Svenska Spel Profit Down Despite Increase in Revenue

Posted on: July 19, 2022, 07:27h. 

Last updated on: July 19, 2022, 02:15h.

Svenska Spel has released its financial health report for the second quarter of the year. Sweden’s state-run gaming operator reported that its net gaming revenue slowed to a crawl, but its land-based operations saw better results.

Svenska Spel
A Svenska Spel sign displays lottery options. The Swedish gaming company has increased its revenue but decreased its profit. (Image: Svenska Spel)

The company’s net gaming revenue increased by 1% during the second quarter. As a result, it earned about SEK1.96 billion (US$190 million) in the period, an insignificant increase from what it earned a year earlier.

However, in the second quarter of last year, Svenska Spel closed its casinos in response to the COVID-19 pandemic. As a result, this greatly skews the figures.

As a result, the operator’s land-based casinos, with SEK284.4 million (US$27.5 million), earned 95% more than they did in the second quarter of last year. Despite this, the company’s net operating profit shrunk 7% to SEK531 million (US$51.29 million).

Lottery Still Remains Strong

Svenska Spel’s lottery operations continue to shore up the company’s activity, accounting for 61% of its total revenue. The company received SEK1.13 billion (US$110 million) from the vertical, roughly the same amount it earned in the second quarter of last year.

During the quarter, Svenska Spel distributed almost SEK180 million (US$17.48 million) in lottery winnings. The highest profit of the quarter fell on Eurojackpot, which now has two draws a week, with slightly more than SEK20.8 million (US$2.02 million).

During the quarter, Stryktipset, where players need to predict the outcome of 13 soccer matches, scored the biggest win of the year. Over SEK7.5 million (US$729,000) went to a single winner. High Five reached its first million, paying out over SEK1.6 million (US$155,520) for the first time.

Casino and Sports Numbers

Svenska Spel’s casino and sports segment saw its net gambling revenue lose 19%. The lower revenue was due to new responsible gaming protocols, according to the company. Sweden, however, rejected the idea of further spending restrictions for online gambling at the beginning of the year.

Operating profit decreased in the second quarter due to spending on investments in new products and technologies. As a result, the operating margin fell from 30% to 27%, some 3% lower than what Svenska Spel was to deliver to the Swedish government. In addition, online transactions fell by 5%.

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

This decrease comes from COVID-19’s impact at the start of the year and the new gambling protocols. The result was a decrease in operating profit of 4% to SEK$1.12 billion (US$108.34 million) and an operating margin of 29% for the six months.

Svenska Spel Dedicated to Entertainment

Patrik Hofbauer, CEO of the company, touched on Sweden’s new gambling safety measures. He asserted that the company remains focused on responsible gambling and, at the same time, hopes he can bring Svenska Spel a more sustainable income.

We see a positive development in the share of healthy income as a result of our strengthened gaming responsibility measures. We continue to provide our customers with entertaining gaming experiences in a responsible way, as we want gaming to be a joy for everyone,” said Hofbauer.

Hofbauer believes another gambling sector might be impacting the company’s ability to report better revenue. A month ago, he criticized the Swedish model for restaurant casinos by arguing that they are “almost without rules and control.”

The CEO posted remarks to the company’s corporate blog, criticizing separate rules for restaurant casinos in the country and the absence of official data. He said that this has implications both for addicts as well as money launderers.

Restaurant casinos are licensed casinos that operate inside premises that have liquor licenses. Svenska Spel holds the exclusive right to operate regular casinos under its Casino Cosmopol brand. However, operators can offer table games at these locations.