iGB Intelligence reports iGB-Market-Monitor-May-2020-proof4 | Page 14

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