Finlands gambling monopoly operator Veikkaus forecasted that its 2020 earnings will plummet by €300 million (£268.6 million/$354.5 million) after the company declared a 28.1% decrease in overall income and a 33.6% drop in profit in the initial six months of the year.
Total gambling income for the six months concluding June 30 decreased to €607.2 million, with Veikkaus calculating that roughly €200 million of revenue was lost due to the effects of the coronavirus (COVID-19) pandemic.
The operator shut down its gaming venues and disconnected its slot machine network from March 13. It did not reopen its gaming halls until June 26, just four days before the end of the reporting period, and its slot machines did not return to service until mid-July.
This resulted in a 46.0% reduction in the operator’s casino gaming income to €243.2 million, which included €137.8 million (down 58.8%) from Veikkaus gaming halls and partner network slot machines and €105.4 million (down 9.1%) from other casino games, including online.
Veikkaus observed that online revenue accounted for 11.8 percentage points more of total revenue, reaching 44.1% of total revenue in the first half of the year.
In spite of this, the firm asserts that this is primarily due to a general downturn in the retail industry, rather than a sign of players migrating to online platforms. The firm stresses that the number of online players has risen by 21% year-on-year over the past six months.
Income from operating online casino games actually decreased slightly, dropping to €101 million year-on-year.
The contribution of land-based slot machines is projected to decrease further, with Veikkaus planning to reduce the number of machines in operation to 10,500 by the end of 2020.
From January 2021, mandatory registration will be implemented, requiring all players to have an account with the operator before participating in gambling. Before the regulation comes into effect, all slot machines will display a timer reminding players after 15 minutes of play.
Sports betting income across all channels also decreased, falling by 21.9% year-on-year to €58.1 million, due to the significant reduction in the sports event schedule caused by COVID-19. There are indications that some players have switched from sports betting to Veikkaus’ Toto product, which saw a slight increase in revenue to €28.9 million, although this was offset by a 38.9% decline in betting contributions to €29.1 million.
The decline in lottery was smaller, with revenue falling 4.3% in the first half of the year to €305.9 million. This was primarily due to a decline in revenue from weekly and daily draw games, with only two jackpots occurring in the first half of the year, compared to six in 2019.
The company’s income from other sources increased by €1.3 million, and it paid €72.8 million in lottery tax, down from €101.1 million in the previous year.
Expenditures on products and services by Visas in the initial six months of 2020 declined by 22.7% to €80.2 million, while personnel expenses decreased by 17.3% to €43.5 million.
The company accrued €79.2 million in other costs, encompassing service charges, depreciation and impairment levies, along with €100,000 in financial earnings, leading to a profit of €332.7 million, down 33.6% from the previous year. Of this sum, 53% will be channeled towards initiatives in the arts, science, athletics, and youth activities, social and health organizations will receive 43%, and equestrian sports and education will secure the remaining 4%.
“Similar to numerous other operators, Visas encountered a highly demanding spring,” remarked Regina Sippel, the operator’s Chief Financial Officer. “As a consequence of the COVID-19 pandemic, our contribution to society will be considerably lower than in prior years.”
Visas asserted that, according to H2 Gambling Capital estimations, Finland generated an aggregate gambling income (inclusive of offshore providers) of approximately €760 million during the first half of 2020, signifying that the operator accounts for roughly 80% of all revenue.