Interactive
Sweden – LeoVegas President warns of unlicensed operators impact in Swedish market
By Lewis - 6 November 2020
In its latest quarterly report, LeoVegas president and CEO Gustaf Hagman has warned of the impact unlicensed operators were having in Sweden by targeting self-excluded gamblers – a move he said was ‘shaking’ the legal market.
“We had a favourable development in most of our markets during the quarter, with our growing customer base as the main driver. Many markets had double-digit growth compared with the same period a year ago.
“In Sweden we are seeing a troubling development in which the unlicensed market continues to grow unhindered. A growing number of operators without licences are actively targeting Swedish players, including those who have been barred by the self-exclusion tool Spelpaus.
“This has been confirmed by, among others, several organisations that provide help to people with a gambling problem. These organisations have noted that the majority of those seeking help are playing with the unlicensed operators.
“The problem is big and is shaking the foundation of the entire Swedish licence system. Quick and strong measures are now needed by Swedish politicians and authorities to ensure a well-functioning Swedish gaming market.”
In the third quarter, LeoVegas revenue increased by one per cent to €88.9m. The number of depositing customers increased 26 per cent. Net gaming revenue from locally regulated markets was 44 per cent of total NGR. EBITDA was €11.9 m, corresponding to an EBITDA margin of 13.4 per cent.
Operating profit (EBIT) was €5.1m, while adjusted EBIT was €9.2m, corresponding to an adjusted EBIT margin of 10.4 per cent. Earnings per share were €0.04 before and after dilution, while adjusted earnings per share were €0.08.
“Once again, we have shown our ability to quickly adapt to new, external circumstances, such as those related to the continuing pandemic and the constant regulatory changes in our various markets. During the third quarter we maintained a high pace of innovation and investment, which is strengthening our long-term position and growth prospects,” commented Gustaf Hagman.
“During the quarter our customer base again reached a new record level. The number of depositing customers grew 26 per cent compared with the same period a year ago, which confirms the strong development of our business. This is partly attributable to the ongoing structural shift from land-based gaming to online, but above all to our focus on creating the best product and experience for our customers.
“We continue to optimise scalability and reduce complexity in the organisation. During the quarter, among other measures we realised synergies from previous acquisitions and instituted a clearer organisational and Group structure. This has led to a slight level of staff redundancy, and operating profit was charged with EUR 0.5 m for measures coupled to this.
“At the same time, we estimate that yearly net savings from these measures will amount to roughly EUR 1.5 m start- ing with next year. Our efficiency improvement work equips us for continued profitable growth and makes us – combined with greater diversification of the revenue base – more resilient to rapid fluctuations in individual markets.”
LeoVegas’ President also referenced Germany’s new licence system set to be introduced in the second half of 2021. “We are looking forward with confidence to Europe’s largest market finally being regulated. Ahead of implementation of the licence system, it is expected that operators will carry out certain limitations in their respective customer offerings in advance.
“LeoVegas has already begun implementing such limitations, which will initially have a negative impact on revenue. Details on regulation of the German market are provided in the Legal update section in this report.
“LeoVegas today has a licence in the German state of Schleswig-Holstein and expects to receive nationwide licences once they are available. Germany generated approximately 17 per cent of the Group’s total revenue during the third quarter.”
