Betsson AB has reported a strong performance across multiple verticals and markets in the first quarter of the year, although acknowledging a slight decline in casino revenue amid continued regulatory hurdles impacting Western European income.
The Stockholm-listed online gambling group recorded an 8% increase in total group revenue during Q1 to €170.2 million (2021: €157.4m), coupled with a 5% rise in gross profit to €107.1 million (€102.4m).
However, group EBITDA stood at €33.4 million, a 7% year-on-year decline on the previous year’s figure of €35.8 million – as Betsson noted a slight increase in expenses from €75.1 million to €83.5 million – attributed to a number of factors including higher costs of betting duties, increased payment processing fees and increased share of locally regulated revenues.
A vertical breakdown saw massive dominance from Betsson’s sportsbook operations, with strong turnover and an above-average margin resulting in ‘all-time high sportsbook revenue’ of €56.4 million, marking a 45% increase on Q1 2021 and 33% of total group earnings.
Online betting in particular was the dominant vertical for Betsson, representing 80% of all sportsbook revenue, with the high-margin for sports betting as a whole also attributed to strong returns from domestic football leagues, the Champions League and Europa League – although the World Cup qualifying games were ‘more challenging’.
“Thanks to a goal-oriented work from our employees, we have been able to take advantage of the growth opportunities identified, which has resulted in increased revenue and healthy profitability,” said Pontus Lindwall, Betsson AB CEO.
“Betsson’s revenue increased during the first quarter by 8% (14% organic) to €170.2 (€157.4) million. 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 casino unit did not fare as well as its sportsbook with revenue declining by 4.6% to €111 million (€116.4m) – as with sports betting, mobile dominated €87.1 million (€85.8m), 78% (74%) of casino revenue.
Difficulties in the casino sector were largely attributed by the group to difficulties in Germany, where the vertical has faced new restrictions in the aftermath of the Fourth Interstate Gambling Treaty’s implementation.
Mirroring wider market concerns, Betsson is currently in a state of semi-limbo in the Netherlands due to the launch of the new licensing regime last October, ceasing operations in line with the KSA’s ‘cooling-off command’ pending its licence application.
Hurdles in the Dutch and German markets had a substantial impact on Betsson’s performance across Western Europe as a whole, with the group’s revenue in this region declining by 43.5% from €39.3 million to €22.2 million.
On the other hand, revenue from Central and Eastern Europe and Central Asia (CEECA) remained steady. Although declining by 0.2% to €53.4 million (€53.5m), Betsson remains encouraged by prospects in these regions due to growth in Greece, whilst in Lithuania it recorded an ‘all-time high’ although Georgian revenues decreased slightly due to legislative changes to casino age limits, a marketing ban and higher taxes.
By far the most successful European market for the group was the Nordics, where aforementioned sportsbook success drove a revenue increase of 12.5% from €48.1 million to €54.1 million.
Even more significantly, high-levels of activity – particularly, again, with regards to sportsbook – driven by high-profile sports events such as Betsson-sponsored World Cup qualifying games as well as commencement of online gambling in the City and Province of Buenos Aires – resulted in a huge increase in Latin American revenue of 174% to €36.8 million (€13.4m).
Lastly, revenue from Rest of World Markets segment amounted to €3.7 million, a growth rate of 19.3% on the 2021 figure of €3.1 million, primarily driven by the group’s Canadian presence, whilst it was also able to secure entry into the US state of Colorado via the Betsafe brand.
Moving forward, the group aims to consolidate its position across multiple markets, particularly within the Americas, as Betsson leadership continues to monitor Eastern European political developments.
Russia invasion of Ukraine, alongside Belarus support for the conflict, has prompted Betsson to withdraw its enterprise in Belarus, whilst the company has hinted at the possible evacuation of its Ukrainian staff to Malta and Budapest or, at the very least, less dangerous areas of the besieged country.
“Looking ahead, we are seeing more undertakings on the horizon,” Lindwall concluded. “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.”