Interactive

Sweden – Swedish overhaul would be the Cherry on top of the cake

By Phil - 19 February 2015

Stockholm-based operator Cherry has reported record turnover across all its business divisions in the fourth quarter with its online operations growing by 60 percent and its land-based tables business Restaurant Casino increasing turnover by seven per cent.

Group revenue for the entire year increased by 28 per cent and amounted to SEK340m.

Despite business booming on all sides Fredrik Burvall, CEO, would like to see an overhaul of legislation in Cherry’s domestic market.

“A new order is required in the Swedish gaming market,” he said. “Sweden has quite rightly been taken to the European Court after it has, for too long, delayed a re-regulation. Some countries have realized that the gaming industry, if properly managed, can contribute positively to economic growth. Instead of hindering private operators and trying to maintain a monopoly, Sweden should make it accessible and affirm the rapidly evolving gaming industry. Cherry calls for a modernized legislation, which allows us to operate under great social responsibility and compete on equal terms.”

2014 was a colossal year for Cherry with its Restaurant Casino business in Sweden seeing its turnover increase by seven per cent. Its partnership with Yggdrasil Gaming also proved fruitful with 18 new contracts signed and 13 new operators going live.

During January Cherry acquired 51 per cent of Game Lounge, which will see Game Lounge selecting Cherry as a white label partner for SveaCasino.com and other brands in the future.

Fredrik Burvall, CEO said: “This is expected to enable Cherry to rapidly increase its volumes in existing brands and through future white label brands, and increases the number of customers at a significantly lower cost per customer than before. We believe that this will increase Cherry’s revenues and EBIT during the next few years and generate many new depositing customers, which will mean that we will reach profitability in this business area more quickly.”

“Cherry is a unique company in the Swedish gaming market,” added Mr. Burval. “Cherry has entertained generations of players with moments of fun and excitement, playing in pubs and restaurants all over Sweden, and in recent years we have also been present online as a casino and lottery operator and gaming provider. Once again Restaurant Casino impresses with a continued positive trend and 2014 shows the best result ever, creating growth in a declining market. During the year Cherry acquired JPC Casino and introduced faster POS terminals. The market share is currently 64 per cent, making Cherry the clear market leader in the land-based sector. The market has stabilized, but larger stakes are still required for long-term growth.”

Cherry has though decided to phase out its involvement in the Swedish sports lottery Klubblo.
Mr. Burval said: “The conditions for conducting business have changed. Cherry and Idrottsalliansen believe that enforcement has changed, which has made it impossible for Klubblo to cooperate with the sports associations whose federations are not members of Idrottsalliansen. Just under half of all special sport federations within Riksidrottsförbundet (the Swedish Sports Confederation) are connected to the Idrottsalliansen, also several large confederations, such as the Football and Ice Hockey Federations, are prevented from joining the Idrottsalliansen because of the exclusivity agreement with Svenska Spel. The objective was that Klubblo, with its focus on grassroots sport, would take on the position as a significant partner to Swedish athletics within gaming and lotteries. Under current conditions Klubblo therefore does not fit with Cherry’s strategy.”

In the fourth quarter, Yggdrasil has launched six gaming operators and during the year has signed 18 new agreements with well-known gaming operators. It takes time to get customers live and get them to use all of the games and features, but we can conclude that the gaming operators that went live in 2014 made great progress, which has proved that the business model works and that the games and features Yggdrasil produces are popular. Several new games have been released, such as Reef Run, Cazino Zeppelin and Draglings. Also, in January 2015, The Dark Joker Rizes was released.The Dark Joker Rizes is the first Yggdrasil game built on the new platform HTML5 platform iSENSE 2.0, which makes it possible to launch games simultaneously on PC, mobile and tablet. This means that the operators have greater ability to reach their players and streamline their marketing costs.