Veikkaus released its H1 2024 results on Monday 2 September and, across the board, the numbers did not have great things to say. Actual sales revenue, which includes gross gaming revenue and turnover from other business activities, for the gambling operator totalled €483.8m ($535.4m), down 6.8% year-on-year, while gross gaming revenue for physical point-of-sale ticket-based games was down 21%, with operating profit down 20.4% to €246.9m. Profits saw a similar decline, down 19.1% to €252.3m.
Veikkaus Oy experienced similar results, with revenue from gambling operations down 7% to €482.8m, while operating profits fell to €250.2m, down 20.1%.
Antti Koivula, Legal Advisor with Legal Gaming Attorneys at Law, had this to say on the results, specifically as they apply to Veikkaus Oy (not Veikkaus Group, which includes Veikkaus Oy and B2B subsidiary Fennica Gaming Oy): “Veikkaus Oy's interim report for the first half of 2024 was published 2 September and it makes for a heart-wrenching read from Veikkaus' perspective. Financial profit declined by a staggering 18.8%, driven by a significant 7% decrease in gross gaming revenue (GGR) and the return of the gambling tax to its normal level of 12% after being temporarily reduced during the COVID-19 pandemic.
“Veikkaus reported declines across all product categories, despite the Finnish gambling market experiencing considerable growth, with an overall market increase of 5.3% and a 17.6% surge in the digital sector.”
Gross gaming revenue for physical point-of-sale ticket-based games was down 21%, with operating profit down 20.4% to €246.9m. Profits saw a similar decline, down 19.1% to €252.3m
ID checks: Explanation or excuse?
According to Veikkaus, one of the driving factors in the decline of GGR was the introduction of ID checks for physical sales ticket-based games. Such an example was given in the form of scratch cards, which saw a decline of 44% in H1 2024.
In February, just a few months after the ID checks were introduced, we spoke with Veikkaus VP Lottery Products Ville Venojärvi on The Huddle, who said the ID checks were having “no drastic impact” on the level of wagers being placed. Indeed, H1’s results do not directly dispute this; in fact, the number of Veikkaus customers increased year-on-year. Yet in spite of this, the operator saw declines across the board.
With these two factors to consider, was it really ID checks that caused such universal declines?
Said Koivula: “Veikkaus attempts to explain their poor results by citing the introduction of a compulsory identification system. However, this system was implemented in most game categories as early as 2022, and its extension to scratch cards at the beginning of 2024 has had little impact, given that scratch cards represent only a small portion of the GGR. Additionally, Veikkaus emphasised changes in general consumer behaviour and a decline in purchasing power. However, considering that these same conditions apply to online competitors who are simultaneously experiencing significant growth, this explanation seems insufficient.”
"Veikkaus Oy's interim report for the first half of 2024... makes for a heart-wrenching read from Veikkaus' perspective" - Antti Koivula
So, what caused the dip?
For Koivula, the current legislation Finland’s gaming industry operates under is a key factor to consider when accounting for this half’s results. “In my view, the actual reason for Veikkaus' declining GGR is significant competitive challenges, largely caused by the restrictive nature of current legislation, which is effectively enforced only against Veikkaus, coupled with the regulator's failure to address unregulated offerings.”
As was explored in our March/ April edition of Gambling Insider, the monopoly system operated in Finland, in which Veikkaus takes centre stage, is set to come to an end, with the nation planning to open a licensing system no later than the end of 2025. A draft for the licensing system was released in July, which outlines the licensing for the majority of verticals (verticals such as lottery and scratch cards will remain under the Veikkaus monopoly), stated that licence applications are scheduled to begin in early 2026, with licensed operations set to commence the following year.
Said Veikkaus CFO Regina Sippel in the H1 report: “The upcoming change in the gambling system is a great opportunity for Veikkaus and we will continue to invest in developing our business and providing the best customer experience in the industry.”
Despite the wait, it is not all doom and gloom for Veikkaus. Its subsidiary Fennica Gaming “achieved significant results during the beginning of the year,” according to Sippel, with Fennica Gaming partnering with IGT in March to expand its video lottery terminal (VLT) content and LottoCap in Brazil in June to launch its eInstant games.
Will H2 be able to turn things around, or will we have to wait for the licensed market to open before Veikkaus makes its comeback? For this, we will have to wait and see.
