RG measures push revenue down at Veikkaus in 2019

12 March 2020

Finnish state-owned gambling operator Veikkaus has reported a year-on-year decline in both gross gaming revenue and profit for 2019, due in part to new restrictions it imposed to protect customers gambling online.

Revenue for the 12 months through to 31 December 2019 amounted to €1.69bn (£1.49bn/$1.90bn), down 3.9% from €1.76bn in the previous year.

Casino gaming accounted for the majority of revenue for the year, though the €911.9m total was down 3.0% on 2018.

Revenue from lottery games slipped 4.1% to €631.1m, while sports betting revenue was fell 8.5% to €147.8m.

Veikkaus also noted that of its total gross gaming revenue for the year, 68.2% of this, or €1.15bn, was attributable to its retail sales network, with the remaining 31.8% (€537.0m) being derived from online.

The overall decline in revenue, Veikkaus said, was primarily due to a range of new responsible gambling measures that were introduced during 2018, including mandatory spending limits for all customers. This ultimately contributed to a reduction on player spending for the year. 

Veikkaus also said its market share in Finland fell by 1% to 85%, with the total amount of gross gaming revenue lost to other operators totalled €309m, an increase of 8.5% on the previous year.

In terms of spending, Veikkaus was able to reduce its main operating costs by 10.1% to €210.1m for the year. The operator cited sales commissions and site fees as its main outgoing, but this was down 6.7% year-on-year to €159.0m.

Lottery costs were up slightly to €11.1m, but regulatory costs were down 12.4% to €9.9m and materials and supplies spending was reduced by 21.1% to €5.6m. In addition, product advertising spend was slashed by 42.4% to €11.3m.

Other operating expenses, including cost of services and spending in relation to epreciation, amortisation and impairment, were also down 14.9% to €174.6m.

However, despite cutting spending across the board, Veikkaus still reported a 0.5% decline in profit for the year to €1.00bn, as it was unable to completely overturn the drop in revenue.

Reflecting on the year, Veikkaus’ president and chief executive Olli Sarekoski was upbeat about the performance, reiterating the operator’s desire to protect its customers from gambling related harm.

“The year 2019 was important to Veikkaus in many respects,” Sarekoski said. “There was lively public debate concerning the company and the gaming system.

“We made responsibility towards the players our top priority and made several decisions that will help us to offer our players modern, effective tools for gaming control in the future.”

Confirmation of the results comes after Veikkaus in December set out plans to further enhance its responsible gambling measures in 2020, but warned that changes to its operating strategy could lead to a €50m decline in earnings.

Approved by the Veikkaus board of directors, the operator’s strategy for the next 12 months will include reducing the number of slot machines it operates across Finland by an estimated 3,500.