iGaming drives revenue growth for Norsk Tipping in 2019

28 April 2020

Norway's lottery and gaming monopoly Norsk Tipping put marginal growth in revenue for 2019 down to the strong performance of its online gaming offering, though admitted that tighter player protection controls had cut the full year total by around NOK200m. 

Full year turnover grew 5.6% year-on-year to NOK40.27bn, aided by customer numbers growing to a record 2.0m, of which 28% were aged under 40, according to chief executive Åsne Havnelid.

Online gaming turnover was up 29.8% to NOK18.03bn, above lottery, which contributed NOK10.56bn. Sports betting turnover also grew, rising 4.8% to NOK3.80bn.

Gaming terminals, meanwhile, saw turnover decline 24.4% to NOK6.82bn, while instant win was down 6.3% at NOK1.05bn.

After paying out NOK32.11bn in winnings - a 7.1% increase - revenue amounted to NOK8.16bn, up 0.1%, despite the impact of new social responsibility controls. After seeing the number of customers classed as at risk of developing problems grow to 10,000 in 2018, it brought in a measure that stopped online customers from gambling with winnings over NOK20,000 and now automatically displays an overview of a player's gambling history upon login.

Despite this, revenue from online gaming grew 17.5% to NOK981m, with sports betting revenue across online and retail channels up 4.5% to NOK947m. 

However, lottery continued to generate the majority of Norsk Tipping's revenue in 2019, with its contribution rising marginally to NOK5.27bn.

“From a social responsibility perspective, it’s important that the games with the lowest correlation to gambling problems is our market leader,” Havnelid said.

Scratchcard revenue declined 7.7% to NOK458m while gaming terminal revenue fell 37.6% to NOK503m.

Norsk Tipping took in an additional NOK11m in revenue from other sources.

The operator paid NOK620m in commissions, down 12.2%, and NOK440m in personnel costs, up 6.3%. Of these personnel costs, NOK323m came in the form of salaries and fees, NOK51m in employer taxes, NOK60m in pensions and NOK6m in other costs.

In addition, it incurred depreciation and write-down charges of NOK189m, a 2.9% increase, and other operating expenses of NOK1.32bn, down 4.6%.

Of these other operating costs, plants and machinery were the largest expenses, at NOK435m, down 7.9%. Advertising costs declined 8.3% to NOK297m while costs relating to player identification and payment solutions fell 4.9% to NOK175m.

Also listed among other costs, collaboration agreements came to NOK100m, consultancy fees came to NOK83m, while payments to the Lottery and Foundation Authority (Lotteri- og stiftelsestilsynet) and distribution and shipping costs both totalled NOK39m. Telecommunications costs were NOK27m, printed supply costs came to NOK36m and TV production expenses totalled NOK25m.

These costs, totalling NOK2.56bn, resulted in an operating profit of NO5.60bn, up 2.4%. Norsk Tipping’s financial income rose 61.1% to NOK86m, with interest income the largest contribution at NOK57m, while financial expenses almost tripled to NOK14m.

As a result, the operator’s net profit for the year came to NOK5.68bn, up 2.8% year-on-year.

Havnelid added that the Norwegian government is still working on a new Gambling Act, but has already decided that Norsk Risktoto should not merge with Norsk Tipping to jointly run the country’s horse racing betting monopoly as previously proposed.

“The Government is finalizing the draft new Gambling Act, which will replace both the previous Gambling Act, the Totalizator Act and the Lottery Act,” Havnelid said. “In this process, the Ministry of Culture and Agriculture considered moving horse racing from Norwegian Rikstoto to Norsk Tipping, but decided in April 2020 to continue the current system.”

Last week, the operator revealed that it distributed over NOK5.5bn from its profits to good causes across the country during 2019.