Svenska Spel struggles despite online, mobile gambling gains

Svenska Spel, the state-owned gambling operator in Sweden, has witnessed a dip in gambling revenue. This could be alarming for the operator as it has been enjoying monopoly of the market and it is bracing for new competition as the country is poised to liberalise it online gambling market.

Svenska Spel reported an earnings of SEK2.08b (US$234m) in the three months ending June 30, a nearly 4 per cent decline from the same period last year. Operating profit was reduced by 11.4 per cent to SEK975m as margins fell two points to 19.1 per cent.

Svenska Spel’s digital division did its best to shoulder the burden with revenue of SEK621m, up one-fifth from Q2 2017 and accounting for 30 per cent of the overall revenue pie. Mobile devices accounted for two-thirds of this digital slice, and mobile growth outpaced the overall digital number, rising 42 per cent year-on-year.

Svenska Spel’s mainstay lottery revenue was flat, while the land-based Casino Cosmopol and Vegas divisions had a rougher ride. The Vegas video lottery terminal business reporting revenue down by one-quarter as more and more customers shift their action online.

Svenska Spel’s poor overall performance stands in stark contrast to local rival Betsson, who today announced a return to profitability thanks to strong World Cup betting action that appears to have passed Svenska Spel by.

Investors might be questioning Svenska Spel’s future because, as of August 1, Sweden will begin accepting online gambling license applications from international operators ahead of the liberalised market’s official reboot on 1 January 2019.

Svenska Spel, which has long chafed at its inability to offer an online casino to match its internationally licensed competitors, has been taking steps to bolster its digital offering. The company has inked an online casino technology deal with Scientific Games’ SG Digital division, and recently announced a live casino tie-up with Evolution Gaming.

Svenska Spel will have a new CEO at the helm when it faces this challenge, as Patrik Hofbauer is taking over from Lennart Käll, who in January announced his intention to step down after seven years.

In a final blog post on Monday, Käll claimed to be “a little jealous” at not being around for this paradigm shift in the company’s history, but not so jealous that he wants to stick around to compete “on equal terms” with the international sites.

Source: calvinayre.com