LeoVegas concerned about damaging Swedish restrictions amid solid Q2

LeoVegas has lauded “continued solid growth and profitability during a period of exceptional circumstances,” as a sense of operational normality returned to igaming following the culmination of Q3.

As revenue for July amounted to €30.7m (2019: €29.3m), representing a growth rate of five per cent, the group says that “the gaming market has returned to a more normal environment in July”.

This is via an expected player shift from casino back to sports betting now that major sports leagues have restarted, however, temporary restrictions imposed in Sweden are having a negative impact on revenue.

Commenting on favourable developments across most markets during the quarter, driven primarily by a record-large depositing customer base which grew by 24 per cent to 434,453 (2019: 350,298), Italy is pinpointed as“posting record-strong performance” with COVID impacts having a negative effect in Sweden.

During the quarter, representing the period from April 1 – June 30, revenue increased 17 per cent to €110.7m (2019: €94.4m), operating profit reached €16.3m (2019: €8.5m) and EBITDA rose 52.3 per cent to was €23m (2019: €15.1m).

NGR per region was made up 34 by the Nordics, 51 per cent by the rest of Europe and 15 per cent by the rest of the world, with GGR per product seeing casino dominate with 78 per cent, ahead of live casino (18 per cent) and sport (four per cent).

For the first half of the year revenue grew 10.7 per cent to €200.2m (2019: €180.7m), operating profit increased 103.3 per cent to €18.5 (2019: €9.1m) and EBITDA reached €32m (2019: €22.3m.

In his comments Gustaf Hagman, president and CEO of LeoVegas, elaborated on responsible gaming and again focussed on the aforementioned Swedish restrictions and the associated risks posed: “During the quarter, several countries implemented measures to reduce the risk for problem gaming in connection with COVID-19. Spain, for example, introduced a temporary ban on gambling advertising. 

“On top of these restrictions, LeoVegas has chosen to implement its own proactive measures to strengthen player protection. Most of the temporary restrictions throughout Europe ended in June, and Spain and the UK, among other countries, have reverted to normal regulations once their respective societies opened up again. 

“It is therefore remarkable that Sweden, despite massive criticism from most areas, has moved in the opposite direction and introduced new, temporary restrictions, effective 2 July, focused particularly on online casino. 

“There is a large risk that these restrictions, implemented entirely without supporting factual data, are undermining the Swedish regulation system and driving players to companies without Swedish licences, where player protection is nonexistent. These restrictions therefore risk being counterproductive and instead contribute to an increase in problem gaming in Sweden.”

Asserting a long-term financial target of achieving organic growth that outperforms the online gaming market, the operator also praised the expansion of its multi-brand strategy.

Developments during the quarter saw LeoVegas launch the LiveCasino.com brand in a number of English-speaking countries, as well as expanding GoGoCasino into Finland after debuting in Sweden last year. 

Commenting on the group’s future performance, Hagman concluded: “We will maintain a continued high rate of investment during the third quarter, partly linked to the launch of new brands and market establishments. Our current assessment is therefore that marketing costs will be in line with – or slightly higher than – the level during the second quarter. 

“We continue to focus on delivering sustainable and profitable growth for our shareholders and on offering an entertaining and safe gaming experience for our customers around the world. LeoVegas’ long-term vision is to be ‘King of Casino’.