Svenska Spel profit down despite rising revenue

Posted: July 19, 2022, 7:27 a.m.

Last update: July 19, 2022, 7:27 a.m.

Svenska Spel has published its financial health report for the second quarter of the year. The Swedish state-run gaming operator reported that its net gaming revenue slowed, but its land-based operations performed better.

Svenska Spel
A Svenska Spel sign displays lottery options. The Swedish game company increased its revenue, but decreased its profits. (Photo: Svenska Spel)

The company’s games net revenue increased 1% in the second quarter. As a result, he earned around 1.96 billion Swedish kronor ($190 million) during the period, an insignificant increase from what he had earned a year earlier. However, in the second quarter of last year, Svenska Spel closed its casinos in response to the COVID-19 pandemic. This therefore strongly distorts the figures.

As a result, the operator’s land-based casinos, with 284.4 million Swedish crowns ($27.5 million), earned 95% more than in the second quarter of last year. Despite this, the company’s net operating profit decreased by 7% to SEK 531 million (US$51.29 million).

The lottery still stays strong

Svenska Spel’s lottery activities continue to support the company’s business, accounting for 61% of its total turnover. The company received SEK 1.13 billion ($110 million) from the vertical, roughly the same amount it earned in the second quarter of last year.

During the quarter, Svenska Spel distributed nearly 180 million Swedish krona ($17.48 million) in lottery winnings. The highest profit of the quarter fell on Eurojackpot, which now has two draws per week, with just over SEK 20.8 million ($2.02 million).

During the quarter, Stryktipset, where players have to predict the outcome of 13 football matches, had the biggest win of the year. More than 7.5 million Swedish crowns ($729,000) went to a single winner. High Five has reached its first million, paying out more than 1.6 million Swedish krona ($155,520) for the first time ever.

Svenska Spel’s casino and sports segment saw its net gaming revenue decline by 19%. The drop in revenue is due to new responsible gambling protocols, according to the company. Sweden, however, rejected the idea of ​​new spending restrictions for online gambling earlier this year.

Operating profit declined in the second quarter due to capital expenditures in new products and technologies. As a result, the operating margin fell from 30% to 27%, which is 3% less than what Svenska Spel had to deliver to the Swedish government. Additionally, online transactions fell by 5%.

In the first half of the year, Svenska Spel’s net gaming revenue decreased by 1% compared to last year. It reported net gambling income of SEK$3.89 billion (US$377.08 million) for the period.

This decline stems from the impact of COVID-19 earlier in the year, as well as new gaming protocols. The result was a 4% drop in operating profit to SEK$1.12 billion (108. US$34 million) and an operating margin of 29% for the six-month period.

Svenska Spel dedicated to entertainment

Patrik Hofbauer, CEO of the company, spoke about the new gambling security measures in Sweden. He said the company remains focused on responsible gaming and, at the same time, hopes to be able to provide Svenska Spel with a more sustainable income.

We are seeing a positive trend in healthy revenue share thanks to our enhanced gaming responsibility measures. We continue to provide our customers with entertaining gaming experiences in a responsible way, because we want gaming to be a joy for everyone.said Patrik Hofbauer, CEO of Svenska Spel.

Hofbauer thinks another area of ​​gaming could impact the company’s ability to generate better revenue. A month ago, he criticized Sweden’s restaurant-casino model, arguing that they are “almost without rules or controls”.

The CEO posted remarks on the company’s corporate blog, where he criticized separate rules for restaurant-casinos nationwide and the resulting lack of official data. He said this had implications for both drug addicts and money launderers.

Restaurant casinos are licensed casinos that operate inside licensed liquor establishments. Svenska Spel holds the exclusive right to operate regular casinos under its Casino Cosmopol brand; however, operators may offer table games at these locations.

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