Svenska Spel, the Swedish casino brand, has announced the permanent closure of Casino Cosmopol venues in Gothenburg and Malmö due to declining visitor numbers, attributed to the increasing popularity of online casinos. This decision aims to 'limit losses' and will lead to union negotiations before finalizing the closures. Following this move, the only remaining land-based casino in Sweden will be the Casino Cosmopol in Stockholm, potentially impacting around 200 jobs.
Ola Enquist, the chief executive of Casino Cosmopol, remarked, 'This is an emotionally tough step to take as it affects many of our employees. We have taken a number of measures in an effort to increase revenue and reduce costs. Despite hard work, we see that the measures are not sufficient.'
These closures follow a December fine of SEK2 million (£154,000/€180,000/$200,000) imposed on Casino Cosmopol for anti-money laundering (AML) deficiencies, as determined by the Swedish regulator Spelinspektionen. Svenska Spel also received a warning related to these issues.
In October, Svenska Spel’s Q3 report indicated stalled revenue and earnings amid market-wide challenges affecting the retail sector, with net gaming revenue for Casino Cosmopol and the Vegas segment declining 11% to SEK247 million. Increased competition from online gaming and restaurant casinos was identified as the primary cause of the decline. Additionally, the combined losses for Casino Cosmopol and Vegas reached SEK35 million.
In an effort to address these challenges, Svenska Spel modified its business operations at Casino Cosmopol, including adjusting opening hours to compete with restaurant casinos. However, these changes have not alleviated the losses.
Further complicating the landscape for Swedish casinos, the government has proposed increasing the gambling tax rate from 18% to 22% of gross gaming revenue (GGR), effective July 1, 2024, if approved. The government anticipates that this change could generate an additional SEK540 million in tax revenue annually, but it has faced significant opposition from the industry.
Hasse Lord Skarplöth, CEO of Aktiebolaget Trav och Galopp (ATG), has urged the government to reconsider its tax plans, advocating for a differentiated tax structure where sports betting remains at 18% while the rate for online gaming is raised. He stated, 'It came as a shock, the proposal for a higher excise tax on gambling companies. Shortly afterwards, the will to fight awoke. Strengthened by our research, we have now put quite a lot of energy into demonstrating the advantages of a differentiated gaming tax in Sweden as well.'
In other news from Sweden, La Française des Jeux (FDJ) has made a bid of SEK27.96 billion to acquire all outstanding shares of Kindred Group, offering SEK130 per share, which is a 24.4% premium over Kindred’s share price of SEK104.50 on January 19, the last trading day before the offer was disclosed. Kindred’s board has unanimously recommended that shareholders accept the offer, which is set to begin around February 20 and expire on November 19. FDJ stated that this acquisition would create the second largest operator in Europe's gaming industry, resulting in a 'European gaming champion' with improved revenue and earnings growth.
