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While the cultural and environmental impacts of fashion retailers SHEIN and Temu are controversial at best, their influence on the fashion industry is undeniable. When it comes to online gambling in the United States, the evidence that there won’t be an equivalent to SHEIN or Temu continues to mount.
The latest evidence comes in the form of the most recent full-year earnings report from Betfred, a gaming company based in the United Kingdom that offers in-person and online sports betting in several US states. The US online casino industry is always ready for innovation, but true disruption is a fool’s errand at this point.
Betfred shares fiscal year totals with investors
According to the latest filing from Betfred1, costs greatly exceeded revenue during the past fiscal year. Gaming revenue from both online and physical operations totaled almost £908 million, the equivalent of around $1.1 billion US.
However, the company posted a net loss of nearly £36 million (around $46.2 million US) for the period. The report does not break down expenses and revenue numbers by region.
Betfred currently operates in nine US states, either brick-and-mortar or online. While that includes Pennsylvania, Betfred has not launched a PA online casino product to date.
Thus, all of its US operations focus solely on sports wagering at this time. It’s unclear to what extent those US operations played a part in taking Betfred’s net income from a gain of £37.7 million for the previous fiscal year to a loss of £35.8 million for the most recent.
At the same time, one excerpt from the filing is extremely telling about the state of Betfred’s US operations.
“The company funded some of the expansion in the US businesses through inter-group loans. Due to doubts surrounding the estimated future cash flows of the US business and therefore the recoverability of these inter-group loans, the loans have been provided for in full, £42.9m.”
Betfred’s own assessment of its US business seems a far cry from the success that SHEIN and Temu have found in the fashion industry in the same country.
SHEIN and Temu weave tale of true industry disruption
“Fast fashion” retailers SHEIN and Temu have actually achieved the kind of industry disruption that CEOs of startup companies regularly use as a buzzword in their pitches to investors but rarely truly deliver. Their negative impacts on the environment2 and their exploitation of workers3 are factual and legitimate concerns.
There is also no denying they have taken significant market share4 from established brands in the US because they have been able to pivot more quickly to shifting consumer demands and undercut that competition. It seems that the window of opportunity to do the same in the online gambling space in the US closed long ago, despite many attempts to force that window back open.
Cutting their losses and moving on
Just a few examples of significant recent exits from US online gambling operations by foreign operators include:
- PointsBet’s sale of its US operations to Fanatics Betting & Gaming
- Tipico’s selling its US assets to MGM-owned LeoVegas
- Unibet shuttering its online gambling apps in the US
In all of these instances, the explanation for the moves was almost identical; the returns didn’t even match the investment, much less surpass the cost. It seems that Betfred is facing the same challenge in the US.
The biggest difference between these efforts and the success that SHEIN and Temu have enjoyed in bringing their businesses to the US is that these foreign gambling companies failed to offer anything superior or different in a good way. Moreover, they got into the game far too late.
Postmortem on an intriguing era
The aforementioned gambling operators and others began launching their products in US states after those jurisdictions began regulating online gambling following the fall of the federal Professional and Amateur Sports Protection Act in 2018. At that point, though, it was already too late to mount a legitimate business.
In reality, the time for foreign brands to start marketing their online gambling products to US customers was well before those became explicitly legal. DraftKings and FanDuel began acquiring customers with grey-market daily fantasy sports products in 2012.
The benefit of hindsight reveals that companies like Betfred, Kambi, PointsBet and Tipico probably should have done the same at that time if they were serious about competing in the US. However, the case against that was strong at the time.
DraftKings and FanDuel were burning through huge amounts of capital to build their brand awareness at great risk. Furthermore, there was no guarantee that any new online gambling products would ever become legal in any US jurisdiction or that such regulation would afford opportunities to any companies outside of the country.
Regardless of the prudence of avoiding those risks, waiting until the landscape became more favorable meant that when licenses became available in the various US states, the brand recognition and customer base that DraftKings and FanDuel commanded set those operators at a huge disadvantage. From there, they have failed to offer a superior product at a better value necessary to begin to overcome that disparity.
It’s probably only a matter of time before Betfred joins the trend of foreign companies cutting their losses and exiting the US as a result of the numbers simply dictating the necessity of that movement. When that happens, it will further reinforce the belief that the US online gambling industry will never see a SHEIN or Temu equivalent.
