Kindred suffers setback due to new Swedish regulations
The online gambling operator Kindred Group has revealed that its earnings dropped in the first half of the year due to new Swedish regulations.
Swden.- Nasdaq Stockholm-listed online gambling operator Kindred Group revealed this week a significant decrease in EBITDA in the first six months of the year. The figure decreased from €98.8 million in 2018 to €68.3 million in the same period this year. Kindred said that the setback was due to new Swedish regulations.
Despite the gross winnings for the six-month period increased to €504.1 million, EBITDA registered a 32% decrease. Profits before tax also fell to €36.2 million from €69.9 million last year, while profit after tax was €30.8 million, down from €61.9 million.
Kindred Group CEO Henrik Tjärnström said that despite very tough 2018 comparatives, which included the start of the FIFA World Cup, revenues increased 4% in constant currency year on year with particularly strong growth in locally licensed markets.
“Of the Group’s gross winnings revenue, 59% came from locally licensed markets which represented 41% growth compared to the same quarter last year (growth of 19% excluding Sweden). This focus on growth in locally licensed markets is very much part of our strategy and, as expected, has resulted in margin pressure from higher betting duties.”
During the second quarter of 2019, gross winnings revenue from mobile grew by 11% compared to the second quarter of last year and amounted to 77% of our total gross winnings revenue.
New regulations are the cause of this setback
“As we have highlighted for a long time and as we saw in the first quarter of 2019, the new licensing regulation in Sweden has resulted in significant short-term margin pressure driven by higher betting duties but also higher marketing as we are investing for the longer term. In the Swedish market, we saw a significant improvement quarter on quarter, but EBITDA contribution was still down €10.2 million when compared to the second quarter last year,” added Tjärnström.
Sweden to improve anti-money laundering measures
Spelinspektionen, the Swedish gambling regulator, revealed last month that it is one of the 16 authorities in Sweden that are working against money laundering and terrorist financing in the territory. The entities are fighting in coordination as money laundering and terrorist financing produce a national risk to Sweden.
The regulator said that the main role of this effort is to exchange information and knowledge between the participating organisations. It also aims to continuously identify, map and analyse risks and methods for money laundering and terrorist financing. It also aims to compile national risk assessments.
Furthermore, Spelinspektionen said that one of the tasks is to provide information to operators to contribute to their work against money laundering and terrorist financing. The regulator will work to counter money laundering and financing of terrorism in the gaming sector, as it is believed that a gaming company can be used as a criminal tool as well.
