The Finnish state-owned monopoly Veikkaus Oy’s revenue has remained largely flat year-on-year. This was attributed to low consumer confidence.
The group’s revenue was EUR1.07bn (PS1.52bn/ 1.81bn) in the 12-month period ended 31 December. This is a 33% decrease from the EUR1.1bn achieved by the company in the previous year.
The company’s total revenue increased from 29.4% down to 32.4% for land-based casinos, which generated EUR346.7m. The largest segment was Lotteries, which accounted for 56% of total revenue at EUR600.0m. This is a 1.1% decrease from the previous year.
The company experienced a 16.9% decrease in its betting segment year-over-year, which was worth EUR123.8m.
In 2022, overall revenue was 49.7% from physical points, and 50.3% from online channels.
The company’s market share has been affected by illegal and offshore offerings.
“Veikkaus Oy has suffered a decline in its share of the Finnish digital gaming market for many years. The business stated that it was just over 50% at the end of 2022.
The online gaming business saw a decline in absolute and relative terms, falling from 13.5% down to 11.6% from EUR149mto EUR123.8m
Veikkaus also made EUR4.9m from other non-gaming activities, including food and drink at its land-based properties. This was a decrease of 34.4%.
Profits are being eroded by rising costs
Veikkaus spent EUR36.3m on lottery taxes in the year. This is a 39.8% decrease. The highest cost of the period was EUR132.5m in material and services, which rose by 3.3%.
Employee benefits costs amounted to EUR85.5m. In addition to EUR48.4m in impairment and depreciation charges, the company also had to pay $101.8m for miscellaneous expenses.
The company’s net income was EUR671.0m. This will be divided between a number specific ministries as it is a state-owned Monopoly.
Veikkaus also reported EUR343,210 financial income and EUR684,888 finance costs.
The profit before taxes was EUR670.6m. This is 1.3% less than the previous year.
Consumer uncertainty
This was the first year in a row since the Covid-19 pandemic. The organisation’s land-based operations, which include a number gaming halls and two casinos, were operational throughout the year without being affected by pandemic restrictions.
Despite not having to place restrictions, the business saw weak sales at its retail outlets.
Regina Sippel, CFO, stated that “Consumer behavior at physical points of sale have not, however, returned the same level as prior to the coronavirus panademic.”
She continued, “In addition to the mandatory loss limits implemented in 2021 for slots machines have reduced volume of slot machine gaming.”
The CFO also pointed out the impact of the macroeconomic environment on revenue reductions, pointing specifically to the drop in consumer confidence and purchasing power.
She stated that the war in Ukraine, as well as increased consumer uncertainty and lower purchasing power, has also affected Veikkaus’ demand.
International subsidiary
After the passage of the Lottery Act in December 2021, Veikkaus decided to open Fennica Gaming, an international B2B company.
The company’s revenues in 2022 were not affected by the new organization’s operations. It reported a turnover of EUR174,500 for the year.
“The positive feedback received from the company, including the increased interest and functionality in different markets, the high-quality games and technical reliability, as well as the customer cooperation, has been encouraging,” stated CEO Olli Sharekoski.
Fennica Gaming will be a major component of Veikkaus’ future business, once the business is established.
