Svenska Spel

Directors report

The Board and CEO of AB Svenska Spel, corporate registration number 556460-1812, with its registered office in Visby, hereby submit the Annual Report and the Consolidated Financial Statements for the financial year 1 January–31 December 2012

The Company’s mandate and permission

Sweden’s gaming policies aim to achieve a sound and secure gaming market in which social considerations are heeded by meeting the demand for games under controlled forms. The aim is to counteract excessive gaming, which can lead to gambling addiction, and thus acheive one of the objectives in the area of public health.

Svenska Spel has a mandate from the State, after securing permission from the government, to organise games and lotteries in a socially responsible manner.

The company should:

  • satisfy consumers’ demand for attractive gaming activities;
  • provide games that can be deemed to entail risks of a social nature within the framework for social responsibility, when this is deemed to be able to curb illegal gaming in uncontrolled forms;
  • be a credible but also attractive alternative to, first and foremost, uncontrolled gaming activities;
  • take into account social consideration, fraud risks and consumer interests when games are being developed and otherwise in the operation;
  • aspire to achieve a well-established service in urban and rural areas;
  • focus on social responsibility in its marketing so as to avoid being perceived as excessively intrusive.

The 2012 Annual General Meeting adopted a financial goal aimed at ensuring cost-effective operations. Over the course of one ­economic cycle of five to seven years, Svenska Spel should achieve an operating margin of at least 22%. The operating ­margin is calculated as the operating profit in relation to all ­revenues, meaning gross gaming revenues and other operating revenues.

The Swedish government grants a number of permits that form the basis of Svenska Spel’s operations. The applicable permits govern the following areas:

  • Lotteries and betting on sports competitions
  • VLTs
  • Casino games and the locations for casino games
  • Online Poker

Legal structure

AB Svenska Spel was founded in 1997 following a merger of AB Tipstjänst (established in 1934) and Svenska Penninglotteriet AB (formed in 1897), and is 100% owned by the Swedish State.

The Svenska Spel Group comprises the Parent Company AB Svenska Spel and subsidiaries Svenska Spel’s Förvaltnings AB and Casino Cosmopol AB. Svenska Spel’s Förvaltnings AB forms a sub-group with the subsidiaries AB Svenska Spel’s Internet­service, Casino Cosmopols Fastighets AB, CC Casino Restaurang AB, AB Svenska Spel’s Servicecenter and Playscan AB. In addition, there are a number of dormant companies, see Note 25.

Operational structure

Since February 2012, the Group has been organised in three result areas: Sports Games & Lotteries, Vegas and Casino Cosmopol, as well as seven staff functions (Parent brand, Strategy, Finance & Security, Legal, Communications & Responsibility, HR and IT).

Sports Games & Lotteries result area

The result area is responsible for selling all games and lotteries through the sales channels: retailers, arenas, online, corporate ­customers and subscriptions. At 31 December 2012, Svenska Spel had 5,969 retailers (6,209).

Sports Games & Lotteries offers a broad gaming range in the form of sports games, number games and lotteries. The sports games are Stryktipset, Europatipset, Måltipset, Topptipset and Oddset. The number games are Lotto, Keno, Joker, Viking Lotto, and the online games Bingo, poker and Pick´n´Click. Svenska Spel’s lotteries comprise Triss, Tia, Penning and Scratch games comprising Skrap-Pyramid, Skrap-Kryss, Skrap-Bingo and Skrap-­Stjärna. The offering also includes a pre-packaged set of lottery tickets and temporary campaign lottery tickets.

The result area accounts for 67.4% (66.1) of Svenska Spel’s total gaming revenues. In the 2012 financial year, net gaming revenues totalled SEK 6,615 million (6,401), up 3.4% year-on-year.

Vegas result area

The result area is responsible for the Vegas VLTs, which are the only gaming machines legally allowed in Sweden, except for the slot machines at Casino Cosmopol.

The VLTs are installed in selected restaurants with alcohol ­permits and bingo halls with bingo permits. A gaming location may not have more than five Vegas VLTs and the income from these may not dominate the operation. Under Svenska Spel’s ­permit, the total number of VLTs that Svenska Spel can install is restricted to 7,500 and at 31 December 2012, 6,695 (6,588) VLTs were installed at restaurants and bingo halls nationwide. These VLTs are distributed among 2,276 (2,254) business partners.

In 2012, net gaming revenues amounted to SEK 2,014 million (2,083), down 3.4% year-on-year.

Casino Cosmopol result area

Svenska Spel’s subsidiary Casino Cosmopol AB has been operating international casinos since 2001. The four casinos enjoy unique premises in Stockholm, Gothenburg, Malmö and Sundsvall, with a varied entertainment offering in terms of classic and new casino games, restaurants, bars and entertainment.

The games on offer at the casinos are table games (roulette, dice and card games), as well as slot machines. In 2012, Casino Cosmopol had 1,201,035 visitors (1,231,845).

The net gaming revenues for 2012 totalled SEK 1,186 million (1,203), down 1.4% year-on-year.

Significant events in 2012

  • In June, the Swedish National Audit Office presented a study of the State’s role in the gaming market. In its report entitled "The State in the gaming market – are the goals being achieved?" the Office gave Svenska Spel a number of recommendations, including following up responsible gaming actions.
  • A decision to increase investments by about SEK 300 million to develop the Company’s digital platform.
  • Launch of restructuring programme that will encompass skills development and cost-efficiency enhancements.
  • The SVEA sponsorship partnership was launched during the autum, under which SEK 50 million is distributed by customers to amateur sports. The aim is to strengthen the association with sports and to increase responsible gaming by having more customers register their games.
  • Studied Vegas to obtain a basis on which to strengthen responsible gaming.
  • The Swedish Gambling Authority adopted new limitation rules for Vegas, meaning amended terms and conditions as of 1 Janu­ary 2013 when becoming a Svenska Spel business partner.
  • In December, Svenska Spel was certified for the second time in accordance with the European Lotteries responsible gaming standard.

Events after the balance-sheet date

  • Eurojackpot, an international numbers game partnership with 14 European countries participating, was launched in January 2013.
  • Communication Manager Annika Ferm stepped down from her role on 11 January 2013, with her final day scheduled for 10 July 2013.
  • Andreas Holmström succeeded Ann-Sofie Olsson as the new CEO of the subsidiary, Playscan AB, as of 18 February 2013.

Future outlook

The greatest sales increase is taking place via mobile phones, and the trend is a continued increase in the digital channel. Despite a shift in customer habits, whereby an increasing number are playing online, the majority of Svenska Spel’s total sales will be generated by retailers for a long time to come. The integration between physical and digital distribution will increase.

The customer offering in the gaming market is increasing at a fast pace and the games that are increasing the most are primarily high-risk games. The competition from gaming companies without permits continues to rise, which is also causing an increase in marketing. This will remain a reality as long as players without permits can market, conduct sales and operate in the market and the supervisory authorities lack sufficient sanction capabilities.

A crucial factor moving forward is to succeed in creating as strong consumer protection as possible. Responsible gaming is being assigned the highest priority at Svenska Spel and hopefully by the entire market. A prioritised area in which responsible ­gaming will strengthen in 2013 is the Vegas game.