LeoVegas growth profile interrupted by Swedish home woes

An ongoing structural shift from land-based gaming to online has allowed LeoVegas to offset the far-reaching impacts of the Coronavirus pandemic, but the operator exercised caution over the tumultuous regulatory landscape within its home market of Sweden.

Publishing its Q3 results for the period 1 July – 30 September, the operator praised its ability to  ‘to quickly adapt to new, external circumstances’ such as the pandemic and shifting regulatory demands within its various operational markets.

LeoVegas noted that the number of depositing customers rose by 26%, increasing from 347,464 in 2019 to 438,691 in Q3 2020 which LeoVegas has attributed to the ‘strong development’ of its business. 

Commenting on the quarter’s trading, Gustaf Hagman, President and CEO of LeoVegas, said: “During the third quarter we maintained a high pace of innovation and investment, which is strengthening our long-term position and growth prospects. 

“During the quarter our customer base again reached a new record level. The number of depositing customers grew 26% compared with the same period a year ago, which confirms the strong development of our business. 

“This is partly attributable to the ongoing structural shift from land-based gaming to online, but above all to our focus on creating the best product and experience for our customers.”

The operator’s Casino division accounted for 77% of the Group’s Gross Gaming Revenue (GGR), Live Casino generated 16% of GGR, while the sportsbook accounted for 7%. The figures represent a marked improvement for LeoVegas’ sportsbook operations which was largely driven by an ‘increase in sporting events during the period’.

During Q3, revenues increased by 1% from €88.2 million in Q3 2019 to €88.9 million. Net Gaming Revenue (NGR) from locally regulated markets accounted for 44% of total NGR, down from 50% in 2019.

The decrease is attributable to performance for the company’s Swedish business, which has been affected for the time being by the temporary restrictions that were implemented on 2 July.

In the Nordics region, NGR decreased by 20% compared with the same period a year ago which was due to the ‘temporary restrictions implemented in Sweden in July’ which included new deposit limits. 

In the Rest of Europe region, LeoVegas stated that NGR increased by 13% compared with the same period a year ago. According to the operator, the quarter ‘entailed a return to more normal player behaviour following the special conditions that prevailed during the second quarter, where societies in Europe were periodically entirely shut down in response to Covid-19’. 

In the Rest of World region, NGR increased by 21% over the same period a year ago, with positive development in most markets. 

Hagman continued: “We had a favourable development in most of our markets during the quarter, with our growing customer base as the main driver. Many markets had double-digit growth compared with the same period a year ago. 

“In Sweden we are seeing a troubling development in which the unlicensed market continues to grow unhindered. A growing number of operators without licences are actively targeting Swedish players, including those who have been barred by the self-exclusion tool Spelpaus. 

“This has been confirmed by, among others, several organisations that provide help to people with a gambling problem. These organisations have noted that the majority of those seeking help are playing with the unlicensed operators. 

“The problem is big and is shaking the foundation of the entire Swedish licence system. Quick and strong measures are now needed by Swedish politicians and authorities to ensure a well functioning Swedish gaming market.”