BlueBet Exits U.S. Market Amid Strategic Review and Merger with Betr

In a significant strategic shift, Australian wagering operator BlueBet has announced its decision to cease all operations in the United States. This move comes as the company reassesses its global expansion strategy in light of regulatory challenges and market dynamics that have proven difficult for smaller operators to navigate.

BlueBet revealed on Thursday that it plans to withdraw entirely from the U.S. market, shutting down its online wagering services in all licensed states. This decision follows the termination of its market access agreement with Horseshoe Hammond in Indiana, a move announced just last month. The company had also secured market access in Colorado, Louisiana, and Iowa but faced “slower than expected” progress in other markets where it sought to establish a presence.

“The industry dynamics in the U.S. B2C market are such that scale players are currently dominant, with smaller operators unable to achieve the necessary unit economics, driving a recent wave of consolidation and exits, which is likely to continue into FY25,” BlueBet stated. By exiting the U.S., the company expects to save between $6 million and $8 million annually, funds that will be redirected to bolster its Australian operations.

Strategic Review Spurs Exit

BlueBet’s withdrawal from the U.S. market is the result of a strategic review of its American business, which was initiated following its recent merger with the Australian wagering operator, betr. The merger was a significant move for BlueBet, positioning the company to become a leading player in the Australian market. BlueBet issued approximately $265.4 million in fully paid shares to Betr shareholders as part of the acquisition, equating to 57% of BlueBet’s shares.

The decision to pivot away from the U.S. and focus on Australia is driven by the company’s desire to leverage its strong market position at home. The merger with betr is expected to help BlueBet capture over 10% of the Australian market, a key objective for the company. BlueBet currently serves over 70,000 active customers in Australia, a 7.7% increase from the previous year, despite reporting an EBITDA loss of $12.9 million in 2023.

BlueBet’s challenges in the U.S. are not unique. The company entered the U.S. market with a conservative, “Capital-Lite” approach, aiming to minimize investment while testing the waters in a highly competitive environment. However, the fragmented and costly regulatory landscape in the U.S., where each state has its own process for approving wagering operators, has proven to be a significant barrier to growth. In many cases, securing regulatory approval has taken years and required substantial financial resources, with no guarantee of success.

These challenges are part of a broader trend affecting smaller Australian betting firms like PointsBet, which also exited the U.S. market earlier this year. The difficulties faced by these companies highlight the dominance of larger, global players in the U.S. market, who have the scale and resources to navigate these regulatory hurdles more effectively.

BlueBet’s exit from the U.S. also comes at a time when Australia’s largest wagering operator, Tabcorp, reported a substantial net loss after tax, citing a weak wagering market and increasing competition from digital-only brands like BlueBet and betr. This highlights the shifting dynamics in the Australian market, where digital innovation and customer engagement are becoming increasingly important.

Source:

BlueBet to exit US to focus on core Australia market. Press release. August 29, 2024.