Regulatory strike against gambling advertising in Sweden while several gambling companies report strong Q3 results
27 October 2017
Swedish law dictates that companies are not allowed to run gambling ads. However, several media houses have ignored the law, claiming that it collides with EU regulations. This week, the supreme administrative court (Högsta Förvaltningsdomstolen) decided to not take up the rulings against two media companies made in the second highest administrative court (Kammarrätten). The Swedish Gambling Authority (Lotteriinspektionen) takes this as a confirmation that Swedish law applies and does not collide with EU regulations, hoping that this decision will set a precedent for the many similar ongoing cases in different courts around the country.
As such, Lotteriinspektionen has stated that they expect both media and gambling companies to cease running their ads. Foreign media companies broadcasting from overseas remain unaffected, such as Discovery Networks and MTG. However, with less than a year to go before the planned re-regulation of the Swedish gambling market, it is uncertain whether this latest development will have any effect in practice.
This week also saw several of the major Sweden-listed gambling companies presenting their Q3 reports, and it is clear that the gambling sector is going strong overall. Most companies report significant economic growth in their quarterly reports, with positive development on the stock market as a result. Gambling operator Leo Vegas reports an organic growth of 33%, with total revenue increasing by 40% up to 55.6 MEUR (39.7). Prior to publishing their Q3 report, Leo Vegas also announced the acquisition of competitor Royal Panda. Royal Panda, like Leo Vegas, is especially strong in casino, and has a big presence mainly in the UK market. Kindred’s (Unibet parent) quarterly figures exceeded analysts’ expectations while hinting of a strong fourth quarter as well. Kindred reports an all-time high gross winnings revenue of 193.6 million GBP (142.3).
Operator Mr Green’s quarterly figures exceeded analysts’ expectations as well, but not to the same degree as Kindred. Mr Green reports an increase in total revenue of 28.4% up to 295.1 MSEK (229.9). Mr Green also improved their EBITDA margin by 7.6%, which in absolute numbers equal an increase by 191% up to 50.6 MSEK (17.4). The fourth major Swedish operator Betsson, however, reports a quite modest third quarter with an increase in organic growth of 2% and total revenue increasing by 11% up to 1180.6 MSEK (1063.3). Betsson reports a decrease in operating profit (EBIT) by -21%.
Companies Net Ent and Evolution Gaming, who develop games for the operators to distribute to consumers, have had a positive quarter as well. Net Ent’s figures came in slightly higher than estimated by analysts, the operating margin of 39% being roughly 2 percentage points above expectations. Total revenue for Q3 2017 increased by 12.3% up to 401 MSEK (357). Evolution Gaming reports an increase in operating revenue by 56% up to 45.7 MEUR (29.2). Evolution Gaming also reports an improved EBITDA margin of 47.7%. which equals an EBITDA increase of 56% to 21.8 MEUR (10.8) in absolute numbers.
For more information contact Sixten Ekström, Communicator at Mediavision.