Las Vegas-based SuperBook has announced it is exiting the U.S. online gaming market with operations in Michigan and New Jersey. Last year, the company shuttered its Betway mobile sportsbook operation in the country.
Shifting Landscape
Increasing taxes have begun to erode the bottom lines for mobile sportsbooks and online casino operators in the U.S., which has consolidated the market, and SuperBook has become the most recent casualty. The company announced it was terminating its two existing iGaming operations in Michigan and New Jersey.
“This is a difficult decision, particularly because our U.S. team has worked hard and made progress over recent quarters,” CEO Neal Menashe said in Tuesday’s release. “Nonetheless, recent regulatory developments combined with ongoing assessment of capital allocation requirements have led us to believe that our stringent hurdle for return on capital will likely not be met in this market any time soon.
“We therefore intend to focus capital and resources on markets where we see the greatest opportunity for scalable, sustainable, profitable super growth, with a disciplined emphasis on operational efficiency.”
NJ Tax Hike Contributes to Exit
The regulatory increase in online casino taxes operating in New Jersey is likely to have exacerbated the situation and resulted in this most recent action. A recent bill escalating the tax rate on mobile sportsbooks, DFS, and online casino gambling from 15% to 19.75% was recently passed in the New Jersey legislature, which is reflective of the industry’s shifting landscape when it comes to taxes on mobile betting operators.
The exit will affect SuperBook’s online Spin Palace Casino in both states and will cost the company tens of millions to depart the industry.
“Various strategic exit options are under consideration,” CFO Alinda Van Wyk said. “We are still early in the process, but nonetheless would expect to incur a one-time cash restructuring cost of approximately $30 million – $40 million in connection with such an exit and are actively pursuing multiple efforts to minimize the impact thereof.
“Further details regarding these potential costs will be shared during our second quarter earnings release.”
Back to Vegas
SuperBook is known for its famous sports handicapping contests and has established itself as a premier retail sportsbook back in 1993. Characterized as one of the largest retail sportsbooks, nestled inside the Westgate Las Vegas Resort & Casino, its SuperContest is one of the most popular NFL handicapping tournaments in the world.
Struggles with Online Expansion
However, its migration into the realm of online sportsbooks and iGaming industries has not been smooth sailing. Almost a year ago, it announced it was shuttering its Betway online sportsbook operating in eight states, including Arizona, Colorado, Indiana, Iowa, New Jersey, Ohio, Pennsylvania, and Virginia.
The group said, “We regret to inform you that SuperBook Sports will no longer be accepting wagers, deposits, or new accounts in Colorado, New Jersey, Arizona, Tennessee, Ohio, Iowa, Maryland, and Virginia.
“You are free to withdraw your funds. Thank you for being a loyal customer of SuperBook Sports.”
It should be noted, however, that SuperBook’s sportsbook still exists in Nevada through its famous retail location and is working in digital form through the Westgate in Nevada through both Westgate Las Vegas and the Westgate SuperBook Mobile app.
