For many international gaming operators, the U.S. iGaming market was once viewed as the ultimate frontier. However, as the market matured, the reality of how competitive the market is became impossible to ignore.
According to Super Group, the parent company of Betway and Spin, the decision to exit the U.S. market in 2024 was one that provided the company with much food for thought, offering lessons that have ultimately shaped its strategy in the years since.
Speaking on the latest episode of iGaming Daily, Chief Executive Officer Neal Menashe highlighted the sheer scale of the barriers to entry within the U.S. But in a market dominated by names such as FanDuel and DraftKings, gaining market share stateside is no easy feat.
He said: “We tried in the U.S., we spent hundreds of millions of dollars. To compete in this business, you need a great product, great marketing, a great back office and obviously a great team to support that.
“We were up against big competitors there, especially the two biggest [FanDuel and DraftKings], who own 80% of the market in sports. The amount they were spending on marketing, we just couldn’t compete with.
“Plus, the ecosystem in the U.S., you have to have land-based partners, the taxes you have to pay, all the different costs involved, meant that your break-even was like four times anywhere else in the world.”
You can’t be everywhere, all at once
Beyond marketing, the structural requirements of the U.S. market – from establishing land-based partnerships to navigating the fragmented regulatory landscape – created a unique “burn-rate” that the Super Group CEO noted was significantly higher than in other global territories.
But rather than continuing to chase a distant break-even point, Super Group chose to reallocate its resources and refine its focus – withdrawing from the U.S. and also streamlining its European operations in markets it deemed to be underperforming.
Menashe continued: “We were in seven or eight of these states and putting all our development into the product in those states. Actually, when we cut it – and we cut some some European countries like Belgium, France, Portugal, etc. where we couldn’t see a path to profitability – we could hone our resources on the markets where we’re making lots of money.
“Canada, Ontario, Mexico, UK, Spain. You’ve seen the super growth of Super Group’s EBITDA and revenue; it’s because of honing in on where we can make money. That’s what it’s about.
“You can’t be everywhere, in the same way we can’t be in every African country tomorrow. Maybe in five years time, we can cover a lot more of it, and we would hope to, but it’s the same principle. It’s not just about putting a website up, marketing ourselves a bit, and then players arrive at your site. That’s not what this business is. This is hardcore, being the best of the best in order to compete.”
Lessons learned
Despite the withdrawal, Menashe shared that the company’s U.S. efforts were not wasted – in fact, he highlighted that its time in the states taught the company some valuable lessons: from product development and marketing to competing as a market leader.
“From the U.S., we learned that lesson,” Menashe shared. “The product we developed for the U.S. is what we’ve moved the whole of Betway Global to in Canada. So, it wasn’t a total waste. We learned lots of lessons, but I think that at least we tried and we realized the path, which you’ll find now in some of the markets.”
The disparity between entering a fresh market versus maintaining a legacy stronghold is nowhere more apparent than in Canada, where Super Group enjoys a decades-long head start.
He added: “We’ve been in Canada for like 25 years. So, you’ve got this customer base, you’ve already got a marketing budget that you don’t have to cover. Remember, these businesses are all about having a certain scale with good marketing every month, and then you get this operating leverage in your EBITDA over and above these amounts. But in America, you’re starting from zero. You have to build it up.”
Finding Nirvana
As Super Group looks toward future expansion, particularly in Africa, the lessons from the U.S. serve as a blueprint for its future growth and product strategy.
The goal, the CEO said, is no longer just to be present, but to achieve the same level of dominance that the market leaders enjoy in North America.
He concluded: “How FanDuel and DraftKings are in the U.S., we are like them in some of these African countries. It’s all about the brand, but a great brand with a not good product is no good. A great brand with an unbelievable product and an unbelievable back office, this is nirvana, and this is what we are striving to do.”
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