Finland – Veikkaus predicts drop in slot revenue of €100 to €150m following compulsory identificationBy Phil - 20 February 2019
Finland’s stare-owned operator Veikkaus is predicting that revenues from its slot machines will fall by between €100 to150m a year, following the introduction of compulsory identification on decentralised slot machines as of January 2022.
Veikkaus operates one international casino and several arcades around the country, offering a total of 21, 424 slot machines.
The move towards compulsory identification will be forced on Veikkaus following a government bill for a new Lotteries Act, which was presented for parliamentary consideration in October. Veikkaus estimates the impact on the lottery tax paid by Veikkaus would fall within the range of €4 to 36m.
President and CEO Olli Sarekoski said: “We are working to overhaul Veikkaus’ cost structure to correspond to the development in order to ensure our future competitiveness, thereby securing funds to our beneficiaries. In the coming years, we will focus on investments that support Veikkaus’ competitive monopoly. In spite of the challenges in the development of the gross gaming revenue, we were able to generate the projected profit to our beneficiaries in 2018, by operating in a cost-efficient way. By developing further our operations, we can continue to guarantee the profit to our beneficiaries even in the future. Changes in consumer behaviour, the transition that trade is currently undergoing, and the reductions in the point-of-sale network have lessened gaming at the points of sale.”
Veikkaus reported a drop in both revenue and profit in 2018 but hopes that launching digital offering of its business in the next three years.
Revenues dropped by 2.4 per cent to €3.1bn in 2018. Of the turnover, 57.9 per cent came from the points of sale and 42.1 per cent from the digital channel.
Eurojackpot had an excellent year with multiple large jackpots boosting the game’s turnover to €300.8m to a growth of 40,6 per cent. The Lucky Games segment generated the biggest slice of the company’s revenue at 37.8 per cent, coming in at €1.1bn. Lotto, the most popular game in the country, generated a revenue of €340.4m, representing a fall off 1.3 per cent.
Slots and instant games, both online and land-based, bingo and instant win games witnessed a revenue decline of 5.9 per cent to €1.1bn. Online and land-based sports betting, to and pools experienced a 4.8 per cent fall to €799.4m.
Profit came in at €1.01bn in 2018, marking a slight fall of 0.7 per cent.
Mr. Sarekoski: “In 2018 Veikkaus prepared for major changes in its operating environment. Gaming is shifting from the points of sale towards the digital channel, where Veikkaus also faces competition from foreign operators. Veikkaus must develop its operations to succeed in international competition. Succeeding in the competition and ensuring our ability to channel gaming also provide the basis for the exclusive right and its continuation. We want to be able to provide games responsibly even in the future, minimizing game-related harm and channelling gaming revenue to the benefit of Finnish people.
In 2018 Veikkaus managed to reach the previous year’s level in its financial result, despite toughening competition. The year was especially successful for Eurojackpot, the turnover of which increased by 40.6 percent over the previous year. During the year Veikkaus kept preparing for major changes in its operating environment and drafted a strategy for the years 2019 to 2021.”
The strategy for the next three years will see Veikkaus’ competitiveness reinforced in the digital channel.
“We innovate and develop our operations in order to be able to offer our customers world-class alternatives to play entertaining and exciting gambling games in a reliable way. We also work in close cooperation with our international partners,” Mr. Sarekoski explained.
“From the perspective of responsibility, it is important that we manage to channel gaming towards Veikkaus’ games. A year ago, we introduced gaming limits in the digital channel that are unique even in the international setting. The first analyses have shown that the players have managed to use the gaming limits to control their gaming to take the direction they wish, and this has also lessened problematic gaming.”
Veikkaus is currently building a second casino in Tampere as part of a multipurpose arena.The first phase of the project is expected to be completed in 2020.