Veikkaus revenue declines amid questions over future

5 September 2019

Amid questions about the future of its status as Finland’s gaming monopoly, Veikkaus’s turnover, revenues and profits dipped slightly for H1 of 2019 as the company introduced greater responsible gaming controls and saw lower turnover in almost every vertical.

Veikkaus’ president and chief executive Olli Sarekoski said the company was aware of questions over its status ⁠— with a majority of Finns in favour of ending Veikkaus's monopoly status ⁠— and that the company took responsible gambling seriously.

“Veikkaus has been subject to heated public debate at the end of the summer,” Sarekoski said. “Many people are wondering how the altered atmosphere will affect the conditions of the company’s future operations and the Finnish gaming system.

“Unfortunately, gaming always involves problems that cannot be done away with in any system. We take all detriments associated with gaming extremely seriously. Responsibility and reliable games are the foundation of our operations. We monitor the development of gaming related harms regularly, and we work hard to fight problem gambling.”

Turnover for the six months to 30 June declined in every sector except for Lotto Finland ⁠— where consecutive rollovers led to multiple record jackpots culminating in a €15.5m jackpot in February, causing turnover in that vertical to increase from €174m to €187.5m ⁠— and fast-paced raffle games, where turnover increased from €3.3m to €3.9m.

However, the lottery sector as a whole still posted a decline in turnover from €672m to €630.2m. Eurojackpot, previously the company’s second-largest product in terms of turnover, fell 25.0% to €119.5m, due to a lack of high jackpots compared to 2018, when a €90m jackpot was won in Finland. Keno turnover declined 2.6% to €152.1m, while Vikinglotto turnover declined 15.7% to €33.3m.

Casino game turnover declined 3.7% year-on-year to €507.2m, which was largely down to a 2.4% drop in slot turnoverto €404.6m. Table game turnover fell 10.6% to €18.9m and with other digital casino games reporting an 8.8% decline to €83.7m.

Sports betting, meanwhile, saw turnover drop 7.6% to €359.0m, with fixed-odds betting down 8.3% to €172.9m, and in-play down 10.4% to €52.5m.

Sarekoski said that rather than being a source of disappointment, the company’s decline in turnover showed that its new responsible gaming controls were working as intended.

“The loss and money transfer limits that were introduced last year in the digital channel have proved to prevent problem gambling as desired. Gambling that involves the biggest risks seems to have decreased most significantly, as the limits are most often hit by players who play the most and players who play casino games in the digital channel, eInstants, and eBingo.”

Veikkaus paid out €652.1m in winnings, leaving revenue of €844.3m, down 3.5% year-on-year.

The company paid €101.1m in tax, while operating expenses totalled €241.1m. Sales commissions and fees were the company’s largest expense at €79.8m, down 5.1% from last year. All other expenses for goods and services also declined, including a 44.3% decline in marketing expenses to €6.1m. Salary expenses dipped slightly to €42.9m, though these were offset by a 23.3% increase in other staff costs to €1.8m.

Costs of purchases of services declined 12.1% to €30.9m,  depreciation, amortization and impairment costs fell 2.7% to €24.5, while other operating expenses fell from €37.7m to €32.4m. This left a net profit of €501.4m, down 0.8% year-on-year.

Without large Lotto Finland jackpots to boost the lottery vertical, group turnover declined 7.6% to €722.5m in the second quarter of 2019, to 30 June.

Turnover declined for the lottery vertical, to €298.4m, and casino (down 3.6% to €249.6m), while betting turnover fell 6.1% to €174.5m.

After winnings were paid out, Veikkaus posted revenue of €405.5m for Q2 after expenses also declined, including a 16% decline in goods and services expenses to €49.5m and a slashing of marketing costs - with non-lottery advertising shut down in August - from €6.3m to €1.8m. Net profit for the quarter was €239.9m, down 3.8% from the prior year.