In its 2024 full-year results published today (5 March), Veikkaus saw sales revenue decrease 7.3% year-on-year to €956.2 million ($1.02 billion/£800.1 million). The group’s operating profit also dropped 19.6% to €466.8 million.
It attributed the operating profit decrease to its “significant investments” and an increased lottery tax of 12%, up from 5% the previous year. In total, the company paid €114.2 million in lottery tax to the Finnish state in 2024.
Gross gaming revenue was impacted by games requiring new certifications, as new rules around ticket-based and scratch card games came into force in 2023 and 2024.
Roughly 60% of Veikkaus’ gross gaming revenue came from digital sources, while the remaining 39.8% consisted of physical point of sales.
Veikkaus said by the end of 2024 it had grown its “registered” customer base by 80,000 users in the 12-month period, which brought its total to 2.6 million.
Veikkaus has been in steady decline for years. In its H1 2023 earnings released on 2 September, group managing director Olli Sarekoski pointed to a lower-than-expected profit margin, while its group gaming revenue suffered a 21% drop from the previous year.
Stakeholders believe the operator’s consumers have become less loyal as the grey market in Finland has grown over the years.
Speaking to iGB in September, local lawyer Antii Koivula said the operator’s market share had eroded over time. “In 2021 it was estimated that Veikkaus had roughly a 30% market share in non-lottery categories which now go under the licensing system,” Koivula told iGB. “Since then, there’s been considerable decrease in these numbers.”
International business
Despite its B2C business suffering, Veikkaus celebrated its B2B subsidiary Fennica Gaming expanding into three new continents in 2024. The company provides online lotteries and slots operations in markets such as the US, France, UK and Sweden.
Veikkaus’ Fennica Gaming reported sales of €3 million, up 181% year-on-year.
However, the business unit, which was started in 2022, posted a loss of €8.6 million, an increase of 14% on the previous year.
Veikkaus said its international subsidiary had signed 14 corporate clients by the end of 2024.
Reforms inbound in Finland
Despite its disappointing results, Veikkaus is bullish on the upcoming reforms in Finland that will open the online gambling market to competitors in 2026 or early 2027.
The changes will see Veikkaus granted a licence to operate a separate business arm that will be in competition with private licensees.
However, Veikkaus will retain its retail slots and lottery arm exclusivity.
“The reform of the gambling system is a great opportunity for Veikkaus and we have done long-term work to prepare for the future,” Veikkaus CFO Regina Sippel said in a statement acompanying the results.
“In 2024, as planned, we implemented the Veikkaus strategy and invested in both business development and international growth. We want to continuously develop, driven by our new mission ‘We passionately drive better gaming.’”
Veikkaus previously warned that up to 620 staff at the state monopoly gambling firm could be at risk of redundancy as a result of the reform actions.
The group continues to compete against offshore operators, it noted. It has estimated, using H2 Gambling Capital data, that domestic spend on illegal games was €550 million in 2024.
Jari Vähänen, partner at Finnish Gambling Consultants and ex-Veikkaus executive, said in a LinkedIn post today that the illegal market revenue in Finland could be closer to €900 million for 2024.
“This gives a very different estimate of market shares and the channelisation rate of the gambling system.”
Of Veikkaus’ performance, he said: “It is also interesting to see Fennica Gaming’s start. The company’s turnover rose to 3 million euros last year, but there was still quite a lot of loss—around €8.5 million. I hope my ex-colleagues succeed, but making big profits in that B2B business is challenging.”
Original article: https://igamingbusiness.com/finance/full-year-results/veikkaus-posts-7-3-sales-decline-in-2024-looks-ahead-to-market-liberalisation/
