Gambling duties bring Betsson Q1 profit down despite revenue growth

Betsson reported an 11.8% year-on-year decline in net profit for the first quarter of its 2021 financial year despite revenue increasing 8.1%, something it put down to a growth in betting duties related to operating in more regulated markets.

Ice hockey player on the ice, outdoors

Revenue for the three months to 31 March 2021 was €170.2m (£142.9m/$178.9m), up from €157.4m in the previous year.

Casino accounted for €111.0m of total revenue in the quarter, though this was down 4.6% on last year after Betsson stopped operating in The Netherlands following the launch of its regulated market. The operator also noted new regulations in Germany also contributed to this decline.

Sportsbook revenue reached €56.4m, up 45.0% on 2021 and a new quarterly record for the group. Betsson said this was driven by a high sportsbook turnover and an above-average margin, helped by strong returns from domestic football leagues, as well as the Uefa Champions League and Europa League competitions.

Revenue from other products including poker and bingo also increased 29,0% from €2.1m in Q1 of 2021 to €2.7m this year.

In terms of geographical performance, the Nordics region led the way with €54.1m in total revenue, representing 32.0% of all revenue for the quarter. Central & Eastern Europe and Central Asia followed with €53.4m, then Latin America on €36.8m, Western Europe with €22.2m and the rest of the world on €3.7m (2.0%).

Looking at developments during the quarter, Betsson launched in both Colorado in the US and Buenos Aires in Argentina. Betsson also appointed Roland Glasfors as vice president responsible for communications, sustainability and investor relations and proposed adding Eva de Falck, Louise Nylén and Tristan Sjöberg as new board members.

Turning to spending, costs of sales increased 14.7% to €63.1m. The operator said this was “mainly driven by higher cost of betting duties from increased share of locally regulated revenue and
increased payment provider costs”.

Operating expenses were also 11.2% higher at €83.5m. This included €27.0m worth of marketing expenses, down slightly from 2021, and €26.0m worth of personnel expenses, an increase due to geographical expansion.

Financial expenses remained level at €1.3m, but overall higher costs meant pre-tax profit fell 14.2% to €22.3m.

Betsson paid €1.4m in income tax, which left it with a net profit of €20.9m, a decline of 11.8% from €23.7m last year. The operator also noted that higher spending led to a drop in earnings before interest, tax, depreciation and amortisation (EBTIDA), which fell 6.7% to €33.4m.

“Once again, new records were set for sportsbook revenue and in several individual markets. It has been said many times before, geographic diversification makes Betsson’s business less sensitive to disruptions in individual markets,” Betsson’s chief executive Pontus Lindwall said.

“The launch in March of the proprietary sportsbook in the US was an important milestone in Betsson’s continued global expansion. The US investment is primarily focused on presenting the US adapted sportsbook to other operators within the framework of the B2B offering.

“Looking ahead, we are seeing more undertakings on the horizon. Our ambition is to further strengthen our presence in North America by operating under a new licence in the Ontario region in Canada starting this summer. We also aim to launch in Mexico together with our local partner Big Bola Casino in 2022.

“Applications to operate in the Netherlands under the new licence model were submitted during the quarter in line with the group’s plan.

“All in all, the year has been off to a good start as there are many important activities that we look forward to during the remainder of 2022.”

Author: Raymond Fleming