Financial struggles lead to redundancies at exchange operator Smarkets
Betting exchange operator Smarkets made approximately 20 redundancies in November last year amid ongoing financial struggles.
The company – which also operates the SBK sportsbook brand – cut around one sixth of its workforce in a bid to drastically reduce costs.
Some of the affected employees went on gardening leave, while others accepted a lump sum in lieu of notice.
iGaming NEXT understands that only staff working directly on product, increasing revenue, cutting costs or raising investment were guaranteed their positions, while all remaining roles were put at risk of redundancy.
Smarkets’ head of political markets Matthew Shaddick was one of the affected employees. Shaddick confirmed his exit on LinkedIn after an 18-month stint with the company.
The November lay-offs followed a smaller round of redundancies in the summer of 2022.
Smarkets acknowledged it was a “difficult situation” for the business but did not wish to comment further when contacted by iGaming NEXT.
Why have costs increased?
The redundancies were likely driven by the increased costs of operating a regulated sports betting company in the UK.
Licensed operators have been ordered to comply with increased safer gambling measures by the Gambling Commission during recent years, which has led to higher operational costs.
The tighter oversight of customers through enhanced affordability checks and more in-depth – and arguably intrusive – KYC measures has also come with a significant cost for bookmakers, scaring off some high value customers in the process.
A January article in the Racing Post revealed that high stakes punter Joe Beevers withdrew his custom from Smarkets after the operator requested source of funds information, including questions on two transactions from his friends, of which he deemed “immaterial” information.
Many firms have either fallen into financial difficulty or withdrawn from the UK market altogether for these reasons. Mansion Group, Genesis Global and STS have all exited the UK market since the turn of the year, for example.
London-based Smarkets is still active and committed to the UK, however, with both its sportsbook and exchange brands live on the Oddschecker comparison grid.
In August 2022, Smarkets was on the wrong end of a £630,000 fine by the Gambling Commission for AML and social responsibility failings, while the launch of its SBK brand in the US via the state of Colorado has proven expensive and is yet to bear fruit.
“Revenue decreased as costs increased and that is obviously not a good trajectory,” confirmed one source while speaking to iGaming NEXT on the condition of anonymity.
What do the accounts say?
The operator was scheduled to report its financial performance for the year up to 31 December 2021 on Companies House by September 2022, but the accounts are overdue.
The firm’s most recent published accounts, made up to 31 December 2020, confirm the major investment in safer gambling:
For full-year 2020, Smarkets made a loss after taxation of £2.57m, down from a profit of £612,000 in 2019.
Smarkets did however execute a significant Series B funding round in June 2021, including the closing of a significant minority investment from private equity firm Susquehanna Growth Equity.