Retail Segment Hampers Svenska Spel’s Growth in the Third Quarter
Sweden’s renowned state-owned gambling operator, Svenska Spel, recently published the financial report for the third quarter of 2023. The Net Gaming Revenue (NGR) could only mark a slender one percent year-on-year (YoY) increase because of the sluggish performance in the land-based segment under Svenska Spel. Healthy revenue reached a new high, and the revenue from the lottery and online segments also increased, but the massive blow dealt in the retail segment only resulted in the smallest revenue rise.
Svenska Spel revenue increases by one percent in Q3 2023.
?Jonathan Petersson/Pexels
The Swedish gambling market is one of the most active and competitive markets in Europe. Like its Nordic neighbours, Norway and Finland, Sweden had a gambling monopoly that allowed only Svenska Spel to offer gambling to people in the country. However, the Scandinavian nation switched to a license-based system in 2019, and the Spelinspektionen was instated as the nation’s central gambling regulatory and supervisory authority, responsible for monitoring all gambling activity in the country and also for granting gambling permits to offshore operators who are looking to expand their presence across Europe. While Svenska Spel was the solitary legal operator in the monopoly, it faced much competition from unlicensed foreign operators. The competition was so high the state-owned operator’s market share started declining rampantly. Ultimately, the doors to these operators were opened as the online gambling segment was introduced with it. This also enabled Svenska Spel to enter the online segment and add another vertical to its portfolio.
The primary segments of the gambling market in Sweden comprise three significant segments – online, retail, and lotteries. Under online gambling, licensed operators can offer online casino games like virtual slots, poker, and sports betting. Licensed land-based casinos and slot machines can be found nationwide in the retail segment. Meanwhile, many lotteries run under the lottery segment of the country. Being the oldest and one of the most popular gambling operators in Sweden, Svenska Spel is active across all these segments, most of which were impacted by the pandemic. However, the operator was criticized several times for its performance when it held the monopoly. Swedish players have shown a lack of trust for the state-owned operator despite the fact that Svenska Spel has implemented all responsible gambling policies that comply with the European gambling standard. The operator has also ensured the implementation of mandatory game registration to help players track their gambling behaviour. To fight harmful gambling, Svenska Spel has also designed a self-assessment test and integrated a tool that scans changes in player behaviour.
Despite the operator’s topsy-turvy journey, many players still consider it a reliable and safe option for gambling in Sweden. However, surviving in one of the most competitive markets in Europe is challenging. The Swedish gambling market is home to more than 100 licensed gambling operators. Sweden’s annual Gross Gambling Revenue (GGR) at the end of last year amounted to SEK 27 billion. As the number of legal operators increases, there is also an increase in the number of players. In 2018, 58 percent of Swedes participated in some form of gambling. Four years later, the figure rose to 72 percent. Horserace betting and lotteries are two major segments, with the former generating a yearly surplus of about SEK 2 billion and the latter collecting SEK 1.6 billion for the non-profit sector. Svenska Spel’s lottery segment, Tur, is growing consistently thanks to its Eurojackpot game. In the third quarter of this year, Tur launched a digital lottery for associations in Swedish Sports called the Supporter. The new extension is expected to further boost the segment’s growth in the upcoming months.
The President and CEO of Svenska Spel spoke about the operator’s performance in Q3 2023.
“In a time of zero growth, revenues for two out of three business areas grow during the third quarter. Our customer base is growing and the share of healthy revenue is increasing – we therefore have more customers who also play more sustainably. We have increased results, high and consistent customer satisfaction, and also high availability of our services.”
Svenska Spel’s Financial Metrics of Q3 2023
The NGR of Svenska Spel during the months of July, August, and September this year amounted to SEK 1,965 million. In the corresponding period last year, the NGR was SEK 1,954, 11 million less than the figure for Q3 2023. As the NGR increased by only one percent, the online sales channel saw a YoY increase of six percent. The healthy revenue and sustainable customer numbers also increased to a certain extent. The operating profit also increased YoY by one percent, rising from SEK 681 million to SEK 686 million. The margin remained steady at 35 percent. The lottery segment, Tur, marked a slender two percent YoY increase, climbing to an NGR of SEK 1.2 billion, while the biggest spike of the quarter came in the Sport & Casino segment, which increased four percent YoY to SEK 510 million.
This growth was driven by multiple aspects, including the increase in active users, the launch of new poker games, and the growth of the online casino segment. NGR decreased by 11 percent and dropped to SEK 247 million in retail. The operator has claimed that this drop is primarily due to the growth of the online segment and increased competition in the land-based segment. As expected, the online segment continued to perform well as the NGR recorded a decent six percent YoY increase as revenue touched SEK 1 billion. The online gambling segment reeled in more than half (53 percent) of the revenue in the third quarter of 2023. Mobile phones were the most preferred devices for online gambling activities, with 44 percent of users opting for it.
Kambi to Help Svenska Spel by Upgrading Sportsbook
Earlier this month, online gambling solutions provider Kambi confirmed a multifaceted and long-term deal with Svenska Spel. The state-owned Swedish operator has struck this deal with one of the most credible solutions providers to enhance its sportsbook across the online and retail segments. Kambi will also work on upgrading the front end of the upgraded sportsbook via its brand, Shape Games.
The Malta-based solutions provider has already commenced the process of upgrading the sportsbook. Once complete, it will not have an instant impact. The financial impact of the new sportsbook is projected to be in the second half of 2024. Kambi is experienced in the market and has provided articulate solutions to 40 licensed gambling operators on all six continents.
