Kindred Group’s Quarter 4 Figures Impacted by French Market Tax

The CEO of the Kindred Group is predicting the worst is over after the company predicted a 50% reduction on Earnings before interest, taxes, depreciation, and amortisation figures compared to 2018 figures.

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French Tax Calculations Impact Kindred Group © Pixabay.

Speaking on a post-Q4 trading update webcast, Kindred’s CEO Henrik Tjärnström revealed that over half of the £15m negative growth in Q4 was due to almost £8m worth of liabilities in the French market. Tjärnström also revealed that low sports margins had also contributed to the low figures.

Tjärnström explained that under the current tax regime in France, operators are required to meet a margin of a minimum of 15% and the duty set on betting was based on turnover. Therefore, the effective tax liability for the company was 60% on gross gaming revenues. The CEO explained that under new rules, effective from January, rance switched to a GGR tax model, this should result in a like-for-like rate of 54.9%, a 5.1% drop.

He said;

The customers are winning which is good for them, but it creates more turnover and indirectly more betting duties, this has double the effect when we have a low sports betting margin, and this was heavily the case in the fourth quarter. Henrik Tjärnström, Kindred Group CEO

Tjärnström said France’s move to the new tax regime would stop the “double effect” by taxation and would provide stability by removing the volatility of the previous method of calculating liabilities. He said previous “pockets of low margins” in France had often been offset throughout the year but hit hard in Q4. Better news for the Kindred Group and other operators who service the UK sports market came in the form of domestic football in the UK.

League One’s Shrewsbury Town fought back from 2-0 down to draw with the Premier League runaway leaders and make it a bumper FA Cup fourth-round for the bookies. Heavily backed Liverpool appeared to be cruising into the next round after taking a commanding half-time lead. However, Shrewsbury’s Jason Cummings stunned the league title favourites with a brace to force a replay, much to the delight of the bookies.

Kindred Group’s Ali Gil said of the surprise result, “No surprise but Shrewsbury were the heroes here at Kindred over the weekend as their two-goal comeback against all-conquering Liverpool was the perfect bookend to our weekend”.

Gil explained that the six draws in the other ties in the round had also been extremely “layer-friendly” with Newcastle’s draw at home with Oxford also serving them well while the importance of the Liverpool draw was underlined by betting exchange which revealed that one punter lost £13,510 after backing a Liverpool win against their lower league opponent. However, despite this bumper weekend for Kindred and sportsbook operators, Betfred’s Peter Spencer warned about the challenges in a low-margin arena. He revealed that the operator came out ahead on football betting this weekend for the first time in 2020.

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