Finland: Veikkaus’ profit fell significantly due to the coronavirus epidemic

in Lottery

The coronavirus epidemic had a significant impact on Veikkaus’ business operations in 2020. Veikkaus’ profit for the financial year was EUR 680.2 million (-32.6%). A significant reason for the decrease was that the slot machines were closed entirely or in part for a total of about five months. The profit from the gaming operations, i.e., the gross gaming revenue for the financial year was EUR 1,260.3 million (-25.5%). Veikkaus estimates that the coronavirus epidemic reduced its gross gaming revenue by more than EUR 300 million in 2020.

Veikkaus’ year 2020:

  • The financial profit was EUR 680.2 million (-32.6% as compared with 2019) and the lottery tax was EUR 151.4 million (-25.4%).
  • The gross gaming revenue was EUR 1,260.3 million (-25.5%). Veikkaus estimates that the coronavirus epidemic reduced its gross gaming revenue by more than EUR 300 million in 2020.
  • Of the gross gaming revenue, 56.6% came from the points of sales of the retail network, whereas 43.4% came from the digital channel (+11.6 percentage points). The increase in the share of the digital channel was especially due to a drop in the share of point-of-sales gaming, as the slot machines were closed for a major part of the year.
  • Of all gaming, 58.1 percent took place authenticated. For slot machine gaming, the share of authenticated gaming was 11.5%.
  • The total Finnish gambling market amounted to ca. EUR 1,585 million (-21%) in terms of GGR in 2020. Veikkaus’ share of the total market was ca. 80 percent.
  • The total volume spent on Veikkaus games was ca. EUR 8.2 billion in 2020.
  • Veikkaus commissioned two surveys from Taloustutkimus market research company in 2020, concerning gambling problems. The average prevalence of gambling problems in the two surveys was 2.5% in 2020.

The coronavirus epidemic affected Veikkaus’ year 2020 in many ways. Veikkaus closed its slot machines and gaming arcades for about four months in the spring to prevent the spreading of the coronavirus and again in large parts of the country in November. Even when slots gaming was possible, only some of the slot machines were open, to secure a safe distance between the machines, as required by the coronavirus safety measures. Many sports series were interrupted due to the coronavirus, which caused a drastic drop in the availability of betting objects. Moreover, the exceptional year caused changes in our plans to launch new games and in revising existing ones. The measures due to the coronavirus also led to employee layoffs during the year.

– We had to take major, even difficult, decisions, on a tight schedule at Veikkaus due to the coronavirus epidemic in 2020, in order to protect the health of our staff, customers, and retailers. To Veikkaus, just as to many other companies, the year of the coronavirus was challenging; however, it was also a year of positive, remarkable solutions that have enabled the building of a more responsible gaming environment, says Ms Regina Sippel, Veikkaus’ CFO.

Veikkaus’ share of the total Finnish gambling market was ca. 80 percent in 2020.  Gambling is shifting strongly towards the digital channel where Veikkaus is competing against foreign operators. Online gambling in gambling services other than Veikkaus’ service increased by over two percent in the year under review. Veikkaus’ share of the total digital market was ca. 63 percent in 2020. The drop in Veikkaus’ market share of the digital channel, which has continued for long, has affected Veikkaus’ gross gaming revenue negatively.

Significant decisions for responsibility during the year

Both Veikkaus’ strategy and CSR Programme were updated during 2020. Veikkaus’ updated strategy highlights player-centred responsibility, i.e., our responsibility towards individuals.

– The updated strategy is based on an even safer and more responsible gaming environment. Despite the challenges and insecurity caused by the epidemic, we made major decisions to work on the building of a more responsible gaming environment in 2020, says Ms Hanna Kyrki, SVP, Legal Affairs and CSR.

One of Veikkaus’ major actions for responsibility was that the number of slot machines in the retail network was reduced more in 2020 than previously planned. They were reduced by 8,000, i.e., by 40 percent from the previous year. As a result, the current total number of slot machines in stores, kiosks, restaurants, and service stations is ca. 10,500 slot machines. The reductions were basically carried out by limiting the maximum number of the slot machines per one point of sales to four. This was a significant change, as the largest retail units could previously have up to 15 slot machines at the maximum.

In 2020, we also prepared for compulsory authentication on the slot machines of the retail network, which entered into force in January 2021, and made a decision to bring forward the introduction of compulsory authentication to the slots and table games at Veikkaus gaming arcades, to be already started in summer 2021. We are also planning to apply the same loss limits that currently cover the fast-paced games in Veikkaus’ online service to the physical slots and table games next summer.

Veikkaus’ objective is to make all of its games subject to authentication by the end of 2023. By adopting compulsory authentication, we aim to reduce problematic gambling. When the games can only be played authenticated, we can offer our customers effective tools for gambling control, and the players can, e.g., opt for total gambling self-exclusion. What is more, compulsory authentication facilitates age limit controls and helps us to prevent money laundering and other criminal activities.

– It has been estimated that the compulsory authentication, together with the gambling control tools, will cut the players’ losses – and at the same time reduce the revenue to society – by ca. 300 million annually, as compared with the revenue of the pre-coronavirus year 2019, Ms Sippel says. 

Veikkaus commissioned two extensive population surveys from Taloustutkimus market research company in 2020. The surveys analysed Finnish gambling and the prevalence of gambling problems. The average prevalence of gambling problems in the two surveys was 2.5% in 2020. The result for the year 2020 was the lowest since the series of surveys on the prevalence of gambling problems was started in 2017. It is still too early to evaluate whether the drop in the game provision caused by the coronavirus epidemic affected the prevalence of the problems.

Read more at Veikkaus’ website:

The English version of the Annual and CSR Report will be published later.

More information:

SVP, Legal Affairs and CSR Hanna Kyrki, and CFO Regina Sippel, contacts via Veikkaus’ media service, tel. +358 9 4370 7000

https://www.veikkaus.fi/fi/yritys#!/article/tiedotteet/yritys/2021/03-maaliskuu/01_veikkaus-year-2020