The Dutch land-based monopoly’s CFO Ruud Bergervoet warns the company’s is “vulnerable” after a difficult H1, as it continues to struggle with high inflation and rising costs.
In May, a coalition agreement between four political parties proposed raising the gambling tax rate from 30.5 % to 37.8% in 2025. This could raise €202.0m (£171.5m/$225.0m) in additional tax revenue annually.
The proposal comes after gambling tax already increased by 1% for 2024. This, Holland Casino said today (22 August), has already had a major impact on its performance in H1, contributing to a net loss of €3.5m for the six months to 30 June.
“We cannot properly pass on price increases”
Chief executive Petra de Ruiter warns any further tax increases would make it impossible for Holland Casino to operate profitably. She went as far as to say the mooted 7.3% rise would be “irresponsible”.
“Our total tax burden will then be almost 50%,” she said. “This means black numbers are not possible. We will then make a significant loss. Unlike supermarkets, we cannot properly pass on price increases.”
Holland Casino could be forced into “undesirable” measures to make money
CEO de Ruiter went on to say if the tax increase were to go ahead, Holland Casino would need to take “undesirable” measures to run as a profitable business.
It would be forced to aggressively recruit new customers, encourage people to spend more, or slash prize money for players.
“These measures are unacceptable for Holland Casino and irresponsible from government policy on gambling,” she said. “Moreover, the planned investments in our prevention policy are also coming under pressure.”
Tax burden impact clear to see in H1
Turnover for the six months to 30 June was 2.4% lower at €395.4m. Some verticals performed strongly, with retail slot and catering revenue slightly higher year-on-year.
However, total branch turnover was 0.5% lower year-on-year across its 14 properties, despite a marginal increase in total visits. In addition, Holland Casino Online turnover was down 14.7% to €48.9m.
The 1% tax increase added €3.7m in additional costs to Holland Casino’s balance sheet. Personnel expenses were also up 11% but the operator was able to make the €5.4m in total operational cost savings.
Commenting on the results, CFO Ruud Bergervoet said that the financial position of Holland Casino is “vulnerable”. He added that any further rise in costs would place the operator in a “losing situation”.
“Holland Casino’s finances are under heavy pressure due to increased costs,” he said. “This mainly concerns high inflation, the increase in the collective labour agreement and investments in our game offering and staffing.
“As a company, we are also still working on repaying corona debts. This makes our financial position vulnerable. It is crucial for our financial health that there are no further significant cost increases now. Only then can we avoid ending up in a losing situation.”
Original article: https://igamingbusiness.com/finance/holland-casino-gambling-tax-hike-warning/
