Veikkaus Group reported a significant drop in sales revenue for the first half of 2024, with a decrease of 6.8% to €483.8 million (£407.6 million/$535.4 million). This decline follows a modest 1% year-on-year revenue rise during the same period last year. The company's gross gaming revenue (GGR) also fell sharply by 21% from January through June 2024.
The plunge in revenue has been attributed to the new mandatory ID verification process introduced in spring 2023, which requires customers to verify their identity for ticket-based game purchases. This requirement has resulted in a 21% decrease in sales. Additionally, the implementation of ID verification for scratchcards this year led to a staggering 44% drop in revenue from that segment.
Operating profit for Veikkaus decreased by 20.4% to €246.9 million, while total group profit fell 19.1% to €252.3 million. The company has stated that these profit declines are linked to strategic investments in its future and the cessation of a temporary reduction in lottery tax, which has returned to 12% from 5%. Consequently, Veikkaus paid €57.6 million in lottery tax to the state, an increase of €31.7 million from the previous year.
As Veikkaus faces these financial challenges, significant changes loom on the horizon for Finland's gambling industry. In June 2023, it was announced that the current monopoly system will be dismantled by 2026, with Veikkaus being divided into several companies under the same group umbrella.
Regina Sippel, the chief financial officer of Veikkaus, expressed that the forthcoming regulatory changes present exciting opportunities for the company. "The upcoming overhaul of the gambling system is a great chance for Veikkaus and we will continue to invest in business development and offering the best customer experience," Sippel remarked.
Meanwhile, Veikkaus Oy, the parent company, experienced a 7% decrease in GGR, totaling €482.8 million, with operating profit declining by 20.1% to €250.2 million. The total financial profit for the first half of the year stood at €255.6 million, marking an 18.8% drop compared to the previous year. Contributions to the state from Veikkaus throughout the first half amounted to €313.2 million, which is 8.1% lower than the same period last year.
Despite these setbacks, Veikkaus remains optimistic. Olli Sarekoski, managing director, noted that the B2B subsidiary, Fennica Gaming, has shown positive development, although specific numbers have not been disclosed. Furthermore, the number of registered customers grew by 15,000 in the first half of the year, reaching over 2.5 million by the end of June.
Concerns about the future of Finland's gambling industry persist, especially regarding the liberalization of the market. CEO of the Finnish online gambling trade body, Mika Kuismanen, expressed skepticism about the government's plan to heavily restrict marketing, stating that it does not promote a healthy gambling environment. Proposed regulations would limit bonusing, affiliates, and influencer marketing, raising fears that such restrictions could hinder the intended objectives of opening up the market to competition.
Kuismanen highlighted, "The new gambling law […] was supposed to open the market and welcome competition. Now the law threatens to go down the wrong path right from the start. Marketing is unjustifiably limited, sponsorship is stifled, while bonuses and offers are prohibited. If it doesn’t change course quickly, the law reform will run into a wall and gambling on the grey market will continue."
Local consultant Jari Vähänen cautioned that despite the introduction of commercial operators scheduled for 2027, Veikkaus may retain a competitive edge over licensed markets. Vähänen is advocating for the Finnish government to divest its ownership of the Veikkaus monopoly, arguing, "The Finnish state wants to maintain a dual role, taking care of the legislation and supervision of gambling activities and, at the same time, owning the company involved in gambling activities. There is a high risk of conflict of interest in such a model."
