Smarkets CEO Jason Trost has stated the company will slow down its US expansion plans after facing what the firm called a challenging year of trading in 2022.
Reporting its accounts to the Companies House – the UK’s registrar of companies – as per its legal obligations as a privately owned company in the country, Smarkets noted that its revenue had declined 10% year-over-year from $24.4m in 2021, to $21.9m in 2022.
2022 trading saw Smarkets launch its flagship SBK sportsbook brand in Indiana in Q1 and it secured a permanent license in the state in Q4. Meanwhile, it also appointed a General Manager for the US the spearhead growth.
However, after a challenging year for international expansion driven by rising inflation stemming from supply chain issues from a mixture of Covid-19 and Russia’s invasion of Ukraine and the subsequent global increase in interest rates, the firm has decided to pause US expansion.
The firm stated: “While we acknowledge the challenges present in our international expansion during 2022, we have made the decision to temporarily pause our US expansion.
“However, this is not a goodbye to the American market. We are committed to re-engaging with better and stronger product, and we remain optimistic about the opportunities it holds. Our focus for 2023 will be narrower and centered on product development.”
A tough year was amplified by the firm encountering difficulties regarding betting volume, which fell by 33%, attributed to a ‘churn of users acquired during the COVID-19 pandemic’.
Smarkets also embarked on a cost-cutting strategy as its costs of sales rose 21% from $9.2m to $11m in 2021.
The group was able to reduce administrative expenses from $36.6m to $32.9m and £335,000 to £276,000, partly by laying off staff which Trost acknowledged had ‘resulted in the loss of talented individuals’.
The CEO concluded: “Our efforts in cost reduction, coupled with revenue increases, have transformed us into a leaner organization and put us on a clearer path towards profitability.
“Although the past year was filled with obstacles, I am immensely proud of the company’s continued productivity and the efficiencies we have achieved.
“Our commitment to fixing the betting industry remains steadfast, and while the journey has been challenging, it has also been a remarkable turnaround to reach the point where we stand today.”
