Veikkaus saw its sales revenue fall by 6.8 per cent in the first half of the year with profit down by over 20 per cent.
During the period from January to June 2024 it took major steps in the development of digital gaming and international business. as it prepares for the upcoming overhaul of the Finnish gambling system, which will take force in 2026 according to the Government Programme with the goal of staying competitive, profitable and responsible even in the new system.
Fennica Gaming, subsidiary to the company, continued to grow, and Veikkaus doubled its’ investments in business development during the first half of the year. This way the company prepares for the partial multi-licence system that will be adopted in Finland in 2027, in accordance with the draft legislation on new gambling system.
Gross gaming revenue fell during the reporting period due to the authentication requirement introduced to the physical point of sales ticket-based games in the spring of 2023 (down 21 per cent), the authentication requirement applied to scratchcards since the beginning of 2024 (down 44 per cent) and, to a lesser degree, a decrease in consumers’ purchasing power. However, there have also been positive trends: the number of customers has increased, and the share of the digital channels out of the gross gaming revenue has risen to 60.5 per cent (up 6.6 percentage points).
Fennica Gaming signed three major client agreements during the review period: one in Brazil, one in France, and one in the State of Virginia (USA). The subsidiary currently boasts fifteen signed agreements, ten of which were in production on three different continents at the end of the review period. The turnover prospects of Fennica Gaming are bright.
Veikkaus Group’s actual sales revenue in January-June 2024 amounted to €483.8m (down 6.8 per cent compared to January-June 2023). The actual sales revenue includes both the gross gaming revenue and turnover from other business activities.
Veikkaus Oy’s revenue from gambling operations, i.e., the gross gaming revenue, was €482.8m (down seven per cent).
Regina Sippel, Veikkaus’ CFO, said: “During the first half of the year, we implemented Veikkaus’ strategy as planned, investing in both business development and international growth. Fennica Gaming reached significant results during the first half of the year, and the future outlook is bright. 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.”
The change into a multi-licence system means that international gambling companies can apply for a licence to operate in Finland and that they can legally provide, e.g., sports betting and online casino games to Finns. The change would mean that all companies licensed to operate in Finland would be covered by the same rules of responsibility that currently already apply to Veikkaus, and that would improve the management of problems caused by gambling.
The company has been preparing for the changes in the operating environment for a long time at Veikkaus.
Heli Lallukka, Executive Vice President, HR, said: “We have worked, and are still working, to renew our capabilities within such sectors that are deemed to generate competitive advantage to the company. The objective is a company that will continue to create joy through games while being a trailblazer of responsible gambling experience. The measures we are planning now are a sequel to those of autumn 2023, and a major part of Veikkaus’ growth strategy.
“In practice, we are aiming at an operating model through which we can focus on our core business. The planned measures would enable us to deal with the changes in Veikkaus’ mission and operating environment, as well as with the changes in the overall gambling sector. We want to ensure our competitivity in the future licence-based market and our vitality in the monopoly market.”
“It may also mean changes to the organizational structure and the operating models. This autumn, Veikkaus is planning to take first steps towards a product organization by developing the operating models within the tech function, together with Veikkaus’ development processes, towards a more product-based model. This would require some restructuring.”
The changes made in autumn 2023 have taken Veikkaus towards the targeted direction. We are still planning to carry on with the change process, in order to optimally support successful business and implementation of the strategy, while complying with the regulatory requirements.
Ensuring our competitivity in the licence-based market and preserving our vitality in the monopoly market may also lead to changes within the organization. New roles and jobs open, while we also re-evaluate the old ones and consider restructuring them.
As part of our preparations for the future, we have issued a proposal for change negotiations on Monday 2 September 2024, which covers ca. 580–620 employees at Veikkaus. The negotiations may lead to the termination of 1–4 employment contracts, and material changes to 10–37 employment contracts.
Ms Lallukka added: “This turning point is an opportunity for Veikkaus to reform and grow. We will continue to invest in business that we deem to be significant for Veikkaus’ future competitivity. We want to turn Veikkaus into a company that is a major operator both in Finland and internationally, the customers’ first choice, and a shared source of pride of all Finns.”