The latest financial summary for Svenska Spel, Sweden’s state-owned gaming company, paints a picture of a business in the midst of significant change. Reporting a drop in its net gaming revenue to SEK1.96bn for the first quarter of the year, from SEK1.98bn in the comparable period of 2023, Svenska Spel faces a challenging era marked by restructuring and evolving market dynamics.
Erik Strand, the interim CEO of Svenska Spel, attributes the tempered revenues to an “adjustment” phase, particularly citing the late February closures of the Casino Cosmopol sites in Gothenburg and Malmö as primary factors. These casinos were shuttered in light of limited profitability, a strategic decision poised to have long-lasting, albeit painful, immediate impacts. Strand noted that this closure “had a major impact on the group’s results during the quarter,” but he remains optimistic about the underlying health of the business, especially praising the Tur lottery segment’s stable and impressive performance.
Breaking down the company’s earnings by sector, the Tur lottery business area emerged as a lighthouse in stormy seas, with revenue surging by 6.4% to SEK1.24bn, accounting for over 63% of the total revenue in the quarter. Successful draws like Eurojackpot attracted customers and boosted sales, bolstered by timely celebrations such as Easter and Valentine’s Day.
In stark contrast, the Sport & Casino segment experienced a slight decline of 2.8%, tallying a revenue of SEK549m. The company attributed this decrease to weaker sports betting offerings and lower-than-anticipated margins on its sports betting operations. On the other hand, the closure of the two brick-and-mortar casinos significantly impacted the Casino Cosmopol & Vegas segment, slicing its revenue by 31.6% to SEK169m. Aside from the closures, the Stockholm venue also curtailed its operational hours, adding to the revenue dip.
An area of growth, however, was in the online gambling sphere, where Svenska Spel saw a robust 5.8% increase to SEK1.09bn, which now represents a significant 56.0% share of all Q1 revenue. This digital buoyancy, however, was not able to fully offset the losses seen in physical venues, where betting shop revenue trickled down by 1.2% to SEK681m and bingo and restaurant sectors plunged by 17.2% to a mere SEK101m.
Operational expenses also fluctuated, with direct revenue costs seeing a slight decrease, even as costs linked to gaming operations and taxes ascended. Personnel expenses jumped by a notable 37.5% to SEK425m, with other external costs also climbing steeply by 38.6% to SEK600m. These expenditures, compounded by an SEK108m loss from a joint venture, significantly dragged down pre-tax profits, which fell by 41.9% to SEK371m. After accounting for taxes, the net profit for Svenska Spel stood at SEK294m, a drop of 24.6% from the previous year’s SEK507m.
Regulatory challenges compounded Svenska Spel’s financial results. Svenska Spel Sport & Casino, the operator’s digital arm, was fined an hefty SEK100m for failing to uphold adequate player protection measures, as mandated by Sweden’s Gambling Act. The Swedish Gambling Authority’s examination, which looked into the treatment of 10 customers who lost significant sums between October and December 2021, concluded that the company did not take sufficient action to mitigate excessive gambling habits. While Svenska Spel has implemented measures to address some of these concerns, it also disputes parts of the regulator’s assessment, insisting that responsible gambling is integral to its operations. Svenska Spel has chosen to appeal the decision, seeking clearer guidance on the interpretation of the Gambling Act and the associated duty of care requirements.
Q1 of 2023 was especially noteworthy for Svenska Spel as it marked the first quarter of Erik Strand’s tenure as interim CEO, following the planned departure of Patrik Hofbauer. Hofbauer left on January 31 after a five-year leadership stint. Anna Johnson is slated to succeed Hofbauer as CEO starting in June, with Strand manning the helm until her official takeover. This period of leadership transition and operational restructuring will be closely watched by industry analysts and stakeholders as Svenska Spel adapts to the evolving gaming landscape.
