In the current transition phase in the German market, LeoVegas noted issues that came into force after the federal states decided to adopt a licensing system to be introduced during the second half of 2021.
Until this takes effect, operators wishing to apply for and obtain a gaming license must comply with a variety of limitations, including a mandatory daily limit of EUR 1 wager per spin, a five-second rule between slot spins, an online live casino ban, a € 1,000 monthly deposit limit for casino and poker games, and more.
The comments of the online gambling group, which expects to obtain national licenses once they have been made available, indicate that “there are certain elements and limitations in the German regulations that will affect customer value negatively and also risk leading to low channelisation”.
Recognising that “regulation is positive from a long-term perspective,” this group adds that lower competition and greater access to local payment opportunities and marketing channels can compensate for such concerns over time.
President and CEO, LeoVegas, Gustaf Hagman, noted: “In the German market, LeoVegas has implemented a number of changes ahead of the forthcoming licence system in July 2021. As expected, this affected revenue during the period.
“Operators in the market are acting differently with respect to the new restrictions, and at present necessary clarity is lacking in the ongoing transitional period, which unfortunately has led to a skewed competitive situation until the licence system has been fully implemented.”
Double-digit growth across core markets
The comments come in the 2020 Q4 and FY study of the company, a period that saw LeoVegas secure high double-digit growth across core markets, with the exception of Sweden and the United Kingdom. Italy has also been the group’s top-five jurisdiction.
Revenue rose by 13 percent during the quarter to reach EUR 98.4 million (2019: EUR 87.1 million), gross profit reached EUR 66.9 million (2019: EUR 57 million), and EBITDA fell by 45 percent from EUR 14.5 million to EUR 7.9 million. The number of customers deposited was 461,983 (2019; 372,032), a 24 percent rise.
‘Rest of Europe’ segment’
During the fourth quarter, the firm’s ‘Rest of Europe’ segment was the largest area and accounted for 47 percent of NGR. The Nordic countries accounted for 36 percent, while the rest of the world had 17 percent.
On a commodity basis, during the reporting period, casinos accounted for 75 percent of the LeoVegas’ GGR, led by live casinos with 16 percent and sports betting with nine percent.
“LeoVegas concluded the record year 2020 with its strongest fourth quarter ever,” Hagman noted. “And we did this despite frequent changes to the gaming requirements in our markets in addition to finding ourselves in the midst of a global pandemic.
“I am proud of our ability to quickly adapt to changed conditions through a high capacity for innovation at the same time as we are building an increasingly solid and diversified business.”
Revenue from LeoVegas rose by nine percent to EUR 387.4m for the full year (2019: EUR 356m), gross profit increased to EUR 262.3m (2019: EUR 237.1m) and EBITDA finished at EUR 51.8m (2019: EUR 49.5m). In January, preliminary sales amounted to EUR 32.5 m (EUR 29.9 m in 2020), reflecting growth of nine percent.
Hagman added: “On the tailwinds of a strong 2020 we are now looking forward to a year with many exciting growth initiatives and an even stronger customer offering.”