Fortuna sees stakes rise, profits fall on new Czech taxes


fortuna-entertainment-czech-betting-taxCentral European sports betting and lottery operator Fortuna Entertainment Group saw profit fall in the first nine months of 2016 despite double-digit gains in betting turnover.

Figures released Monday show sports betting stakes rising 23.4% to €741.6m in the nine months ending September 30, while lottery sales rose 2.6% to €14.4m. The company says the gains were driven by strong online and mobile betting interest, while retail betting gains were confined to single-digits.

Betting gross win rose 15% to €113.8m while lottery win rose 5.1% to 6.4m. But sports betting earnings were down 8.9% to €15.3m and betting profits fell 30.6% to €9.5m due to increased betting taxes in Fortuna’s key Czech Republic market as well as the company’s “planned increase in operating costs to support future growth opportunities.”

On a market-by-market basis, the Czech Republic accounted for 56% of total betting stakes, down one point year-on-year, in part due to retail betting having “moderately declined.” Slovakia’s share of stakes improved two points to 32% despite similar retail shortcomings. Poland’s share of stakes slipped one point to 12% although its share of gross win held firm at 25% and retail betting bucked the trend by growing, albeit “just moderately.”

Looking ahead, Fortuna says FY16 betting turnover will be up 18% to just over €1b, although FY16 earnings will fall 10% to 15%, with €2m of this earnings hit directly attributable to the increased Czech betting tax.

That said, Fortuna expects future gains in the Czech market as the country allows online licensees to begin offering casino products starting January 2017. The government has also promised to take steps to block the domains of operators not holding a Czech license. Also, customers who were previously forced to register in retail betting shops will soon be allowed to register online.

Fortuna expects great things from the omni-channel deal it signed with gambling technology firm Playtech in August. Playtech has promised to provide Fortuna with a customized and scalable multi-channel solution with seamless wallet technology.

Fortuna will enjoy greater visibility in its core market after signing on last month as the new partner of all Czech football competitions and leagues, including the Czech national team. The deal will see Fortuna become the main sponsor of Czech football’s top division starting with the 2018-19 season.