With the rise of online casino causing Casino Cosmopol’s visitor numbers to fall in recent years, the Swedish land-based casino brand of Svenska Spel has decided to permanently close the doors on two of its three venues to “limit losses”. Union negotiations will now be held before a final decision is made.
The Gothenburg and Malmö closures mean the only remaining land-based casino in Sweden will be a Casino Cosmopol in Stockholm. The liquidations could affect around 200 jobs.
Ola Enquist, chief executive of Casino Cosmopol, said: “This is an emotionally tough step to take as it affects many of our employees.
“We have taken a number of measures in an effort to increase revenue and reduce costs. Despite hard work, we see that the measures are not sufficient.”
Casino Cosmopol: December AML penalty compounds financial misery
The planned closures come after Casino Cosmopol was fined SEK2m (£154,000/€180,000/$200,000) for anti-money laundering (AML) failings after a probe by Swedish regulator Spelinspektionen. Svenska Spel were also warned.
A foreshadow of what was to come for Casino Cosmopol came in October. Svenska Spel’s Q3 report revealed a stall in revenue and earnings due to market-wide pressures on the retail sector.
The Casino Cosmopol and Vegas areas of Svenska Spel’s business saw net gaming revenue decrease 11% to SEK247m. Svenska Spel blamed increased competition from online games and restaurant casinos for the drop. Casino Cosmopol and Vegas also recorded a SEK35m loss.
In response, Svenska Spel adapted business practices at Casino Cosmopol, including introducing new opening times to combat restaurant casino competition. These measures haven’t worked though with losses continuing, forcing Svenska Spel’s hand.
New tax a blow to Swedish operators
In September, Sweden’s government (Regeringen) outlined plans to raise the gambling tax rate in the country from 18% to 22% of gross gaming revenue (GGR). If approved, the tax rise will come into effect in the country from 1 July 2024.
Regeringen believes such a move could bring in an additional SEK540m in additional tax revenue each year. However, the move has predictably been met with strong opposition from the industry.
Hasse Lord Skarplöth, Aktiebolaget Trav och Galopp (ATG) chief executive, has called on the government to rethink its proposals.
Instead of a sweeping 22% tax rate, Skarplöth is instead calling for a differentiated tax, with sports betting remaining at 18%, while igaming has its rate increased.
“It came as a shock, the proposal for a higher excise tax on gambling companies,” Skarplöth said. “Shortly afterwards, the will to fight awoke.
“Strengthened by our research, we have now put quite a lot of energy into demonstrating the advantages of a differentiated gaming tax in Sweden as well. The hope is now that our analysis will move legislators from insight to action.
“It is a good starting point for our proposal; keep the tax on horse betting and sports, but raise it on online casinos.”
Kindred’s takeover bid
In other Sweden news, and reported last weekend by the Wall Street Journal, La Française des Jeux (FDJ) have also made an offer worth SEK27.96bn to acquire the entire outstanding share capital of Kindred Group.
FDJ has offered SEK130 in cash for each Swedish Depository Receipt in Kindred. This is 24.4% higher than the SEK104.50 price of Kindred shares at close on 19 January, the final day of trading prior to the offer coming to light.
The Swedish operator Kindred has “unanimously” recommended shareholders accept the offer. The acceptance period is set to begin on or around 20 February and expire on 19 November.
In its statement, FDJ said the move would create the second largest operator in Europe’s gaming industry. It added the deal would result in a “European gaming champion” with enhanced revenue and earnings growth.