Veikkaus, Finland’s state-owned gaming company, has published its financial results for the first half of 2024, revealing a complex picture of declining revenues coupled with strategic investments aimed at long-term growth. Despite a noticeable drop in revenue and profit, Veikkaus has shown resilience through increased customer acquisition and a growing share of digital revenue.

Veikkaus Reports Mixed Results for the First Half of 2024

Overall Revenue Decline Driven by Regulatory Changes

For the period between January and June 2024, Veikkaus reported total actual sales revenue of €483.8 million ($535.4 million), marking a 6.8% decrease compared to the same period in 2023. This decline is largely attributed to the impact of new regulatory requirements, particularly the authentication mandate introduced for physical sales of ticket-based games.

The implementation of this requirement, which necessitates player identification for purchasing certain gaming products, has led to a 21% decrease in gross gaming revenue from these games. The authentication process, designed to promote responsible gaming and combat underage gambling, has significantly impacted traditional gaming channels, leading to a sharp decline in sales.

Impact on Scratchcards and Traditional Gaming Channels

The authentication requirement had an even more pronounced effect on Veikkaus’ scratchcard sales, resulting in a staggering 44% decline in revenue from this segment. Scratchcards, once a staple of Veikkaus’ product portfolio, have seen reduced popularity as the new regulations have discouraged casual and impulse purchases.

However, this shift away from physical sales has coincided with a broader industry trend: the rise of digital channels. While traditional gaming channels have faced challenges, Veikkaus has successfully expanded its digital presence, with the share of gross gaming revenue from digital channels rising to 60.5%. This growth highlights the company’s ability to adapt to changing market conditions and consumer preferences.

Profitability Impacted by Strategic Investments and Increased Taxation

Veikkaus’ financial performance in the first half of 2024 also reflects the company’s ongoing commitment to strategic investments and navigating a challenging regulatory environment. The company reported an operating profit of €246.9 million, representing a 20.4% decrease from the same period last year. This decline in profitability is attributed to several factors, including major investments in business development and international expansion, as well as an increase in the lottery tax.

The rise in lottery tax has placed additional financial pressure on Veikkaus, reducing the overall profitability of its gambling operations. Despite these challenges, the company remains committed to its long-term strategy, which focuses on innovation, customer experience, and expanding its footprint beyond Finland.

Parent Company Performance and Revenue Decline

Veikkaus Oy, the parent company, experienced similar financial challenges, with revenue from gambling operations falling by 7% to €482.8 million. The parent company’s operating profit also saw a significant reduction, dropping 20.1% to €250.2 million. These declines underscore the broader difficulties faced by Veikkaus as it navigates the regulatory landscape and invests in its future growth.

Despite the financial setbacks, Veikkaus’ leadership remains optimistic about the company’s long-term prospects. The strategic investments made during this period are viewed as essential for positioning the company for future success, particularly as it explores new opportunities in international markets.

Strategic Investments and Growth in Digital Channels

One of the key areas of focus for Veikkaus during the first half of 2024 has been its investment in digital transformation and international expansion. The company’s Chief Financial Officer, Regina Sippel, highlighted the importance of these investments, stating, “During the first half of the year, we implemented Veikkaus’ strategy as planned, investing in both business development and international growth.”

Sippel’s statement reflects Veikkaus’ commitment to adapting to the evolving gaming landscape, where digital channels are becoming increasingly important. The growth in digital revenue to over 60% of the total gross gaming revenue is a testament to the success of these efforts. By enhancing its digital offerings and expanding its reach, Veikkaus is well-positioned to meet the demands of modern consumers and maintain its market leadership.

Fennica Gaming’s Role in Veikkaus’ Future Growth

A key component of Veikkaus’ international strategy is Fennica Gaming, a subsidiary focused on offering gaming solutions to international markets. Fennica Gaming achieved significant milestones during the first half of 2024, contributing positively to Veikkaus’ overall performance. The success of Fennica Gaming is a critical element of Veikkaus’ growth strategy, as it allows the company to diversify its revenue streams and reduce its reliance on the Finnish market.

Sippel emphasized the bright future outlook for Fennica Gaming, noting that its continued growth will play a pivotal role in Veikkaus’ long-term strategy. The subsidiary’s success in securing international partnerships and expanding its product offerings is expected to drive further growth in the coming years.

Outlook: Navigating Challenges and Seizing Opportunities

Looking ahead, Veikkaus faces both challenges and opportunities as it continues to execute its strategic plan. The upcoming overhaul of Finland’s gambling system presents a significant opportunity for the company to further solidify its position in the market. According to Sippel, “The upcoming overhaul of the gambling system is a great chance for Veikkaus, and we will continue to invest in business development, and offering the best customer experience.”

This overhaul, expected to bring substantial changes to the regulatory framework, could provide Veikkaus with the flexibility to innovate and enhance its product offerings. By staying ahead of regulatory changes and focusing on customer-centric strategies, Veikkaus aims to capitalize on this opportunity and drive growth in both its domestic and international markets.

Conclusion: The Financial Results

Veikkaus’ financial results for the first half of 2024 reflect a period of transition and strategic investment. While the company has faced challenges due to regulatory changes and increased taxation, its commitment to digital transformation and international expansion positions it for future success. With a focus on innovation, customer experience, and growth in new markets, Veikkaus is well-equipped to navigate the evolving gaming landscape and continue delivering value to its stakeholders.

FAQs About Veikkaus’ Financial Results for the First Half of 2024

1. What was Veikkaus’ total sales revenue for the first half of 2024?

Veikkaus reported total sales revenue of €483.8 million ($535.4 million) for the first half of 2024, which represents a 6.8% decrease compared to the same period in 2023.

2. Why did Veikkaus experience a decline in gross gaming revenue?

The decline in gross gaming revenue was primarily due to the authentication requirement introduced for physical sales of ticket-based games. This regulation led to a 21% decrease in revenue from these games. Additionally, scratchcard sales saw a 44% decline due to the same requirement.

3. How has the shift to digital channels impacted Veikkaus’ revenue?

Despite the decline in traditional gaming channels, Veikkaus has seen growth in its digital channels. The share of gross gaming revenue from digital channels rose to 60.5%, reflecting a successful adaptation to changing market conditions.

4. What factors contributed to the decline in Veikkaus’ operating profit?

Veikkaus’ operating profit declined by 20.4% to €246.9 million. This decrease is attributed to major investments in business development and international expansion, as well as an increase in the lottery tax.

5. How did Veikkaus Oy, the parent company, perform during this period?

Veikkaus Oy reported a 7% decline in revenue from gambling operations, amounting to €482.8 million. The parent company’s operating profit also dropped by 20.1% to €250.2 million.

6. What role did Fennica Gaming play in Veikkaus’ financial performance?

Fennica Gaming, a subsidiary of Veikkaus, achieved significant results during the first half of 2024. Its success in international markets contributed positively to Veikkaus’ overall performance and is a key part of the company’s growth strategy.

7. What is Veikkaus’ strategy moving forward?

Veikkaus plans to continue investing in business development, digital transformation, and international expansion. The company is also preparing to capitalize on the upcoming overhaul of Finland’s gambling system, which presents new opportunities for growth.

8. How has the increase in the lottery tax affected Veikkaus?

The increase in the lottery tax has added financial pressure on Veikkaus, contributing to the decline in operating profit. However, the company remains focused on strategic investments to ensure long-term growth.

9. What are the long-term goals of Veikkaus?

Veikkaus aims to strengthen its position in the market through innovation, enhancing the customer experience, and expanding into new international markets. The company is focused on navigating regulatory changes and capitalizing on new opportunities for growth.