Facing tough regulatory headwinds in its home market of Sweden, an embattled Global Gaming AB has reported that Q2 2019 has ‘been the most turbulent and difficult in the history of Global Gaming’, with revenues and profits bearing the brunt of the licensing decision.
Releasing its interim Q2 trading update (period April – June 2019), Global Gaming reported that revenues have faced a 42% hit in comparison to the same period last year, falling from SEK227.8m to SEK132.2m.
Global Gaming came under fire from Spelinspektionen on 17 June following the decision to revoke SafeEnt’s operator licences. The decision followed the regulator’s conclusion that the Global Gaming subsidiary was in ‘serious breach’ of Swedish gambling’s AML Code and failed to meet customer care-of-duty requirements.
Global Gaming CEO Tobias Fagerlund stated: “It is no understatement to say that the last three months have been the most turbulent and difficult in the history of Global Gaming.
“We published our previous report with the belief that the changes we had made with regard to the CEO post, the general changes in the organization, and the comprehensive and swiftly implemented set of other corrective measures would pave the way for our return to positive figures and growth.
“When we got to the month of June, we positively thought we could realistically expect to be back into black figures already in the second quarter, thus achieving the intended turnaround. Everything changed on the morning of June 17th, when the Swedish Gambling Authority announced that they had withdrawn – with immediate effect – the gaming license that lay at the foundation of the Group’s Swedish operations.
“The Swedish Gambling Authority justified its decision citing serious deficiencies in the business in matters of responsible gaming and Anti Money Laundering measures. Those who have followed the extensive media coverage of the decision know that we do not share the Swedish Gambling Authority’s opinion and have there-fore appealed it.”
Profit after tax took one of the largest hits in Q2, with the operator group reporting a 136% drop compared to Q2 2018. For the period ended 31 June 2019, profits were negative SEK11.8m – a fall from the SEK28.9m from last year.
Profits after tax for the first half of the year dropped by 195% since last year, while cash flow from operations took a similar hit through a 154% drop.
While Global Gaming is still appealing the Swedish regulator’s decision, decreases across the board have largely been attributed to ‘draconian measures’ and ‘substantial organisational changes’.
Fagerlund continued: “The events of this Spring and Summer affect our business in every way, and we are now facing a challenge we have never faced before. Global Gaming has grown at an incredible pace over the past year, yet from where we stand today, we can only acknowledge that we too have made mistakes during the time we grew from a total newcomer to one of Sweden’s most recognisable brands.
“In the short term, it has been about damage control, cost control, and finding solutions to continue moving forward and creating the conditions for a return to profitability.
“Considering the uncertainty of our situation, I think that we have acted both quickly and resolutely. With these substantial organisational changes implemented here and now, and with the swift choice of a new technology approach, we have managed to quickly create the conditions that will enable us not only to face but to also operate in our new reality.
“Despite the draconian measures and drastic organisational changes we are facing, we cannot fail to notice that, internally, our fighting spirit and will to prevail are very much alive, which in itself creates conditions we should not underestimate.
“The future will undoubtedly place great demands on us as an organisation, as well as on me as its CEO. We must live with the consequences of past mistakes but we can also learn and grow stronger because of them. What I can promise is that we will do our utmost to get back to profitability and growth – and I believe we’ll be successful.”