Failure to anticipate regulatory tidal flows in their home waters German and Dutch markets resulted in a lacklustre 2021 Financial Year for Swedish mobile gaming company LeoVegas, with marginal, year-on-year, revenue growth and a decline in net profit.
Revenue for the year, ending December 31, 2021 was €391.2 million (£327.18m/US$442.78m), up a meagre one per cent from FY20.
The Stockholm-based group, led by co-founder Gustaf Hagman, blamed a newly-imposed 5.3 per cent turnover tax on online casino and poker in the complicated, some would say, over-regulated German market for the hit.
In Q4, for example, Germany only contributed two per cent to LeoVegas Group Revenue, a big slide from the 15 per cent in the same quarter in 2020.
Being booted from the newly-regulated Dutch market—with the company dropping grey market operations, in the hope of gaining a pukka licence in the near future—didn’t help the books either.
Even the number of NDCs (New Depositing Customers) fell by some 3.3 per cent, year-on-year, to 724,540. Not a good look.
There was some foresight and bliss on the sports betting front, however, with LeoVegas making a slick move by snapping up fellow Swedish pan-European gaming providers Expekt for a very tidy €5 million (£4.18m/US$5.65m), followed by a successful boost of the brand in Scandinavia.
“Sales [around Expekt] have increased almost fourfold since the acquisition,” said LeoVegas boss Hagman. “We are now planning to expand into more markets.”
Most significantly, in their first serious foray into the U.S. market, LeoVegas has partnered with Caesars Entertainment to launch its online casino product in New Jersey State later this year.
And they are also planning to expand their nascent Canadian operations by expanding into the newly-regulated sports betting market in the nation’s most populous province of Ontario.
Returning to LeoVegas’ less than impressive 2021 financial stats: Adjusted EBTIDA (Earnings before Interest, Tax, Depreciation and Amortisation) was down, year-on-year, by 19.5 per cent to €44.6 million (£37.29m/US$50.48m).
Operating Profit fell 21.1 per cent over the same period to €18 million (£15.05m/US$20.37m). And Net Profit for the year plunged almost 39 per cent to €11.8m (£9.86m/US$13.35m).
Hagman, putting a brave spin on the poor financials, added: “I am proud of how we concluded 2021 and how we offset the revenue loss related to the ongoing regulatory changes in Germany and the Netherlands.
“Even when faced with turbulent times, we demonstrate a high ability to adapt and continue to drive innovation.
“The external market environment will remain erratic and turbulent in places, but we are well-positioned to manage this.
“Armed with all of our ongoing growth initiatives, I feel optimistic ahead of 2022.”