LeoVegas CEO: Germany will be worth the wait despite short-term pain
Gustaf Hagman backs country to become top-three European gambling market as operator battles temporary headwinds alongside growth in other markets
LeoVegas is determined to make a success of itself in the regulated German market as the long-term rewards will be more than worth the short-term headwinds, according to CEO Gustaf Hagman.
In an interview with EGR discussing the group’s Q4 2020 financial results, Hagman claimed that while revenue from Germany had suffered a blow, the numbers had now “hit the bottom” and would ultimately rebound as the market moves towards regulation in July.
The LeoVegas chief suggested that while the firm had chosen to comply with local transitional measures including deposit limits and switching off live casino, other operators had ignored these rules and may have jeopardised their future licence prospects.
“We could do that, of course, but we want to be in Germany for the long run, and if the impact is a few months of lower revenues, we can mitigate that with growth in other markets,” he explained.
Hagman predicts Germany could become one of the top European markets for the group, which also operates in the UK, Spain, Italy, the Nordics and potentially the Netherlands when it regulates, probably later this year.
“The German market is probably a top-three or even a top-two market in Europe,” he explained.
“It’s a huge country, with a lot of people who have a lot of money, and we’ve seen they are becoming more mobile savvy as well.
“For us it’s certainly a market we would like to stay in and continue to explore, and as a publicly traded, transparent operator, you of course must adopt and adjust to the regulations.
“The regulations will continue to affect us, just as they will affect other operators, but then in June/July when the market regulates it will be a level playing field for us and those other firms that choose to stay in the market,” Hagman added.
Outside of a 4% revenue drop in Sweden, the rest of Europe category proved to be very profitable for the business during Q4 as revenue rose 34%.
Discussing potential concerns about black market leakage in Germany, Hagman pointed to decreasing channelisation rates in Sweden as an example of where harsh restrictions can harm a licensed market.
“Looking at what happened in Sweden, unfortunately the Swedish channelisation is down to around 75%, according to the latest the numbers, so there’s a 25% grey or black, unlicensed market,” he explained.
“Hopefully, we, together with other operators, can help German authorities to understand how important it is to maintain a high rate of channelisation.
“Maybe we can get them to draw on the experiences in Sweden, and how important it is to have things like B2B licences and blocking payments on those outside of Germany.
“If they were able to do that in a more proscriptive way than the Swedish authorities, then they will probably maintain a high channelisation rate, but it’s a hard question to answer,” Hagman concluded.