Veikkaus posts 7.3% sales decline in 2024, eyes open market

Veikkaus Sheds Light on Sales Decline Amid Strategic Challenges and Future Opportunities

In its recently published full-year results for 2024, Veikkaus, Finland’s national gambling monopoly, reported a significant 7.3% decrease in sales revenue, totaling €956.2 million ($1.02 billion/£800.1 million). This continuing downward trend poses a pressing concern for the company, particularly as it anticipates a pivotal shift in its business model with the anticipated launch of the online gambling market in 2026.

The Impact of Recent Changes

Veikkaus experienced an accompanying 19.6% drop in operating profit, falling to €466.8 million. This decline is largely attributed to “significant investments” the company has made in preparation for future market changes, alongside a sharp rise in the lottery tax from 5% to 12%. In 2024 alone, Veikkaus remitted €114.2 million in lottery taxes to the Finnish state.

Additionally, a decline in gross gaming revenue was observed due to the introduction of stringent regulations that necessitated new certifications for lottery and scratchcard games, affecting the overall market performance.

Digital and Physical Revenue Distribution

Interestingly, approximately 60% of Veikkaus’ gross gaming revenue now originates from digital channels, while the remaining 39.8% derives from physical retail points. This digital shift showcases a transformative trend within the gambling industry, emphasizing the growing importance of online gaming platforms.

Despite challenging circumstances, Veikkaus reported an increase of 80,000 registered users over the past 12-month period, bringing its total to 2.6 million. This shows a commitment to fostering a robust customer base even amid adverse market conditions.

Market Challenges and Consumer Behavior

Veikkaus has faced several challenges over recent years. During the H1 2023 earnings call, Group Managing Director Olli Sarekoski cited the company’s lower-than-expected profit margins and detailed a staggering 21% decline in gaming revenue compared to the previous year. Analysts suggest that customer loyalty has waned as the grey market for gambling has expanded in Finland, diluting the company’s market share.

Local legal expert Antii Koivula noted that in 2021, Veikkaus held approximately 30% of the market share in non-lottery categories. However, this substantial segment has diminished significantly following the implementation of new licensing protocols.

International Growth and B2B Expansion

Despite challenges within its B2C operations, Veikkaus has reported positive growth through its B2B subsidiary, Fennica Gaming, which successfully expanded into three additional continents in 2024. Operating in markets including the United States, France, the United Kingdom, and Sweden, Fennica Gaming achieved an impressive €3 million in sales—an increase of 181% year-on-year. Nevertheless, it recorded a loss of €8.6 million, marking a 14% increase in losses from the prior year.

By the end of 2024, Fennica Gaming had secured contracts with 14 corporate clients, showcasing its potential as a driving force in Veikkaus’ international strategy.

Anticipated Reforms and Market Transformation

Looking ahead, Veikkaus is optimistic about upcoming reforms in the Finnish gambling landscape scheduled to take effect in 2026 or early 2027. These changes will enable Veikkaus to operate a separate business unit that will directly compete with private licensees, thus diversifying its portfolio while still maintaining exclusivity in its retail lottery and slot operations.

As Veikkaus CFO Regina Sippel remarked, “The reform of the gambling system presents a significant opportunity for Veikkaus, and we have undertaken extensive preparations to embrace this future.” The company has been proactive in implementing strategic investments geared towards sustainable growth and enhanced operational efficiency, aligning with its newly articulated mission: “We passionately drive better gaming.”

However, as reforms unfold, there are implications for employment, with warnings that up to 620 positions may be at risk due to restructuring efforts.

Combating competition from offshore operators remains a priority for Veikkaus. Estimates based on H2 Gambling Capital data indicate that illegal gaming expenditures in Finland approximated €550 million in 2024, with industry insiders like Jari Vähänen suggesting potential figures closer to €900 million—indicating significant challenges for the regulated market.

As Veikkaus navigates these turbulent waters, its performance alongside the growth trajectory of Fennica Gaming illustrates both the complexities and opportunities inherent in the evolving gambling landscape. The journey ahead will undoubtedly be pivotal as Finland’s gambling sector adapts to a rapidly changing environment.