Annual Report 2017

CEO’s commentary

New gaming experiences and satisfied customers strengthen our position

2017 was a good year for Svenska Spel, for everyone who enjoys gaming and who wants it to take place responsibly. During the year, we celebrated 20 years as Svenska Spel and the future looks brighter and more exciting than ever before.

Again, we can summarise the many good steps taken to position Svenska Spel as an even stronger company in the gaming market – for our customers, our owners and our employees. Despite new record marketing spends by all gaming companies, we have retained our position as the Swedish people’s gaming company.

Results that generate ownership value

Svenska Spel’s result for the whole of 2017 shows that we can handle the competition even financially. The profit amounts to SEK 4,709 million, a surplus that is paid to our owner, the Swedish State. Higher costs for adjustments to the new AML and GDPR regulatory frameworks, preparations ahead of a new gaming market, and higher marketing and sponsorship costs contributed to a slightly lower profit in 2017 compared with 2016. The operating margin of 21.8% means that we live up to the owner target of 22% that is set for a period of five to seven years.

We ended the year with good sales results and net gaming revenue of SEK 8,980 million, which is on par with last year. Our competitors are gaining market shares only because they can currently offer game forms for which Svenska Spel lacks a permit, such as online casino and horse racing. In slightly more than a year, we hope to be able to compete in these areas and others.

We must also remember all of our happy winners. In total, we paid out SEK 12.4 billion in winnings to our customers in 2017 and Sweden gained 327 new millionaires. Online sales grew exponentially. Mobile phone sales stood out, in particular, increasing by 49% in 2017.

During the year, we noted a positive trend for Eurojackpot, Bingo, Scratch games and the new Viking Lotto. Live games for new sports and game types have had a positive effect on Sports Games.

Mixen, Stryktipset and Europatipset have grown and our customers have also demonstrated a strong interest in the new pool game Oddset Challenge. However, we noted a downturn for Triss due, among other reasons, to increased in-store competition, and for Lotto including Joker in part due to reallocation to other number games in our own portfolio.

Customer gaming experiences

We meet customers’ demand in terms of gaming experiences with an expanded offering of new products and services. We constantly endeavour to improve the customer gaming experience, to make it more fun and easier to use. And to ensure smooth and safe operation, this year, we launched log-ins via BankID and enabled transfers by Swish at the same time as we strengthened our game offering – not least by mobile phones. In December, about 44% of all deposits were made through Swish and, since the launch at the end of August, around 40% of all log-ins were made using BankID. At the same time, physical interaction at our retailers is still important and we need to be where the customers are when they want to play.

A few examples of launches include round-the-clock sports games, new Bolagsspel (team gaming), a new poker platform, new Viking Lotto, Triss Premium, Miljonregnet for Lotto which offers an even greater chance to become a millionaire, online Lördagsgodis (Saturday mix), new SkrapKeno (Scratch Keno), Craps and Baccarat Squeeze at Casino Cosmopol and six new games on our Vegas VLTs. Sports Games offered around 62,000 matches and sports events compared with about 21,000 last year, and in November we launched Oddset Challenge.

Our customers like what we do. We can see this in, among other things, the positive response to our digital initiatives, but also the all-time-high customer satisfaction index (CSI) where a whopping 70% of our customers reported being satisfied with the experience we provide. This is something that makes me extra proud since CSI is our customers’ rating of how well they enjoy what we do.

Our image is still the highest of all gaming companies – by a broad margin. The image rating that measures the percentage of Swedes between the ages of 18 and 75 who are positive to Svenska Spel amounted to 50% for the fourth quarter in 2017. Our closest competitor has an image rating of 29%. While our image is relatively high, the gaming industry’s reputation is alarmingly low, which is something that we as an industry must address collectively.

Our customers like what we do. We can see this in, among other things, the positive response to our digital ­initiatives, but also in our all-time-high customer satisfaction index rating.

Sustainability is a priority area

Sustainability issues are important and this is reflected, not least, in customers’ increased sustainability awareness. Svenska Spel’s sustainability agenda is governed by a number of laws and regulations that are included in the owner’s specifications, and range from the UN’s Guiding Principles for Business and Human Rights to Agenda 2030. Although we have addressed many of the sustainability topics for many years, it became even more clear in 2017 when the UN’s Global Goals became a requirement from the owners of State-owned companies. It feels gratifying that we can make a difference, together, in creating a better future. 

We have mapped our operations against the Global goals and identified seven that Svenska Spel contributes most to. Obviously, these goals are linked to other goals that we address in various manners. Goal 3, Good health and well-being, includes the problem of addiction where responsible gaming plays a part. It is in this area we risk causing the most harm to the individual and society, and to which we therefore devote most of our efforts – even if we contribute in different ways to all goals.

