Betsson CEO on Germany struggles, Malta’s Bill 55 and CEECA growth

Another Betsson quarterly report, another record-breaking trading period. On 25 October, the Stockholm-listed operator noted its seventh consecutive quarter of growth as revenue leapt 19% year-on-year, while operating profit soared 42%.

With a strong geographic spread, dominated by Central and Eastern Europe and Central Asia (CEECA), plus growth in Latam and Western Europe thanks to the acquisition of Belgian operator betFIRST, Betsson’s share price rose by more than 5% in early trading.

Despite some sports betting slippage, driven by a lower margin, casino came to the fore to represent more than 70% of total group revenue.

With Lindwall also confirming M&A would play a key future role for the business, as well as dismissing the suggestion any redundancies could be on the cards, as has been the case lately with other operators, the Swede was in a bullish mood.

Rizky business

With CEECA continuing to dominate Betsson’s geographical spread with a 41% total share, the launch of the group’s Rizk brand in Serbia towards the end of the reporting period will only further boost its operations.

According to a recent Regulus Partners note, Rizk has achieved a c.9% market share in Croatia from a standing start in 2020, with Lindwall and senior management looking to replicate this success in neighbouring Serbia, although it only has an online casino licence.

Lindwall says: “I don’t know the exact market share but we have been doing well there and we have mentioned that. We have a similar product coming up now , so we have high hopes in the region.”

The CEO added that while it has been “very early days” in Serbia, the brand is already gaining traction.

When asked about the presence of other multinational operators in the shape of Entain and Flutter building up a foothold in the region, Lindwall is confident in the company’s ability to perform.

Entain snapped up Croatian market leader SuperSport last year, while Flutter took a 51% majority share in Serbian operator MaxBet in September for £123m.

Lindwall continues: “We’re confident, of course. These are competitors that are good companies that have good brands. We run into them in virtually every market we operate in so we’re used to bumping into them.

“But, we find our niche of the market and people who like our products, so we will definitely have a good race there.”

Malta makes sense

One of the more interesting industry stories of the year has been Malta’s push to enshrine the power of its Malta Gaming Authority (MGA) licence via Bill 55.

The bill, which has been challenged by German politicians and Dutch lawyers, effectively prevents legal action being brought against Malta-licensed firms in other jurisdictions should the alleged offence be legal under Maltese law.

Betsson operates in several markets using its MGA licence, and also holds a series of local licences for regulated markets.

When asked on his thoughts behind Bill 55 and the subsequent legal challenges, Lindwall notes he has “no concerns”.

The CEO adds: “I fully understand the Maltese lawmakers. When you see those cases that comes out of courts, in some other European countries, it’s like you don’t recognise Malta as a sovereign country. You can’t do that; they’ve had their regulation in place for a very long time.

“They had a gambling authority that was worth the name long before some of these countries were even thinking about internet gaming.

“So to come and say afterwards that this wasn’t functional, or we don’t recognise this regulation or even this country’s laws and regulations, that’s not fair.”

New Nordics

With revenue from the group’s Nordic heartlands dipping 14.3% to €46.1m, driven by downturns in Finland and Sweden, Lindwall can take comfort that worldwide growth abated any excess pain.

But with major changes on the horizon in the region, including the regulation of the Finnish market into a multi-licence arena and a potential GGR tax hike in Sweden, the shakeup could present new opportunities.

On Finland, which is due to ditch the monopoly model by January 2026, Lindwall admits the market is “not a must have” thanks to its strong global presence.

He says: “We like Finland a lot. It’s our neighbouring country to Sweden. We want to be there. But on the other hand, if you compare the size of the market to other markets we are building up in, it is relatively small.

“I would say that it would be unfortunate if the market turns out in a way that means companies like ours cannot be there.”

Reflecting on the potential GGR tax jump in Sweden, which could see the existing rate rise from 18% to 22% from July 2024, Lindwall raises his concerns over what impact it could have on an already struggling channelisation rate.

He continues: “The channelisation is too low, especially on casino games. If you raise the tax that’s going to hurt the channelisation.

“For the time being it is not good. But on the other hand, I understand politicians, they need to get revenues in the budget, so they look at potential options.

“With raising the tax for gaming companies, you don’t lose too many political points by doing that. It’s a natural choice. But it’s not good timing to do it and it will hurt the channelisation even more.”

Wie geht’s?

Despite growth in Western Europe, Germany continues to be the fly in the ointment for Betsson. A line from the firm’s report states: “In Germany, revenue declined compared to the corresponding period last year, mainly driven by the market restrictions that have been implemented in the past years.”

These restrictions, including stake limits and a turnover tax on online slots, monthly deposit limits and a lack of live casino, have seen operators hampered in Europe’s largest economy.

Betsson is still active in the market but it remains a “frustrating” process, according to Lindwall.

Having previously noted Finland should look to multi-licence markets to guide its new regulations, and avoid the issues occurring in Germany, Lindwall is committed to Germany.

He tells EGR: “The German market has the potential to be the largest gaming market in Europe. It’s just so sad to sit on the sidelines and see how this market moves outside of Germany and outside of Europe.

“We try to influence and inform and speak to the lawmakers there to change this. Let’s just hope that they listen and try to bring some of the market back to Germany where it belongs.”

Soft sports

Like other major international operators in Q3, Betsson felt the brunt of negative sporting results, supressing its margin to 7.3%.

Revenue from the vertical remained flat, with a 2.4% uptick to €63.3m, while turnover jumped 23.7% to €1.3bn.

Despite the slip, and the potential of a tougher Q4 comparatives due to last year’s World Cup in Qatar, Lindwall is relaxed on the matter.

He says: “What we saw in the third quarter with a relatively small growth in sports betting revenue was only due to margin difference in comparison to the same quarter last year.

“When we look at what’s going on with the activity, it is all there. The fourth quarter has started off with a little bit of a lower margin, too. We know over time, it catches up.

“That’s how sports betting is; it swings back and forth. That’s how it should be otherwise it would be very boring.

“We had the World Cup last year from late November to late December. Of course, that was an activity boost but we still have a packed calendar this year, so we believe the activity will be good in Q4.”