Danske Spil raises guidance following 2.9% revenue growth in Q3

| By Daniel O'Boyle
Danish state-owned lottery and gaming operator Danske Spil increased its full-year profit guidance after reporting gross gaming revenue of DKK3.54bn (£407.1m/€475.6m/$545.4m) for in the third quarter of 2021.

Revenue from the Danske Lotteri Spil business, which holds Denmark’s lottery monopoly, was up 5.8% from 2020 to DKK2.03bn.

Meanwhile Danske Licens Spil, which offers online betting and gaming in the private market, saw revenue grow 2.9% to DKK1.36bn. This, the operator said, was partly due to a busier sporting calendar during the reporting period, including the latter stages Euro 2020 in which the Danish national team reached the semi-finals.

The Danske Spil board noted that this improvement in revenue from the Danske Licens Spil segment came despite Denmark increasing its online gaming tax rate – from 20% to 28% – from the beginning of the year. 

Elite Gaming, Danske Spil’s gaming hall arm, brought in DKK130.9m, a drop of 30.5% from this quarter in 2020. The operator noted that more venues were closed in Q3 2021 due to novel coronavirus (Covid-19) than in 2020.

Fantasy sports business Swush, however, saw revenue soar DKK15.5m.

Turning to direct costs from gaming, taxes paid to the Danish state were up 25.2% to DKK450.7m. Dealer commission and similar costs declined by 18.8% to DKK339.1m, while direct gaming costs were up 7.0% to DKK207.3m.

This meant the business reported a gross profit of DKK2.54bn, up by 3.0% from 2020. Income from other, non-gaming sources also ticked up, to DKK25.9m.

Operating costs again rose slightly, as a 3.0% dip in other operating costs to DKK492.7m was offset by a 17.6% rise in staff costs to DKK248.1m. Depreciation and write-down costs held steady at DKK238.8m.

This led to a profit before financial items of DKK1.59bn, up 3.4%.

Danske Lotteri Spil was responsible for almost all of this profit, at DKK1.39bn. Danske Licens Spil made up DKK210.9m of the total, while the parent company was responsible for DKK124.1m. 

Swush’s profit before financial items was DKK9.8m, while Elite Gaming made a loss for the period, of DKK12.6m.

Danske Spil’s financial costs, however, were down 60.0% to DKK11.9m.

This meant that pre-tax profit was up 4.6% to DKK1.57bn. The operator paid income taxes totalling DKK346.7m, up 4.9%, resulting in an overall profit of  DKK1.23bn.

Following the results, Danske Spil revised its profit expectation for the full year upwards by DKK100m. Where previously profit was set to fall between DKK1.4bn and DKK1.5bn, it is now expected to fall between DKK1.5bn and DKK1.6bn.

During the quarter, the Danish government announced a proposal to merge Danske Spil and charity lottery the Danish Class Lottery.

The government said that as both digitalisation and responsible gambling require strategic management and investments, a combined operation would be more efficient and cost-effective.

The Ministry of Finance will now work with Danske Spil and the Klasselotteri to prepare a proposal for the merger, including a final law construction and business model. 

If it gains approval, the merger is set to close before the end of the year.

Denmark is also in the process of rolling out mandatory ID cards for retail betting, a move that Danske Spil has already implemented.

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