Five things we learned from LeoVegas’ Q2 2022 results
EGR examines five key topics from the operator’s financial report including the latest on the MGM bid and the success of BetUK
Despite posting a flat 1% growth in revenue year-on-year (YoY) in Q2 2022 for LeoVegas, there were several positives in the latest report from the operator.
Sports betting revenue hit new record highs, while there were launches in Ontario and the debut release from its in-house gaming studio Blue Guru Games.
The Stockholm-headquartered firm noted when taking the Dutch market out of the mix, total revenue increased by 9%, sparked by solid performance in the Nordics, reaching €98m (£80.2m).
LeoVegas also saw a massive boost to its net gaming revenue (NGR) coming from regulated markets, rising from 65% in 2021 to 79% in 2022. The firm also provided an update on the status of the MGM Resorts takeover bid, which looks set to be accepted by the end of this month.
Speaking to EGR, CEO Gustaf Hagman touched on a number of key areas, including the MGM Resorts takeover, the operator’s re-entry into the Dutch market, the success of BetUK, the new highs for its sports betting arm and its recent fine from the UK Gambling Commission.
Stop! Takeover time!
“It will be a new chapter for the company,” said Hagman when asked what the takeover of LeoVegas by MGM Resorts means for the firm.
As the operator celebrates its 10th anniversary, it was the subject of a $607m bid from MGM Resorts in May, and it is expected that the bid will be accepted at the end of the acceptance period on 30 August.
The US giant is looking to flex its M&A muscles and has moved for LeoVegas, with the European operator since pausing its expansion project in the US and New Jersey, although the firm confirmed should the acquisition fall through, it would resume its US strategy
Hagman sees this move as the next natural step for the company as he looks ahead to what the future holds.
He said: “This was my 26th quarterly report so, to some extent, it’s going to be really nice to turn the page and do something new with MGM and see what the future holds for us.
“We will have a lot more power, both in organic growth but also to do some M&A going forward. It’s going to be an interesting H2,” he added.
The boom of BetUK
LeoVegas stated that its BetUK brand has been a tremendous success and has seen the biggest growth in the sector.
The operator was recently added to the Oddschecker sports betting grid and also onboarded former England forward Teddy Sheringham as its latest brand ambassador.
Hagman explained that a focus away from its traditional casino approach had helped the brand make a soaring start.
He stated: “I think it is several things. First off, the devil is in the details, as always. It’s a focus on the customer experience with BetUK. We made some changes to the CRM, which has brought a lot of attention on us in the UK.
“We sat down nine months ago saying we should have an increased focus on sports, so I think BetUK’s success is a testament to that.”
Going Dutch
Since the Netherlands regulated its online market on 1 October 2021, LeoVegas has been absent from the region, while smaller brands who secured a licence in the first tranche, and subsequent ones since, have been able to ramp up operations.
That decision has impacted the firm’s results ever since. However, Hagman confirmed that the company is still in the process of acquiring a Dutch licence and revealed that when excluding revenue from the Netherlands, LeoVegas’s post-Q2 performance was solid.
He commented: “What happened last autumn happened to all the operators and we have all been in the process, some have been a bit faster than us. I can’t give you a timeline but we are in the process.”
“When we look at July, if you take away the Netherlands, revenue is up 8% which I would say is quite good growth.”
However, LeoVegas said it plans to launch in the market in the autumn having applied for the licence. The Netherlands is set to see the return of a series of tier-one operators following the end of respective cooling-off periods.
The likes of Kindred and Entain will be looking to take back lost market share, with LeoVegas among those set to challenge the first movers in the country.
Go sports!
As previously mentioned, LeoVegas rejigged its focus to get more out of its sports betting arm, and it most certainly has done that with the success of its BetUK brand, but it also had a rousing performance with its Expekt brand as well.
Sports betting took a big share of the firm’s revenue, with 12% of Leo’s gross gaming revenue mainly put down to the Expekt brand. However, Hagman said that the business feels like the sports betting arm is starting to take flight and become a core part of the business.
Hagman said: “Sports betting has really strong KPIs, it’s not only the NGR that we are looking at, but it’s also the depositing customers in sports, the activity in sports and the active customers in the sportsbook.
“It’s a great combined statement, I would say. It has been great fun, and I’d like to mention that the UK is one of the really strong drivers right now and promising for the future as well.
The dark side
This year LeoVegas has been rocked by two regulatory issues. The first came in June when the firm was put under investigation by the Swedish Economic Crime Authority (Ekobrottsmyndigheten) over allegations of insider trading in the company’s shares.
The second came last week when the UK Gambling Commission (UKGC) issued the firm with a £1.32m fine over social responsibility and AML breaches.
The UKGC found five failings relating to the period between October 2019 and October 2020. However, Hagman was quick to say that the firm has already updated its policies and has taken all of the necessary measures and precautions that the UKGC required.
He said: “Of course, it’s unfortunate to get a sanction. It is related to October 2019 to October 2020. We have taken the measures and precautions because we were aware of this a long time ago, but not the amount of the sanction.
“In my mind, we have taken those measures and steps in order to change policies so nothing is going to change moving forwards.”
Hagman also provided an update on what is happening with the Swedish investigation.
He stated: “No employee or anyone on the board of management or the board has been charged with anything by the prosecutors. There is no suspicion of anyone within the company. We have not heard anything on that, it has been very quiet.”