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BetMakers Technology, XLMedia, and PointsBet are the gambling stocks on NEXT.io’s watchlist that faced the most significant losses in 2023.

To see which three stocks performed best last year, click here.

1. BetMakers Technology 

Investors in BetMakers Technology faced a challenging 2023, marked by a substantial decline in the company’s stock value.

Starting the year at A$0.28, the stock plummeted to A$0.08, marking a loss of 71.4% over the 12-month period.

Early last year, BetMakers had warned that its investment in growth opportunities during the first half of the 2023 financial year would result in negative earnings for the full year.

BetMakers invested in betting venture Betr together with News Corp and Tekkorp.

Following the profit warning, the company underwent several management changes, including the appointment of Jake Henson as its new CEO.

However, in another blow to the business, high-profile bookmaker and VC fund owner Tom Waterhouse reduced his stake in the company in March. 

To reset its business, BetMakers announced in May that it would cut over 100 jobs globally as part of a comprehensive cost-cutting strategy. 

Despite these efforts, BetMakers concluded its financial year 2023 without generating a profit, reporting a substantial loss of A$38.8m.

CEO Henson highlighted financial year 2024 as a time to aggressively simplify the operating model and retire legacy systems, establishing a robust foundation for growth.

BetMakers aims to bring down its cost base to under A$110m this fiscal year and intends to explore opportunities with key clients including Norsk Rikstoto, Penn Entertainment and Caesars. 

As a positive step, BetMakers completed a restructuring of its US operations. This move streamlined the business, cut costs, and positioned the company for building “further scale in the US in a profitable way.”

The early months of 2024 will provide investors with greater insight into whether the company has managed to pivot its trajectory.

2. XLMedia

Affiliate group XLMedia has consistently appeared in our monthly “biggest loser” stock market sweeps. 

Unsurprisingly, it has also secured a place among the worst-performing stocks of 2023.

Starting at £0.16 on December 30, 2022, XLMedia’s shares plummeted to £0.07 by the final trading day of 2023, marking a 55.4% loss in stock value.

For H1 2023, XLMedia disclosed a 33.9% year-on-year revenue drop, primarily due to challenges in penetrating the US market.

The company experienced a substantial 46.4% year-on-year decline in US sports betting revenue, which dropped to $16.2m from H1 2022’s $30.2m. 

Despite CEO David King’s repeated emphasis on the non-linear growth pattern in the US market, the stock value decline throughout the year suggests that investors have become increasingly impatient.

Moreover, the situation worsened toward the year’s end.

In December, XLMedia revised its full-year revenue and adjusted EBITDA projections downward due to its major partner Barstool Sportsbook exiting the market. 

The affiliate business anticipates its 2023 full-year revenue to range between $50m-$52m, with adjusted EBITDA expected at $12m-$14m.

XLMedia intends to continue selling off some of its assets but has ruled out selling the entire company for now.

The group has already sold three iGaming affiliate sites for $4m and earlier disposed of personal finance assets for $1.3m. 

Despite talks with interested parties, the board concluded that selling the entire company isn’t the best value proposition due to the current share price.

3. PointsBet 

PointsBet shares took the third spot in our rankings with a 38.3% annual decline. 

Starting at A$1.49, they slid to A$0.92 by year’s end.

Since the end of 2022, the operator had been attempting to sell off portions of its business.

In April, the company altered its strategy and began considering the sale of its US operations, after failing to find a buyer for its Australian arm. 

PointsBet later explained that despite achieving strategic success in the US, the high costs of competing against major brands would prevent the business from achieving positive cash flow in the short term and therefore, it opted to sell the US business.

Sports merchandise giant Fanatics tabled a $150m bid for the business in May, and subsequently entered into a binding agreement with PointsBet as the firm’s board unanimously recommended shareholders vote in favour of the deal.

However, a last-minute all-cash offer of $195m from DraftKings for PointsBet’s US operations almost jeopardised the deal. 

Fanatics eventually increased its bid to $225m and the final completion of the sale is expected to take place in March 2024.

PointsBet hinted at the potential to enhance efficiency in its Australian business after freeing itself from its US operations. 

The company’s global workforce is expected to decrease from approximately 650 full-time employees to around 275 once the sale has been completed.

PointsBet anticipates nearing an EBITDA breakeven point from April 2024, on the back of cost reductions in marketing, technology, corporate, and staff expenses. 

Moreover, in November PointsBet chairman Brett Paton said the company wouldn’t need additional external funding to achieve EBITDA profitability in 2024.

Should PointsBet meet its objectives, investors are likely to embrace this positive direction.

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