The Finnish national lottery monopoly, Veikkaus, has once again expressed its backing for implementing a licensing scheme for lotteries, while also reporting solid half-year outcomes.
Veikkaus has been advocating for a licensing system for the past half-year. The monopoly believes this is the most effective approach to guiding consumers away from unlicensed products and towards licensed ones.
“Most crucially, more lottery sales can be channeled towards licensed products than ever before, and we believe that a licensing system best supports this objective and more accountable lottery development,” stated Olli Sarekoski, Veikkaus’ CEO, during the presentation of the half-year results report.
Sarekoski added that Veikkaus is “strategically preparing” to grow its business, irrespective of the lottery regulatory system adopted.
“However, this transition requires adjustments and growth for Veikkaus and its workforce,” he remarked.
Veikkaus reports a slight increase in revenue during the first half of the year.
In the six-month period concluding on June 30, Veikkaus’ revenue reached €519.3 million, a 1.0% rise from the same period last year, which was €515.9 million.
This encompasses its primary B2C business. Veikkaus’ B2B subsidiary, Fennica Gaming, generated €300,000 in turnover during the six months.
A Finnish gaming enterprise, Fennica Gaming, supplies online lottery services to operators across Europe.
The online gambling division of Veikkaus has witnessed a robust growth trajectory, with earnings expanding by 9.4% in the initial six months of the year, reaching €93.2 million. The monopoly attributed this expansion to a series of successful game launches.
“Veikkaus’s performance and outcomes in the first half of the year are in line with anticipations, and overall we are content,” stated CFO Regina Sippel. “The initial six months have been favorable, particularly in Veikkaus’s digital channels.”
Businesses are confronting cost pressures across the board.
Despite earnings growth, escalating business expenses have eroded any potential profit expansion. All expenditures have risen compared to the corresponding period last year, but certain costs have grown more rapidly than others.
Specifically, lottery tax expenses surged by 48.1% to €25.9 million, compared to €17.5 million in the same period last year. The company’s other operational expense categories, including development expenses, escalated from €51.7 million to €60.5 million.
Employee benefit costs at Veikkaus increased more moderately, rising by 10.2% to €46 million. Meanwhile, costs for materials and services remained relatively stable at €61.1 million, up from €59.3 million last year.
The company’s depreciation and amortization costs also increased, from €16.5 million to €17.1 million.
Elevated spending erodes profits
After accounting for the increase in costs, the company’s operating profit declined by 6.2% to €310.2 million, down from €330.8 million last year.
Due to 1 euro.
Vikes earned a total of €311.9 million in profits, after receiving €7 million from financial investments and accounting for €21,700 in financial expenses. As a government-owned company, it did not pay any taxes on its earnings.
Vikes is hopeful about the future of Finnika. The subsidiary was launched in May 2022, bringing in €300,000 in revenue during the period, resulting in a €3.4 million deficit. Vikes stresses that this was anticipated.
Timo Kiskisinen, the head of Finnika, emphasized the company’s offerings.
“Finnika Games’ corporate customers are very happy with the quality of the games developed by Vikes, as well as the modern technology and dependability of the game engine and platform,” he stated.
The Finnish government currently intends to end Vikes’ exclusive control over gambling by 2026, as part of an effort to increase the country’s channelization rate, which is low compared to similar nations.
Under the proposed new system, private businesses will be able to apply for permits to offer sports betting and online casinos.
The government states that it plans to divide Vikes into several independent companies within the same group. This would reverse the 2017 merger of the gambling brand Vikes, the slot machine business Raha-automaattiyhdistys, and the horse racing betting operator Fintoto.
The administration intends to establish a nationwide self-exclusion program, empower regulatory bodies, and implement fresh regulations to combat money laundering and issues related to sports betting.
An analysis published by the government in April revealed that the existing framework necessitates a significant overhaul. The report proposed that this could be achieved by establishing a licensing system or by strengthening the gambling monopoly.
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