Veikkaus expects €300m dent in profits due to Covid-19

The Finnish monopoly operator has already reported a 33.6 per cent drop in profits for H1.

Finland.- Veikkaus has announced it expects the Covid-19 pandemic to dent profits for 2020 by up to €300million. 

For H1, the monopoly gambling operator has reported a 28.1 per cent decline in gross gaming revenue year-on-year and 33.6 per cent drop in profit.

GGR for the six months ending June 30 was €607.2million. Veikkaus estimates that is €200million less than what it could have expected owing to disruption provoked by the Coronavirus pandemic.

Profit, 53 per cent of which is distributed between community projects, social and health bodies and the equestrian sector, came in at €332.7million.

Chief Financial Officer, Regina Sippel, said: “Like many other operators, Veikkaus had an exceptionally challenging spring.

Due to the Covid-19 pandemic, our contribution to society will fall significantly below previous levels.”

Veikkaus closed gaming arcades from March 13 until June 26, while its slot machine network remained closed until mid-July. 

As a result, revenue from casino games fell 46 per cent to €243.2million. The contribution from slots belonging to Veikkaus’ arcade and partner network was down 58.8 per cent year-on-year to €105.4million while the contribution from other casino games, including online, fell 9.1 per cent.

While slots are now back up and running, Veikkaus expects their contribution to revenue to continue on a downward trend since the operator intends to reduce the number of machines operating by 8,000 by the end of the year as part of its social responsibility plan.

That will mean a reduction of more than 40 per cent in the number of machines operating, leaving a total of 10,500.

On top of that, from January 2021, all players will be required to have an account with the operator in order to gamble. Until then, all slot machines will display timers to notify players after every 15 minutes of play.

In H1, the proportion of revenue generated online rose 11.8 percentage points to make up 44.1 per cent of revenue for the six months, but Veikkaus believes this to be more a consequence of retail decline than a migration of players online.

While the number of online players did climb in the six months – up 21 per cent year-on-year – the amount of revenue from online games actually fell slightly to €101million. In May, Finland reduced monthly and daily gambling loss limits.

Sports betting revenue fell across all channels due to the suspension of sports following Covid-19 lockdowns.

Veikkaus saw some signs of migration from sports to its Toto products, but nothing to make up for the shortfall in betting.

Total sports betting revenue fell 21.9 per cent to €58.1million, while Toto games saw revenue increase by 8 per cent to €28.9million.

Lottery revenue fell 4.3 per cent to €305.9million due to a decline in takings for draw-based games, which saw fewer big jackpots than in the same period in 2019. 

Veikkaus contributed €72.8million in taxes for the first half, down from €101.1million in H1 2019. 

H2 Gambling Capital estimates that Finland generated €760million in gaming revenue in the first six months of the year, which would mean Veikkaus was responsible for close to 80 per cent of all takings.