Part 2: Sweden –weathering the storm
Part 2:
Sweden – weathering the storm
The success of online casino in providing
revenue uplifts in the first weeks of the
Covid-19 crisis has, at least according to
anecdotal evidence, been replicated in Sweden
despite the country being the only one that hasn’t
employed a full population lockdown.
“The online casino offering seems to have all
the prerequisites to benefit from the coronavirus
outbreak,” said the analyst team at Redeye in
Stockholm in a note issued at the end of March.
“We would expect a significant increase in player
activity among online casino operators.”
Further, the team predicted that casino games
with more of a social element, in particular live
casino and poker, would perform particularly well
if social distancing, whether enforced or voluntary,
continued into the spring and summer.
“If the lockdown of the community continues
and people are maintained isolated with limited
social contacts, to hamper the spread of the virus,
we expect that social engagement online will
become more and more important.”
As an aside, it is worth mentioning that the
gaming stock that has performed the best in
the past three months is the Stockholm-listed
live casino provider Evolution Gaming. Such
has been the enthusiasm for the stock among
investors that in late April it hit an all-time high
of SEK500 (£42), recovering from a crisis low
of about SEK280 as the market slumped in late
March. Clearly, investors have come to a similar
conclusion as Redeye: that live casino will be a
beneficiary of the virus crisis rather a victim.
Double-edged sword
Yet it is unlikely that operators within the Swedish
regulated market will be celebrating their casino
fortune too much.
A report conducted on behalf of the Swedish
online gambling trade association BOS by
research house Copenhagen Economics
produced some timely evidence at the end of
April on the extent to which the official claims
regarding channelisation within the relatively
newly regulated Swedish market might be overly
optimistic.
Perhaps for the first time anywhere in the
world, the report looked into how channelisation
actually works in a regulated environment. It
pointed out that the estimates from the Swedish
Gambling Authority (Spelinspektionen) made last
year (first that the new market had achieved 91%
channelisation and then subsequently that an 85-
87% rate had been achieved) were too much of a
generalisation.
As the report suggested, operators in online
casino and sports betting – the traditional areas
of previously grey market activity – are likely to
have lower channelisation rates than other areas
of gambling such as horserace betting, lotteries
and bingo. In all of these areas there are likely
very few offshore competitors.
The differentials between betting verticals
mean that online casino and sports betting are
likely to have worse rates of channelisation that
the other forms of gaming.
Working with the data from a consumer survey
in February this year, data from Spelinspektionen,
revenue figures from operators and interviews
with key players, Copenhagen Economics
estimated the rate of channelisation reached for
online casino is actually between 72-78%, while
sports betting is between 80-85%.
In both cases, this is a significant shortfall
compared with the official aim of achieving a 90%
rate of channelisation.
iGB Market Monitor • The UK and Sweden • May 2020 11