Sweden’s regulated online gambling market is proving a tough slog for everyone from private operators, state-run former monopolies and the nation’s media outlets.
On Friday, Nordic online gambling operator Betsson AB released its interim report covering the three months ending June 30, during which the company’s revenue slipped 5% year-on-year to SEK1.28b (US$136.1m), while earnings fell 24% to SEK287.4m and net income slumped 37% to SEK171.6m.
Don’t blame sports betting for the slide, as Betsson’s sportsbook revenue was up 14% to SEK341m, despite turnover falling 1% and Q2 2018 having enjoyed a World Cup wind-assist. The decline was entirely on the casino side, which slipped 10% to SEK917.8m, as active customer ranks slipped 5% to 659k. Mobile revenue now accounts for 70% of Betsson’s overall take (77% sports, 72% casino), up nine points from Q2 2018.
Betsson CEO Pontus Lindwall blamed the earnings decline on Sweden’s “challenging” regulated market and the restructuring of its Dutch-facing operations as the Netherlands prepares for the launch of its own legal online market. The Norwegian government’s payment-blocking efforts also took their toll.
Betsson’s mainstay Nordics and Western European markets reported revenue falling 17% and 12%, respectively, while the Central & Eastern Europe and Central Asia improved by one-third (to 22% of the overall pie). The share of revenue from ‘locally taxed’ markets surged 11.8 points to 35.8% in Q2, largely due to new licenses in Italy and Sweden, and Betsson warned investors that earnings would continue to lag as it adjusted to its increased presence in regulated markets.
SVENSKA SPEL ONLINE UP, EVERYTHING ELSE DOWN
Swedish struggles aren’t limited to the international gambling sites that served the nation without permission prior to this year. State-run former gambling monopoly Svenska Spel delivered its own horror-show results on Friday, reporting a net gaming revenue fall of 2% to SEK2b. But operating profit slid 45% to SEK417m and profits plunged 57% to SEK417m, largely due to the regulated online market’s new tax obligations.
The net declines came despite Svenska Spel’s online revenue rising 14%, pushing digital’s share of the company’s overall revenue up five points to 35%. The Sport & Casino unit’s share rose two points to 23%, while the mainstay Tur lottery division gained one point to 56% and the land-based Casino Cosmopol and Vegas division fell three points to 21%.
For the first half of 2019, Sport & Casino revenue improved 5% to SEK1b, despite a net decline in sports betting revenue (partly due to the World Cup comparison). Tur revenue was down 3% to SEK2.2b while land-based gaming slid 14% to SEK849m.
Svenska Spel’s CEO Patrik Hofbauer insisted that the company’s operations had “stabilized” since the company was forced to split its online and land-based customer databases so as not to have a competitive advantage over its newly licensed online competitors. Hofbauer claimed that the customers it lost during this split “can now be found back to us.”
SWEDISH MEDIA SUFFERING TOO
Swedish-licensed operators have struggled to conform to the Spelinspektionen regulatory body’s requirement for operators to observe ‘moderation’ in their advertising policies. But the lack of specifics in this policy has led to operators testing the boundaries, which in turn has led Sweden’s government to consider imposing a total ban on gambling advertising.
That said, Swedish media aren’t reaping much of a reward from the changes. Media group Schibsted recently reported a 15% fall in the company’s second quarter revenue, and the Aftonbladet newspaper’s online unit reportedly suffered a “significant negative impact” from the reduction in gambling advertising since the Swedish regulated market’s January launch.