Svenska Spel

CEO's commentary - repositioning for the future

In 2012, after setting a new course, we began working on the prioritised development areas that we identified, and prepared the company for the future.

Svenska Spel is on the right track. We have transitioned from words to actions and taken measures in several key areas. We are increasingly ­living in accordance with our vision and values throughout the operation. During a year of intense competition and a major transition in the company, I am pleased with the results that we delivered. We generated our best operating profit ever and delivered ­proceeds of slightly more than SEK 5.1 billion. Overall, we ­successfully achieved the objective from the owner of an operating ­margin of 22% over one economic cycle. 2012 was also a year in which SEK 13 billion was allocated to gratified winners throughout the country, of which a record 409 were winnings in the millions.

Our net gaming revenues rose by SEK 128 million compared with 2011. Sports Games & Lotteries performed particularly well and leveraged strong sales of lottery tickets, numbers games and sports games to bolster its revenues. However, Casino ­Cosmopol and Vegas declined somewhat.

Market with different rules

In 2012, we faced greater competition than ever with the rapid growth of new online forms of gaming, for which ­Svenska Spel lacks permits. Foreign gaming companies successfully captured market shares as a result of more intense marketing. At the same time, different rules and conditions prevail in the market, whereby some gaming companies are not subject to any form of supervision or inspection. The lack of a regulatory framework leads to consumer protection eroding.

We have gaming regulations that do not work and an overhaul is needed to provide us with a functioning ban on ad­vertisements from foreign-based companies and to give authorities the power to take action against the companies that engage in marketing that runs counter to legislation. The need for tighter regulations is confirmed in the dialogue with our stakeholders, in the social debate and in the Swedish National Audit Office’s study of the State’s role in the gaming market.

Investments in a strengthened customer offering

Our ability to adapt our operations to the market, technical developments and customers’ behaviour are crucial to maintaining a long-term viable operation. The online channel is where growth is occurring and here Svenska Spel has not invested in pace with market demand. The Board has now approved an investment of about SEK 300 million in the digital platform, which will enable us to strengthen our customer offering – a key step toward recapturing digital leadership.

To finance the investment, we have closely examined the organisation and questioned every expense. This largely involves ensuring that we have the right skills to make investments that make the greatest difference for customers. At the same time, this requires us to reduce our costs in other areas, which will affect about 100 positions at the company in the next few years. I am proud of how our employees have adapted to the transition, how we have managed to establish the changes internally and how the company has remained focused on advancing responsibility and the business.

New initiatives that promote involvement

Our commitment to Swedish sports remains steadfast and we remain involved in building interest, pride and success for ­several of our cherished national teams. In the autumn of 2012, we launched Svea – a long-term sponsorship initiative in which customers annually help distribute SEK 50 million to the sports associations of their choice. Through Svea, we have s­uccessfully managed to combine sports and gaming interests with our com­mitment to sports in a way that benefits society as a whole.

Another thing that is in demand and a global trend is multi­national games with enormous winnings. It is thus gratifying to launch Eurojackpot – a lottery that is available in 14 European countries and in which participants can win up to EUR 90 million. It will be exciting to see how the new game is received by our customers and if anyone in Sweden wins the big jackpot.

Responsible gaming a key aspect of the customer offering

We continued to build on our responsible gaming efforts in the past year, but I have also noted that we can improve in a few areas. Many customers play with Svenska Spel because it feels safe and secure. We can enhance this perception by becoming even more consistent in how we apply responsi­bility throughout the organisation. We can also improve on following up our responsible gaming actions and, in 2013, we have commissioned an independent assessment of our i­­nitiatives and the effects of our work.

How to make gaming enjoyable for everyone

I look forward to an exciting year in which our work focuses on even more clearly integrating responsible gaming in our business operations and cementing our market position as a different type of gaming company capable of combining attractive, entertaining games with decisive responsible ­gaming measures and strong consumer protection. As the market leader, we must also pursue regulations that are more in line with our gaming policy objectives. We achieve this by sharing the ­collective knowledge about the gaming market that we have gathered over time.

We have a commitment to live up to under our vision – ­gaming shall be enjoyed by all.

Backed by a strong organisation and together with my colleagues and our business partners, I confidently look forward to jointly living up to our vision in 2013.

Visby, February 2013
Lennart Käll, President and CEO