Too early to draw conclusions from Swedish market changes – Betsson

Nordic gaming giant Betsson believes that the market is still adapting to the new regulatory regime in Sweden which came into force at the turn of the year, but initial reports suggest that the regulation will impact the bottom line.
Speaking at the firm’s Q1 2019 results, which saw a 21% EBIT growth over the period, Group CEO Pontus Lindwall said there are still things to smooth out in the market.
“We have now seen the effects from the new Swedish gaming law for a full quarter. Even though we are reporting a solid first quarter, we see that both revenue and operating profit was negatively impacted by the new regulation in Sweden. The market has experienced a challenging start, however we believe it is too early to draw any long-term conclusions.
“During the first half of the first quarter, there were high costs for welcome bonuses to customers as well as a difference in the dynamics of the customer behavior. During the second half of the quarter, the situation stabilised, primarily regarding customer volumes and number of new customers.”
Lindwall also highlighted that there are ongoing discussions regarding rules for marketing volumes and content in Sweden. He added: “Betsson still sees Sweden as an important market long-term, however we now also see the advantage of having a geographical spread that enables scalability. As a result from changing market conditions in Sweden we also see increased M&A activities.”
Revenue for the first quarter 2019 was SEK 1,330.6 million, an increase of 10 percent (8 percent organic) compared to the first quarter 2018. Casino revenue increased by 10 percent, while Sportsbook increased by 13 percent in the quarter. The Sportsbook margin was 6.3 percent, which is lower than the eight-quarter average. The Sportsbook margin differs by the outcome of various sport events.
Lindwall hailed the adoption of the Remote Gambling Bill in the Netherlands in February as a positive milestone. He explained: “It is a step forward for the Dutch market and consumers, as well as a positive development towards locally regulated revenues for Betsson. The operational subsidiaries have taken swift measures to be in the best position to obtain a license at the earliest possible time. The measures include adjustments to the product offering, rebranding and payment solutions.
“Whilst we have short term negative impact on revenues in the Netherlands (one contributing factor reflected in the trading update), the measures ensure a sustainable outlook for the Dutch business and are long-term investments. Above all, we are committed to working with the Dutch regulator and contributing positively to the objective of achieving high channelisation in minimum time in the Netherlands.”