LeoVegas fined £600k for misleading advertising and its handling of problem gamblers

Online gaming company LeoVegas has been fined £600,000 by the UK Gambling Commission for misleading advertising and its handling of problem gamblers.
The Gambling Commission says that it identified and sanctioned 41 misleading adverts, but also proof of ill treatment of customers at the end of their self-exclusion period.

The Gambling Commission found that LeoVegas didn’t return funds to 11k customers after thet chose to self-exclude and also to close their accounts.

It let 413 previously self-excluded customers gamble without speaking to them first or applying a 24-hour “cooling off period” before letting them play again.

“The outcome of this case should leave no one in any doubt that we will be tough with licence holders who mislead consumers or fail to meet the standards we set in our licence conditions and codes of practice. We want operators to learn the lessons from our investigations and use those lessons to raise standards,” said Neil McArthur, Gambling Commission chief executive.

LeoVegas has reported year-on-year growth across a number of key financials for the three months to March 31.

Revenue for the first quarter came in at €77.4m ($92.9m), up 76% on €43.9m in the corresponding period last year.

Organic growth for the quarter stood at 40%, while organic growth excluding the markets closed in 2017 hit 61%.

Adjusted earnings before interest, tax, depreciation and amortisation amounted to €9m, up from €6.2m, with a margin of 11.6%.

The number of depositing customers at LeoVegas increased from 172,338 to 302,014, while the number of new depositing customers was also up from 75,017 to 146,063.

However, while LeoVegas said that operating profit fell from €5.5m to €3.8m, adjusted operating profit was up from €5.7m to €7.9m.

As such, earnings per share before and after dilution fell from €0.05 to €0.02, but the adjusted figure for this result was up from €0.05 to €0.07.

Gustaf Hagman, group chief executive and co-founder of LeoVegas, said: “We got off to a flying start to the year with the acquisition of Rocket X, which has a strong footprint in the UK market with a local multibrand strategy and the market’s most effective customer acquisition model.
“We followed this up with the acquisition of gambling licences in Germany, which will enable better local payment solutions and allow us to market sports betting throughout Germany.”

Hagman also spoke about the company’s performance so far in the second quarter: “April has begun strong with net gaming revenue of €29.3m, corresponding to a growth rate of 77%.

“Marketing in relation to revenue for the group in the second quarter of 2018 will be higher than the average for 2017, which was 42.3%.
“Due to the marketing opportunities surrounding the World Cup, the total amount of marketing is more difficult than usual to anticipate in advance.
“LeoVegas will act opportunistically with marketing on the opportunities we see.”