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 2014.
The overriding goal of Sweden’s gaming policies is 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 individuals into gambling addiction, and to stop fraud and criminality in the gaming industry. Svenska Spel has a mandate from the State, after securing permits from the Government, to organise games and lotteries in a responsible manner.
The 2012 Annual General Meeting adopted a financial goal aimed at ensuring cost-effective operations. Over the course of an economic cycle, Svenska Spel should achieve an operating margin of at least 22%. The operating margin is calculated as the operating profit in relation to all revenue, meaning gross gaming revenue and other operating revenue.
The Swedish Government grants a number of permits that form the basis of Svenska Spel’s operations. The applicable permits govern the following areas:
AB Svenska Spel was founded in 1997 following a merger of AB Tipstjänst (est. 1934) and Svenska Penninglotteriet AB (est. 1897), and is 100% owned by the Swedish State.
The Svenska Spel Group comprises the Parent Company AB Svenska Spel and subsidiaries Svenska Spels Förvaltnings AB and Casino Cosmopol AB. Svenska Spels Förvaltnings AB forms a sub-group with the subsidiaries Casino Cosmopols Fastighets AB, CC Casino Restaurang AB and Playscan AB.
The Group is organised as two business areas: Customer Interaction and Casino Cosmopol, as well as five operating areas (Business Support, HR, IT, Communication & CSR and Marketing).
The business area is responsible for selling all games and lotteries through the sales channels: retailers, arenas, online, mobile phone, business customers, subscriptions, restaurants and bingo halls. At 31 December 2014, Svenska Spel had 5,423 retailers (5,742).
Customer Interaction offers a broad range of games in the categories of games of chance, sports games and casino games. The games of chance category includes Lotto, Keno, Joker, Viking Lotto, Eurojackpot and the online games Bingo and Pick’n’Click. Games of chance also include the lotteries of Triss, Tia, Penning and scratch games comprising SkrapPyramid, SkrapKryss, SkrapBingo and SkrapMatcha. The offering also includes a pre-packaged set of lottery tickets with Triss and temporary campaign tickets.
Customer Interaction is responsible for the Vegas VLTs, which are the only legal gaming machines 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 2014, 5,872 (6,713) VLTs were installed at restaurants and bingo halls nationwide. These VLTs are distributed among 1,952 business partners (2,287).
The business area accounts for 87.0% (88.0) of Svenska Spel’s total net gaming revenue. In the 2014 financial year, net gaming revenue totalled SEK 7,782 million (8,562), down 9.1% year-on-year.
Svenska Spel’s subsidiary Casino Cosmopol AB has been operating international casinos since 2001. The four casinos are housed in unique premises in Stockholm, Gothenburg, Malmö and Sundsvall, with a varied entertainment offering in terms of casino games, restaurants, bars and stage shows.
The games on offer at the casinos are table games (roulette, dice and card games), and slot machines. In 2014, Casino Cosmopol had 1,119,398 registered visits (1,146,309).
In 2014, net gaming revenue amounted to SEK 1,159 million (1,167), down 0.7% year-on-year.
No significant events occurred after the balance-sheet date.
Turnover in the regulated Swedish gaming market has declined in recent years and, in parallel, competition continues to intensify from the unregulated offshore gaming companies. According to the Swedish Lotteries Act it is forbidden to promote unregulated games organised outside the national borders. Nonetheless, unregulated offshore gaming companies account for 69% of all gaming advertising targeted at the Swedish market. This pertains particularly to aggressive advertising of the riskiest games, for example, online casino games.
Given the gaming policy goal of the gaming market being sound and secure, the current trend is precarious. Svenska Spel continues to lose market shares in a growing online gaming market, where gaming over the internet and, particularly mobile devices is increasing. The game form that is increasing most, online casino games, is a game form that Svenska Spel at present has no permit to operate.
Svenska Spel’s mandate is to meet customers’ demands for attractive gaming products. This also includes gaming forms that are more problematic and questionable, but which, nonetheless, remain in demand by customers. Therefore, Svenska Spel submitted an application to the Government for a permit to provide an online casino that could offer comprehensive tools to allow customers to keep track of their gaming. The Svenska Spel online casino would not offer bonuses or be marketed to customers with gaming problems. The aim is not to increase total gaming on online casino games but, rather, to channel online gaming from unregulated gaming companies to a safer alternative.
Irrespective of market developments and the future political direction chosen to create effective gaming regulations in Sweden, Svenska Spel will continue to prioritise social considerations when developing and promoting games. The market trend underlines the significance of the comprehensive approach to social protection considerations taken by Svenska Spel as a large state-owned operator.
In 2015, investments in developing enjoyment for customers continued. Essentially, this means investments in technology and infrastructure, but also improving a more personalised gaming experience – before, during and after a game – based on each customer’s wishes and preferences.