Swedish horse racing monopoly AB Trav och Galopp (ATG) enjoyed strong top and bottom line growth in Q2 but warned the government’s “illogical” gambling tax hike will have a disproportionate impact on the operator.
On 1 July, gross gaming revenue (GGR) tax for gambling operators in Sweden increased from 18% to 22%. The government estimates this hike will generate more than SEK500m (£37.4m/€43.9m/$48.6m) in additional tax revenue each year.
However, the decision has prompted criticism from industry groups and operators including ATG.
After publishing its results for the three months ended 30 June, ATG reiterated its opposition to the tax hike. Chief executive Hasse Lord Skarplöth said the increased rate would negatively impact the country’s horsing racing industry.
“Based on ATG’s mission from the state – to ensure long-term development for the sport of trotting and galloping in Sweden – the tax increase is, to put it mildly, illogical,” Skarplöth said.
The tax will disproportionately impact ATG, Skarplöth explained. Of that SEK500m in additional tax revenue, he expects around SEK200m to come from ATG.
“In other words, it [is] a horse tax,” he said, that means the operator will contribute less funding to Sweden’s racing sector.
“The horse tax will lead to an increase in costs for ATG. This in turn affects the funds for our owners and the entire Swedish horse industry and leads to the erosion of ATG’s mission.”
ATG wanted higher tax for online casinos
Skarplöth went on to say the Swedish government should instead have applied a higher tax rate to online casinos. ATG previously advocated keeping the 18% GGR tax on betting and racing while raising the levy for online casino to 26%.
This, Skarplöth said, would have generated more funds than the government’s increase.
“The proposal would not only mean a lower tax burden for a sport currently struggling against increased costs and high interest rates,” he said. “It would also add more money to the treasury than the government’s own proposal.
“Add that we too would have better public health as online casino is the form of gambling that is most associated with gambling problems.”
He pledged to continue lobbying the government for a change in approach.
How did ATG perform in Q2?
Skarplöth’s comments come in the wake of a positive Q2 for ATG. During the three months to 30 June, total revenue increased 2.6% year-on-year to SEK1.57bn.
Of this, net gaming revenue accounted for SEK1.39bn, a rise of 3.3%. This came despite a dip in horse racing betting revenue, which slipped 1.0% to SEK996m, mainly due to the earlier running of the SpringRace event in Sweden.
However, this decline was offset by growth elsewhere. Sports betting net gaming revenue was 15.6% higher at SEK207m, helped by Euro 2024, which began in mid-June. In addition, casino revenue increased by 16.6% to SEK183m in Q2.
In terms of channels, online operations generated SEK1.26bn of all net gaming revenue, a rise of 7.2%. On the flip side, retail revenue was down 23.4% to SEK131m.
Net profit edges up 4.7%
Operating expenses were slightly lower year-on-year at SEK832m. This meant operating profit increased 5.9% to SEK452m.
Profit before tax was also 3.8% higher at SEK460m in Q2. ATG paid SEK13m in tax and also noted a SEK1m positive impact from translation differences, leaving a healthy net profit of SEK448m, up 4.7% from the previous year.
Record H1 for ATG
Looking at H1, success across the opening two quarters led to net gaming revenue hitting a record SEK2.69bn, a rise of 6.2%. Total revenue was up 5.6% to SEK3.07bn, with ATG seeing growth in all business segments.
Operating costs were marginally lower at SEK1.65bn, with operating profit rising by 13.0% to SEK841m. Pre-tax profit topped SEK860m, a rise of 12.6%.
ATG paid SEK26m in tax and accounted for a SEK1m loss from foreign exchange. As such, it ended H1 with a net profit of SEK833m, up 13.2% year-on-year.
