Svenska Spel To Close All But One Of Its Casinos

Svenska Spel announced its intention to permanently close the Casino Cosmopol venues in Gothenburg and Malmö due to their limited profitability. The decline in visitor numbers, attributed to the growing popularity of online casinos, has made it increasingly difficult for these venues to sustain their operations. The closures will leave only one remaining land-based casino in Sweden, located in Stockholm.

Ola Enquist, the chief executive of Casino Cosmopol, acknowledged the emotional toll of this decision, particularly for the affected employees. Despite efforts to increase revenue and reduce costs, the measures taken thus far have not been sufficient to turn the tide. The closures could potentially impact around 200 jobs, further compounding the challenges faced by the casino brand.

The planned closures come in the wake of a SEK2 million fine imposed on Casino Cosmopol for anti-money laundering (AML) failings. The Swedish regulator, Spelinspektionen, conducted a probe that revealed deficiencies in the casino’s AML practices. Svenska Spel, the operator of Casino Cosmopol, was also warned. This penalty further compounded the financial struggles of the land-based casino brand.

In its Q3 report, Svenska Spel highlighted a stall in revenue and earnings, largely due to market-wide pressures on the retail sector. The Casino Cosmopol and Vegas areas of the business experienced an 11% decrease in net gaming revenue, amounting to SEK247 million. Increased competition from online games and restaurant casinos were cited as contributing factors to this decline. Additionally, Casino Cosmopol and Vegas recorded a loss of SEK35 million.

In response to the financial challenges faced by Casino Cosmopol and Vegas, Svenska Spel implemented various measures to adapt its business practices. One such measure was the introduction of new opening times to counter the competition from restaurant casinos. However, despite these efforts, the losses continued, ultimately leading to the difficult decision to close the Gothenburg and Malmö venues.

The Swedish government’s proposal to raise the gambling tax rate from 18% to 22% of gross gaming revenue (GGR) poses yet another challenge for operators in the country. If approved, this tax increase will come into effect from July 1, 2024. The government believes that this move could generate an additional SEK540 million in tax revenue annually. However, the industry has strongly opposed this proposal.

Hasse Lord Skarplöth, the chief executive of Aktiebolaget Trav och Galopp (ATG), has called for a reconsideration of the tax proposal. Instead of a uniform 22% tax rate, Skarplöth suggests implementing a differentiated tax system. Under this system, the tax rate for sports betting would remain at 18%, while the rate for online casinos would increase. Skarplöth argues that this approach would be more balanced and fair.