A healthy gaming market gains ground!
“It is through products that combine a good experience with responsible gaming that we will strengthen our positions, particularly online.”
We introduced obligatory registration mid-year 2014 and lost around SEK 800 million in revenue, all according to plan and in line with our motto “Responsibility before profit”. If we compare the autumn of 2015 with the same period in 2014, we show recovery and improved performance.
The trend for the full year was favourable too. Operating profit rose SEK 86 million or 1.8%. The operating margin rose from 22.2% to 22.6% in 2015, due to better cost efficiency and a change in the product mix. Net gaming revenues rose 0.2%, primarily linked to Triss delivering the highest net gaming revenues ever. Eurojackpot continued to climb and the pool game within sports posted sound growth. Lotto, including Joker, dropped 5% compared with the preceding year.
Casino Cosmopol increased its results, while the proactive responsible gaming dialogues resulted in some 2,600 guests shutting themselves out during the year, which was on par with the figures for 2014.
Our image strengthened somewhat in 2015. At the close of the year, 62% of Swedes had a definite positive view of Svenska Spel as compared with 61% in 2014.
Substantial demand for online casino games
While we increased revenues via mobile phones and tablet devices by 59% compared with 2014, we lost market shares in total. This is mostly due to a substantial demand for online casino games, for which we still do not have a permit to offer our customers. We applied for the right to arrange online casino games in June 2014, but the application is still under investigation. Online casino gaming is Sweden’s largest game measured in net gaming revenue and the fastest-growing game form. Online casino is also one of the riskiest games. The unregulated gaming companies currently active in the online casino market can freely market themselves and recruit customers without inspection or control from the Swedish authorities.
A sustainable gaming company
According to our mandate from the owner, we are to promote healthy gaming and offer attractive games in a responsible manner. Consequently, during the year we have further reinforced our responsibility initiatives with new functions, including better possibilities for our customers to take a break from gaming and oversee their gaming history. All registered customers were also given access to the Playscan feature, a tool that signals when gaming behaviour is starting to become more risky. In addition, we have introduced new interactive responsible gaming courses for our retailers, partners and employees.
As Sweden’s largest sports sponsor, we have a particular responsibility. We sponsor sports because of its natural link to a significant part of our business, but also because sports has a strong positive impact on society in the form of integration, diversity and public health. To underscore this, we carried out several activities during the year. For example, we highlighted the issue of human rights in sports, which became the basis for a new guideline for our sponsorship partners. In our sports sponsorship agreements, we earmark a portion of the sponsorship amount to a variety of projects that address various diversity and gender equality projects. One good example is that we, in cooperation with Elitfotboll Dam (Women’s Elite Football Association), started “Svenska Spel F19”, a whole-year series with players born 1996 or later, aimed at reversing the trend of girls leaving football early. And it has paid off. Between 2013 and 2015, the number of girls certified rose from 450 to just over 600.
Growth with healthy revenue
It is my firm conviction that our strategy, “Gaming enjoyment based on responsibility”, makes us sustainable in the long term and keeps us competitive. For that reason, it is important to point out that we intend to grow with healthy revenue. It is through products that combine a good experience with responsible gaming that we will strengthen our positions, particularly online.
Digitisation has radically altered customer behaviour. They expect immediate satisfaction of their needs and in a way of their own choosing. Subsequently, we have started a new initiative to further reinforce a customer-centric, value-governed and innovative culture.
Tomorrow’s gaming market
In 2015, the government appointed an investigative committee tasked with proposing a licensing system for the Swedish gaming market. It is good that the committee directive clearly indicates the necessity for high customer protection and game safety. Furthermore, safeguarding gaming regulations is one of the most important issues so that customer protection in particular has the desired effect.
Svenska Spel will continue to be a leading gaming company in the gaming market. We are well-equipped and we look forward to a gaming market in which the competing companies meet on a level playing field. Until a licensing system is in effect, we will see ever-greater competition where all gaming companies, regulated and unregulated alike, concentrate on strengthening their positions by building customer databases. We will see several new initiatives, we will see alliances, acquisitions and partnerships. The gaming market map will be redrawn.
Unique competitive advantage
Our goal is to be able to offer customers an experience, regardless of channel or platform. A distinct offering that includes both the digital channels and the face-to-face meetings at our skilled retailers, which together give us a unique competitive advantage. In parallel, we are investing in new retailer terminals and Vegas Video Lottery Terminals alongside our analysis and CRM platform, to better adapt our offering of games and responsible gaming to the preferences of our customers.
Svenska Spel has a vision, a set of values and a clear strategy that will keep us competitive in the gaming market of tomorrow. We have a strong position and a well-established culture of responsibility along with skilled, dedicated employees who will do everything to face the competition for the customers and strengthen Svenska Spel in the future so that gaming is enjoyed by all.
Visby, February 2016
Lennart Käll, President and CEO