State-owned Finnish gambling monopoly Veikkaus reported significant drops in revenue and profit over the first half of 2024, with changes to the nation’s gambling industry edging closer.
After reporting a 1% year-on-year revenue rise in H1 last year, the same period of 2024 saw Veikkaus Group’s sales revenue fall 6.8% to €483.8m (£407.6m/$535.4m). Gross gaming revenue (GGR) fell by 21% during the reporting period of the start of January to the end of June.
Veikkaus blamed the impact of mandatory ID verification for this decline. From spring 2023 customers must verify their identity for ticket-based game sales, Veikkaus blamed this for a 21% decline in sales. An ID requirement for scratchcards came into force this year and revenue dropped 44% year-on-year.
Additionally, operating profit plunged by 20.4% to €246.9m, with total group profit dropping 19.1% to €252.3m.
Veikkaus attributed the reductions in profit to investments in the group’s future, as well as the end of the temporary reduction on lottery tax, which is now back up to 12% from 5%. The group paid €57.6m in lottery tax to the state, an increase of €31.7 compared to the same period the year prior.
The downturn in performance for Veikkaus comes with huge changes to Finland’s gambling industry on the horizon.
It was confirmed in June 2023 that Veikkaus’ current monopoly system would end “no later than 2026”. Veikkaus will be split into separate companies that form part of the same group.
Regina Sippel, Veikkaus’ chief financial officer, believes the regulatory changes offer Veikkaus exciting opportunities for the future.
“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 explained.
Is B2B performance cause for optimism at Veikkaus?
Parent company Veikkaus Oy saw its gross gaming revenue (GGR) drop 7% to €482.8m, while its operating profit also dropped by 20.1% to €250.2m.
As a result, Veikkaus Oy’s total financial profit for H1 stood at €255.6m, an 18.8% year-on-year fall. Total contributions to the state across H1 amounted to €313.2m, 8.1% lower than in the same period last year.
However, despite the group reporting drops in revenue and profit, Veikkaus outlined there were still aspects to be positive about.
For instance, the turnover of B2B subsidiary Fennica Gaming has “developed positively” according to Veikkaus managing director Olli Sarekoski and, although its figures weren’t outlined, the company emphasised that despite the “small” numbers Fennica Gaming is moving in the right direction.
Additionally, Veikkaus’ registered customers also rose by 15,000 over the first half of the year with the total figure of registered customers amounting to over 2.5 million at the end of June.
Trouble ahead for Finland’s gambling industry?
With sweeping changes coming up for the Finnish gambling industry, the industry has raised concerns over whether the liberalisation of the market will have a positive effect on channelisation rates towards legal operators.
For example, Finnish online gambling trade body CEO Mika Kuismanen said in an opinion piece on Uusi Suomi that the government’s plans to heavily restrict marketing “do not promote a well-functioning gambling environment”.
The draft regulations on marketing include a ban on bonusing and affiliates, as well as influencer marketing.
“The new gambling law […] was supposed to open the market and welcome competition,” Kuismanen explained. “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.”
Additionally, local consultant Jari Vähänen has warned even with the introduction of commercial operators, Veikkaus could still hold a competitive advantage over the licensed market, which will come in from 2027 onwards.
Vähänen feels the Finnish government should sell off its ownership of the Veikkaus monopoly, saying: “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.”
