Svenska Spel Trying To Withstand After The Land-Based Shut-Down

Article by : Helen Nov 9, 2020

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Svenska Spel is a state-owned company that has been around since 1997. For many years, it was the only operator with all the rights to provide Swedish punters with gaming services. However, things started changing at the beginning of 2019, when the Swedish government introduced new gambling laws, according to which the monopoly of Svenska Spel was ruined, and the Swedish gambling market was open to foreign private casino operators. After the Svenska Spel had just gotten over the new gambling laws’ establishment, another problem popped up. Due to the coronavirus pandemic, the operator had to shut down its land-based gambling venues, which had negatively impacted its total revenue.

In Q3, the revenue of Svenska Spel dropped 8% compared to the same time period in the previous financial year. Even the growth of the lottery and online gambling departments didn’t manage to make up for the ongoing shut-down of the land-based casinos. To be more exact, in the third quarter, the revenue of Svenska Spel fell to €178.5 million (SEK1.85 billion) due to the restrictions applied to the land-based gambling industry. Casino Cosmopol, one of the biggest company’s land-based casino networks, remained closed over the entire quarter. Most of its venues were immediately shut down on 29 March, when COVID-19 only began to spread across the country and Europe. In August 2020, Svenska Spel also promised to permanently close the Cosmopol venue in Sundsvall due to the significant reduction of players visiting the casino.

With a constantly declining customer base, the casino in Sundsvall is no longer profitable, and then it is unfortunately not commercially defensible to continue to run the business.

The network of Svenska Spel’s Vegas slot machines was also negatively impacted by the coronavirus restrictions. While more than 100 gambling venues offering slot machines were temporarily shut down to avoid the spread of the coronavirus, the Swedish government also decided to introduce a number of temporary limitations on players’ spendings as a part of a plan to reduce the harm of gambling during the pandemic. As a result, the revenue of the Vegas slots division and Casino Cosmopol dropped almost 60%.

The Casino and Sport division of Svenska Spel was also affected by the SEK5,000 weekly deposit limit. Not to mention that the casinos were allowed to offer bonuses of no more than SEK 100, and players themselves had to set time limits on how long they could play casino games. Despite all these limitations, the division’s revenue was up 6.5%. According to Svenska Spel, the Casino and Sport division managed to stay afloat thanks to the increased popularity of sports betting activities.

Anyway, the majority of the company’s revenue came from the Lottery division. The total revenue of all lottery activities, including Eurojackpot, Keno, and other lotteries, was up 5.2% to SEK1.18 billion. Patrik Hofbauer noted that although land-based gambling revenue is dropping drastically, the business is still doing well overall and continues generating profits. “The group as a whole is still generating profits, which shows strength and stability,” said Hofbauer.

The company’s revenue of 3 quarters amounted to SEK5.55 billion, which is 9% less than during the same period in the previous year. After deducting all taxes, personnel costs, amortization charges, external costs, and all other gambling-related costs, the net revenue in 2020 turns out to be down 35%. However, the previous year’s profit included SEK687 million in deferred tax assets, which created a big difference in annual net revenue values.