On Nov. 16, MaximBet announced that it closed its sports betting operations and is no longer accepting deposits or wagers.
In a press release addressing its customers, the company said: “it is with regret that we inform you that, effective immediately, MaximBet will cease operations. Challenging macroeconomic conditions and an increasingly cost prohibitive marketplace have accelerated this difficult decision.”
While they are no longer accepting wagers, customers can withdraw their funds until Dec. 15, at which point MaximBet will close the account and refund the account holder via check.
“MaximBet launched in 2021 with a desire to bring sports, entertainment, and betting together, all inside a lifestyle brand with a complete focus on the end user. While making great strides in offering customers a completely unique player experience, 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,” the statement read.
MaximBet was live and legal in just two states: Colorado, and as of September of this year, Indiana. They had plans to launch in several other states including Iowa, Pennsylvania, Ontario, New Jersey, and not-yet-launched Ohio.
“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.”’
MaximBet Not Alone
MaximBet is just the latest casualty of the sports betting market, as it becomes increasingly harder for operators to gain relevance in the crowded market at such high costs. They join Churchill Downs and FuboTV as operators this year alone that have ceased operations.
Churchill Downs pulled TwinSpires from the online sports betting space and redirected its efforts to make TwinSpires Racebook its sole focus. The announcement came in an earnings call in February – “because we do not see — for us — a path in which this business model delivers predictable and acceptable margins for at least several years, if ever, we have decided to exit the B2C online sports betting and iGaming space over the next six months,” CEO of Churchill Downs Bill Carstanjen, said.
Meanwhile, FuboTV announced it was shutting down its sportsbook just last month citing the same “challenging macroeconomic environment” as the reason for its exit. The announcement said it would impact their ability to reach their “longer term profitability goals.”
IMPORTANT MAXIMBET NEWS
With regret, we’re informing customers that MaximBet is ceasing operations. Our priority now, in consultation with state regulators, is to wind down operations and help customers withdraw their funds and close accounts. More info: https://t.co/8QzwUOn256. pic.twitter.com/WERYlT1u3s
— MaximBet (@MaximBetUSA) November 17, 2022
U.S. Sports Betting Outlook
With so many operators citing the same issues for their ultimate demise, it’s expected that other sportsbooks will continue to “cut their losses” and jump ship.
CEO of Roundhill Investments Will Hershey spoke to the driving force behind smaller sportsbooks pulling out of the space, back in February when Churchill Downs exited.
“The small players that are trying to carve out half a percentage of market share in New Jersey are realizing that is an incredible uphill battle with the way DraftKings, FanDuel, Caesars, and MGM are spending on customer acquisition.”
But even big operators are struggling, like DraftKings, whose stock just fell more than 20% earlier this month after the company announced adjusted EBITDA losses of $475-$575 million. Or in another more rare example, Caesars who hosted one of Mattress Mack’s multi-million dollar World Series bets called his bet a “high-profile liability” in a Q3 earnings call. They added that if it paid out (which it did) that it would be a “swing factor in whether the fourth quarter is positive as a whole.”
The betting space in general gives way to low margins when you consider state regulatory costs (like New York’s 51% tax rate) and money owed to casinos, data companies, teams, leagues, and players. It’s a gamble for everyone involved.