Casino closures and RG focus lead to decline at Svenska Spel

Svenska Spel has reported a significant decline in revenue and net profit for the financial year 2024, attributing this downturn to the closure of several land-based casinos and an intensified focus on responsible gambling practices throughout the organization.

For the financial year ending December 31, 2024, Svenska Spel’s revenue totaled SEK 7.74 billion (£570.9 million/€683.9 million/$709.9 million), representing a 3.7% decrease from SEK 8.03 billion in 2023.

The financial figures, released on February 7, reveal a downward trend across three of the company’s four core business segments. The most pronounced decline occurred in the Casino Cosmopol division, which experienced a staggering 65.1% drop in revenue, following the closure of two casino locations in January 2024.

Additional factors influencing Svenska Spel’s performance in 2024 include enhanced responsible gambling initiatives, such as income verification processes for high-stake players and increased welfare outreach. Furthermore, a decision by the Swedish government to raise the gambling tax from 18% to 22% of gross gaming revenue, effective July 2024, has added pressure to the company’s bottom line.

Uncertain Future for Casino Cosmopol

Examining the performance of various segments, Casino Cosmopol emerged as the hardest hit, with revenue plummeting to SEK 165 million. With only one operational location remaining, following the closures in Gothenburg and Malmö, the future of the Casino Cosmopol in Stockholm appears tenuous, especially after the Swedish government proposed the elimination of the land-based gambling monopoly.

In contrast, Svenska Spel’s principal revenue driver remains its Tur lottery division, which reported a modest 4.3% increase in revenue to SEK 5.14 billion. This growth was largely fueled by rising interest in the Eurojackpot product.

However, the online Sport & Casino segment recorded a year-on-year revenue decline of 4.3%, falling to SEK 2.07 billion, attributed primarily to the company’s robust responsible gambling measures.

Additionally, the Vegas gaming machine segment saw a revenue drop of 22.4% to SEK 364 million. Again, Svenska Spel cited its commitment to responsible gambling as a pivotal reason, compounded by the challenging economic climate in Sweden.

Net Profit Declines by 8.9%

Despite the closure of the two casinos allowing Svenska Spel to reduce personnel costs, external expenses rose compared to the previous year, driven in part by one-time charges discussed by CEO Anna Johnson. Consequently, operating profit decreased by 9.3% to SEK 2.12 billion.

After accounting for SEK 149 million in positive financial adjustments, pre-tax profit for the year stood at SEK 2.26 billion, a decline of 7.7%. Following a tax payment of SEK 493 million, the net profit was reported at SEK 1.77 billion, down 8.9%.

Commitment to Customer Welfare

Despite the overall decline, CEO Anna Johnson noted that not all news was negative for Svenska Spel. She pointed out that, excluding one-time costs associated with restructuring and casino closures, both operating profit and operating margin were higher than in the previous year, indicating that the operator has successfully met its financial targets.

“This demonstrates that we are well-positioned for future investments,” Johnson stated. She emphasized the importance of their responsible gambling strategy, acknowledging its potential impact on financial performance but maintaining that player protection is paramount.

“We are dedicated to enhancing responsible gaming initiatives,” Johnson underlined. “Although this does impact our revenues and profitability, it is a deliberate choice as we prioritize the health and wellbeing of our customers. Notably, this has the positive effect of generating healthier revenue from players who are at low risk of developing gambling-related issues.”

Closing 2024 with Optimism

While Svenska Spel faced overall declines throughout the year, the final quarter revealed a modest revenue increase of SEK 2.23 billion, surpassing Q4 2023’s SEK 2.12 billion.

Reduced operational expenditures contributed to a 10.3% rise in operating profit to SEK 535 million, while pre-tax profit jumped 25.1% to SEK 608 million.

After paying SEK 126 million in taxes, the company reported a quarterly net profit of SEK 482 million, a remarkable 25.9% increase. Johnson summarized, “2024 has been a transformative year for Svenska Spel amidst a challenging economic landscape. The year concluded positively, showcasing stable revenue and improved operational profitability due to decreased operating costs.”

Potential Changes in Government Ownership

As 2024 drew to a close, renewed discussions emerged regarding the government’s ownership of Svenska Spel. Gustaf Hoffstedt, Secretary General of the Swedish Trade Association for Online Gambling (BOS), urged the government to consider selling Svenska Spel, suggesting that such a move could alleviate concerns over regulatory impartiality and market competition.

In an opinion piece for the Swedish publication Dagens Industri, Hoffstedt drew parallels between the government’s recent divestiture of the vehicle inspection company Bilprovningen and the potential privatisation of Svenska Spel. Both the Moderates and Sweden Democrats, two dominant parties in parliament, have previously expressed support for this initiative, further entrenching the conversation on the future of Svenska Spel within the regulatory landscape.