Another area where we can make a difference is business ethics and anti-corruption. Through extensive efforts to prevent match fixing, we impede the use of the gaming industry for money laundering and terrorist financing. During the year, we made adaptations to ensure that we comply with the new regulations in terms of money laundering, AML, something that concurrently guarantees our customers safe and secure gaming.

Responsible gaming takes priority over profit

Gaming shall be enjoyed by all! However, gambling addiction causes major socioeconomic effects that cost billions every year. We play an important role in the Swedish gaming market by contributing to limiting the harmful effects of gambling and reducing the costs of gambling problems in society.

Irrespective of the standard legislation sets  for responsible gaming requirements, at Svenska Spel we will consider these a minimum level. For us, it is our baseline, not a bar. I am convinced that we are needed as a benchmark in the gaming market to show that it is possible to combine growth and profit with substantial responsible gaming and strong customer protection. We want to provide games that are for everyone’s enjoyment, where our motto is “responsibility trumps profit”.

Measures that we offer customers to prevent gambling problems include better tools to provide them with an improved control of their gaming. Our Awareness index, whereby customers rate our services, shows that eight out of ten customers think they receive good help to keep track of their gaming. An independent report from the company Ramböll showed that Svenska Spel’s tools had a real impact on the customers that used them.

Unfortunately, not everyone uses our tools, and we have not been permitted to contact players who have a risky gaming behaviour without their prior written consent. The new gaming legislation means we will have a general right to follow our customers’ gaming behaviour and to contact players at risk, to offer them support and to help them exclude themselves from gaming. Svenska Spel is currently conducting a pilot test of these types of outreach dialogues that has so far generated good results.

There are still many players who opt to block themselves or take a 24-hour gaming break. Almost 20,000 customers were voluntarily blocked for three months or longer at 31 December within the whole of Svenska Spel, including Casino Cosmopol. This is approximately 2,000 more than the previous quarter. In 2017, we also registered 21,000 key presses for a 24-hour break.

In addition, we continue to back research. Research Day, a yearly event when Svenska Spel’s independent Research Council gathers some of the country’s leading gambling addiction scientists and contributors, was held in October. An important milestone in the field is that gambling addiction is classified as an illness and part of the Social Services Act and the Health and Medical Service Act as of the new year.

Sports’ best friend

We and the sports arena tend to say that Svenska Spel is sport’s best friend, and we are especially proud that we strengthened our partnership with the sports arena through several initiatives. One of the biggest is that we signed an historic agreement with the Swedish Sports Confederation under which we will join forces to get more people moving.

2017 was also the first time we allocated money from the Swedish Sports Confederation’s and Svenska Spel’s new fund, Framåtfond. All specialised sports associations have the chance to apply for a grant from the fund in order to test ideas for new forms of physical activity aimed at getting more people physically active.

We have also donated to activities for children and young people among the country’s sports associations through the Gräsroten. In 2017, 486,474 customers chose their favourite association when gaming and were thus part of distributing SEK 50 million to 8,190 associations in 71 different sports.

Gender equality is a key issue in sports. We actively encourage more associations to mimic handball’s and floorball’s models where women and men receive the same pay. Our agreements with the different sports promote gender balance and guarantees for gender equality. We will continue to be active in advocating a positive course of forward action for Swedish sports!

Towards a new gaming market 

The gaming investigation was presented on 31 March 2017 and the contents of the Government’s proposal for new gaming legislation were apparent. On the assumption that the proposal is voted in by the Swedish parliament, from 1 January 2019, we will have a Swedish gaming market with the same terms and conditions for all licensed companies, and where gaming companies are required to demonstrate care for their customers.

At the time of writing, less than one year remains, and we are currently working with the required adaptations of the organisation to meet the requirements of the new gaming and competition legislation. We do so by clearly dividing our operations into those that operate under license and the rest of the operations. It will be an exciting year, and we will be well prepared ahead of a new gaming market.

We look forward to a gaming market on equal terms, where we can continue to develop and strengthen our business for our customers, owners and employees and where gaming is enjoyed by all.

Finally, as announced earlier, I have chosen to leave Svenska Spel in the summer of 2018. This is my seventh year as CEO and given that we are facing a new gaming market in 2019, this is an excellent time to hand over to a new CEO who can continue to develop Svenska Spel.

Visby, March 2018

Lennart Käll
President and CEO

Svenska Spel Annual Report 2017
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