Lottery leads Veikkaus to marginal Q1 revenue growth

17 May 2019

Finnish gaming monopoly Veikkuas has reported marginal year-on-year increases in both gaming revenue and profit for the first quarter, with growth driven by a strong performance from its lottery vertical.

Gross gaming revenue in the three months to March 31, 2018, totalled €438.8m (£383.8m/$490.4m), up 0.4% on €437.0m in the corresponding period last year.

Veikkuas put this primarily down to increased spending on the lottery, boosted by a record six-week rollover of the Lotto jackpot. Consumers spent a total of €108.2m on the lottery, up 26.3% last year.

However, almost all other sectors saw a decline in spending, with total turnover for Q1 slipping from €805.6m to €774.0m. Casino slot games remain the most popular form of gambling with Veikkuas, despite spending down from €207.1m to €203.4m.

Total customer spend on casino was down 3.7% to €257.7m, while turnover from games of chance dipped 1.0% from €335.3m to €331.8m and betting spend fell 9% from €202.8m to €184.5m.

Veikkuas also noted an increase in costs for the quarter, mainly due to a 4.8% rise in regulatory costs from €38.9m to €40.8m.

However, the operator was able to make some savings across certain areas, with materials and services costs down by 20.5% to €1.5m and advertising expenses falling 8.5% to €4.3m. Purchases of services also fell 17.2% to €16.1m.

As a result, Veikkuas was able to post a profit of €261.5m for the quarter, up by 2.2% on €256.0m in the opening three months of 2018.

Olli Sarekoski, president and CEO of Veikkaus, praised the positive start to the year in terms of the financial performance, but also said it was a difficult period for the operator as it took the decision to discontinue table gaming services in restaurants and at the Pelaamo arcades.

The decision to cease these operations from the end of May will mean Veikkaus will let between 330 and 360 members of staff leave. Sarekoski noted that around 300 of these workers are on part-time contracts.

“We decided to discontinue table gaming services in restaurants and at the Pelaamo arcades, as they were unprofitable and tied up a significant amount of resources,” he said.

“We will take good care of both the employees who will be leaving Veikkaus and of those who will continue.

“Our objective is to ensure Veikkaus’ future in the tightening digital competition, where gaming is shifting strongly towards the digital channel.”

Sarekoski also addressed a recent survey that suggested the majority of Finnish citizens are in favour of abolishing the country’s current regulatory framework for gambling, which gives Veikkaus a monopoly over the market.

The survey, conducted by by Finnish polling specialist Bilendi on behalf of igaming affiliate Kasino Curt, says that most Finns would instead prefer a licensing regime that would open up the market to private operators.

“The monopoly status is based, in part, on Veikkaus’ competitiveness," Sarekoski said. "We want to be able to provide games responsibly, minimising gaming-related harm even in the future, in order to channel the gaming revenue to the benefit of Finns.”