MaximBet joined the range of casinos and sportsbooks that shut their doors due to rising costs.
Closing up because of the macroeconomy:
The company stated that it decided to shut down its sports betting operations because of the macroeconomic conditions.
This gaming operator, which was part of the Carousel Group, was established in its partnership with Maxim magazine. It is known that MaximBet delayed its new tech stack, but major issues the company has been facing haven’t been known by now. The main issue was establishing its position in such a market where a few more affluent operators dominate.
The company stated: “Our ability as an early-stage company to compete in a market where operating costs far exceed revenue, even among the top operators, is not sustainable. Our priority now, in consultation with state regulators, is to wind down operations and help active customers in Colorado, and Indiana withdraw their funds and close their accounts.”
Following Suit:
This isn’t the first U.S. company that shuttered soon after launching. Just last month, FuboTV closed down its Fubo Gaming department, which lasted less than a year. The main issue regarding this company is sports sponsorships, because of which New York Jets sued the company. The club claims that Fubo still owes them money.
When compared to Fubo, MaximBet had fewer sports sponsorships. One of the investors and spokeswomen was popular rapper, Nicki Minaj, and Charlie Blackmon, an MLB All-Star outfielder, was an investor and endorser. It is still unknown how recent events affected them.
In the future, more shutters are expected. Sports betting is still a low-margin business in the U.S. market because of the market’s state-by-state nature and the amount of money that is often owed to casinos, leagues, and data operators. With the current global crisis, the problems keep getting bigger.
Many companies keep losing their value: e.g., DraftKings’ stocks’ value decreased by more than 20% during this month because of the company’s losses.
Small companies can’t compete:
Dave VanEgmond, a Managing Partner at Bettor Capital, a gaming VC firm, said: “The high regulatory cost to entry (including $10M or $25M license fees plus royalty or market access fees to casinos in certain states) make building a scaled sports betting business operating in most legal states difficult and expensive.”
He added that hundreds of millions of dollars, if not even a billion, were needed in order to compete in a market with such strong competition. While the industry leaders were tightening, smaller businesses and startups couldn’t follow them in increasing their capital. VanEgmond claims that he expects more shuttering amongst small businesses that can’t keep up with the most prominent players.
The players will be able to withdraw their funds until Thursday, December 15th. After that time, the remaining money will be refunded via checks that will be sent to the address stated on the account.
Customers can still contact the company’s customer support at [email protected] for any requests and questions.