Despite a barrage of economic hurdles that have dented customer wallets – such as soaring prices, climbing interest rates, and a looming recession – Swedish horse racing betting operator ATG (Aktiebolaget Trav och Galopp) has emerged triumphant with growth in 2023. The operator navigated through these widespread industry challenges and succeeded in bolstering its business, as reflected in its annual financial report.
ATG’s overall group revenue exhibited a slight dip, settling at SEK6.04 billion. However, the company’s net gaming revenue portrayed a contrasting picture, marking an increment of 0.9% to reach SEK5.27 billion. This uptick indicates a resilient performance given the economic conditions affecting the gambling sector.
ATG’s CEO, Hasse Lord Skarplöth, expressed pride in the company’s accomplishments amid turbulent times. “I feel proud of the 2023 figures,” he remarked. Skarplöth highlighted the organization’s expansion, stating, “ATG had growth when the total gambling market landed at plus or minus zero.” He underscored the significance of ATG maintaining its robust customer base, which steadfastly hovered around 1.3 million players despite the financial strains on consumers.
The breakdown of ATG’s revenue streams revealed that horse racing retained its position as the predominant contributor at SEK3.91 billion, even though it experienced a 3.0% decline from the prior year. On the brighter side, sports betting revenues soared by 11.0% to SEK722 million in 2023, and the casino segment saw a remarkable 20.0% surge.
Non-gaming revenues didn’t fare as well, with agency revenues falling by 11.1% to SEK208 million and other revenues experiencing a 4.5% decline to SEK558 million. Cost analysis revealed that gaming taxes were less burdensome at SEK1.06 billion, while personnel costs underwent an 11.2% increase to SEK588 million. Other expenses and depreciation, along with write-downs of intangible and tangible assets, decreased by 6.0% and 3.6% respectively.
ATG reported an additional SEK46 million in financial income, which propelled the operator to a pre-tax profit of SEK1.83 billion, a rise of 7.3%. After paying taxes amounting to SEK380 million, the firm celebrated a net profit of SEK1.45 billion, marking a 7.5% year-on-year increase.
Examining the fourth quarter specifically, total revenue climbed by 2.8% to SEK1.60 billion, with net gaming revenue showing a 3.7% increase to SEK1.39 billion. Agency income did not fare as well, with a 6.9% decrease to SEK54 million, though other revenues remained stable. The quarter concluded with positive notes as personnel costs increased by 8.4% to SEK155 million, but with reductions in gaming tax and other expenditures. Pre-tax profit for Q4 surged by an impressive 23.2%.
Yet, despite these robust results, Skarplöth is casting a cautious eye on the future, especially concerning proposed new gambling tax laws in Sweden. The government has contemplated raising the tax rate from 18% to 22% of gross gaming revenue, set to take effect from July 1, 2024. Skarplöth has been vocally critical, labeling the hike as a “shock” that would “hit ATG hard,” along with the entire Swedish horse industry, to the tune of an estimated SEK200 million annual impact.
Encouraging a different approach, Skarplöth suggests maintaining the 18% tax rate on betting while raising the tax on online gambling, including casino and poker, to 26%. This proposal, he argues, would bring more revenue to the state than the current government plan while also prioritizing public health. As Sweden’s government deliberates, ATG vows to continue its influential efforts to steer the decision in a favorable direction.
ATG’s resilience in 2023 stands as a testament to the company’s strategic agility and its deep-rooted connection with its customers. However, with impending tax reforms on the horizon, the firm faces a new set of challenges that may shape its fortunes in the years to come.
