Veikkaus Struggles with Revenue Losses Ahead of Major Industry Overhaul in Finland

Revenue and Profit Down in H1 2024

Veikkaus, Finland’s state-owned gambling monopoly, reported significant decreases in both revenue and profit for the first half of 2024. The group’s sales revenue dropped by 6.8% to €483.8 million, while gross gaming revenue (GGR) saw a sharper decline of 21% compared to the same period last year. Operating profit also fell by 20.4%, with total group profit decreasing by 19.1% to €252.3 million.

Veikkaus attributed much of the revenue decline to the mandatory ID verification process that was introduced for ticket-based game sales in spring 2023. This requirement was extended to scratchcards this year, resulting in a 44% drop in revenue from these products. The implementation of stricter identification measures has had a significant impact on the company’s overall sales.

The decrease in profits was also influenced by Veikkaus’ investment in future projects and the return of the lottery tax rate to its previous level of 12% from a temporary reduction of 5%. The group’s tax contributions to the state increased by €31.7 million compared to the previous year, reaching €57.6 million.

Regulatory Changes on the Horizon

The Finnish gambling industry is on the cusp of major changes, with the current monopoly system set to end by 2026. Veikkaus will be restructured into separate entities within the same group, a shift that presents both challenges and opportunities for the company. Veikkaus CFO Regina Sippel views these regulatory changes as a chance to innovate and improve the company’s services.

Despite the overall decline, Veikkaus highlighted some positive developments. The B2B subsidiary Fennica Gaming showed promising growth, although specific figures were not disclosed. Additionally, the number of registered customers increased by 15,000, bringing the total to over 2.5 million by the end of June 2024.

Concerns Over Market Liberalisation and Conflicts of Interest

As Finland prepares to liberalize its gambling market, industry experts have expressed concerns about the potential effectiveness of these changes. The proposed regulations include strict limitations on marketing, such as a ban on bonusing, affiliates, and influencer marketing. Critics argue that these restrictions may hinder the development of a competitive market and could drive players towards unregulated operators.

There are also concerns about the Finnish government’s dual role as both regulator and owner of Veikkaus. Local consultant Jari Vähänen suggested that the state should consider selling off its ownership in Veikkaus to avoid potential conflicts of interest as the market opens up to commercial operators from 2027 onwards.