Svenska Spel profit falls in Q3 as overall market continues to contract

Sweden’s state-owned gaming operator Svenska Spel has reported an 11 per cent drop in revenue to SEK2,095m for the third quarter of 2014, despite continued growth from the company’s digital and mobile offering which now accounts for nearly a fifth of the total.

Following a 7 per cent decline in revenue during the first half of the year, revenue fell by a further 11 per cent in Q3, which the operator attributed to the introduction of its responsible gambling controls, including mandatory player cards for all customers and the withdrawal of bonus promotions.

“The decrease is according to plan,” said Svenska Spel CEO Lennart Käll. “We have in recent years seen the Swedish gambling market evolve in the wrong direction. Therefore, we show the way to a healthier gaming market through the introduction of several gaming actions, including compulsory registration. It's a position that comes before short-term profit motives.”

The operator’s online channel accounted for 17 per cent of total revenue, up from 15 per cent a year, although Svenska Spel’s largest channel remains its retail network which accounted for 53 per cent of revenue.

The restaurant and land-based casino businesses contributed a further 13 per cent each in revenue, while its bingo halls represented 2 per cent of the total.

Numbers games (including Lotto, Keno and Joker among others) generated more than third of revenue (34 per cent), followed by lottery games (Triss, Tia, and Penning) with 19 per cent.

Sports betting games including Oddset accounted for 17 per cent of the total, followed by VLT games with 15 per cent. The remaining 14 per cent was generated by casino games (including poker) via Svenskaspel.se and Casino Cosmopol.

Operating profit fell by 14 per cent to SEK1,130m as personnel costs rose by 3 per cent to SEK221m. Other external expenses fell marginally by 0.6 per cent to SEK358m. Net income for the quarter fell 14 per cent year-on-year to SEK1,141m.

For the nine month period, total NGR fell by 8 per cent to SEK6,552m, with net income down 9 per cent to SEK3,504m.

Svenska Spel’s decline was slightly ahead of the overall regulated gambling market in Sweden, which saw gross gaming revenue fall 7 per cent to SEK11.5bn following a 4 per cent decline in turnover to SEK28.5bn, according to figures released by gambling regulator Lotteriinspektionen.

“Results for the third quarter largely follow the same pattern as the first two quarters of this year,” said Joakim Rönngren, communications director at Lotteriinspektionen. “So far this year, sales on the regulated gaming market declined by over one billion. We may also note that some foreign-based gambling operators reported a hefty increase in profits for the same period.”

There were marginal year-on-year increases for operators including horse racing monopoly AB Trav och Galopp, up 0.5 per cent to SEK9.1bn, and the Swedish Postcode Lottery which saw turnover climb 0.9 per cent to SEK2.6bn.

AB Trav’s online channel continued to grow however, up 8 per cent year-on-year and now accounting for nearly half of total revenue (SEK4.2bn).

Kombispel was another operator to record growth, with turnover up 0.2 per cent to SEK363.2m, while Sweden's national prostate and breast cancer associations saw turnover increase 5 per cent to SEK49.9m through its Datumlotteriet product.

Svensa Spel wasn’t the only operator to struggle during the period however. Folkspel turnover dropped 22 per cent to SEK459.6m, with its online channel increasing turnover by 21 per cent to SEK4.3m.

IOGT-NTO saw turnover decline 13 per cent to SEK384.0m, despite a 10 per cent drop in online turnover, while Ideella Spel turnover were down 4 per cent to SEK45.7m through the Månadslotten product.