market launch in Kentucky.
XL Media stated: “The delay in confirmation of the regulatory regime around the Massachusetts launch, combined with the launch occurring after the NFL season had ended resulted in a more muted initial revenue spike. However, the upcoming NFL season presents a second opportunity to launch sports betting in Massachusetts.
“With the highly anticipated Kentucky launch in September 2023 expanding our operations to 20 states, our North American Sports business continues to be driven by the Group’s high-quality content, offering audiences both national and local sports coverage and sports betting content that builds engagement and trust to connect sports fans with operators when promotions are available.”
XLM’s North American gaming revenue for the trading period remained consistent with 2022, standing at $400,000. The group ‘rebuilt’ its casino offering during this time, subsequently extending this to some partner sites and is preparing for the launch of a new North America-focused site, HoneyMonkeyPineapple.
The affiliate will issue its full H1 report in September.