ATG CEO blames continued revenue decline on tax rise, but remains optimistic
During the three months to 31 March, net gaming revenue at Swedish horseracing operator ATG hit SEK1.21 billion (£94.4 million/€110.4 million/$125.7 million). This falls 7.7% short of Q1 last year, the operator said in its first-quarter report.
ATG total revenue for the quarter fell 7.8% to SEK1.28 billion. This includes net gaming revenue, agency income and other income in Q1.
Published yesterday (23 April), the report heavily referenced the recent rise in gambling tax in Sweden, which is based on gross gaming revenue and shot up from 18% to 22% in July last year.
ATG CEO Hasse Lord Skarplöth has heavily criticised the tax increase, branding it in the past a “horse tax” that has hit the monopoly the hardest.
In February, following the operator’s 2024 earnings release, he urged the government to re-think the new structure.
Although he repeats this sentiment in the Q1 report, Skarplöth believes ATG has a positive future.
“We have many challenges ahead of us,” Skarplöth said. “But we also have something unique: a gaming company with a purpose that extends beyond numbers and balance sheets.
“We exist for Swedish trotting and galloping sports. It gives meaning to everything we do – especially in times when much else feels uncertain. That’s also what makes me feel hope, despite the challenges.
“Because we have a strong team, loyal customers and an important mission: to create revenue for Swedish trotting and galloping sports – and by extension for the entire Swedish horse industry.”
Horse racing revenue down in Q1
Breaking down its performance, horse racing betting remains ATG’s primary source of revenue by some margin. However, the SEK867 million posted during the quarter falls 10.4% short of last year. This still represents 75% of all revenue generated in Q1.
Several large customer wins meant casino revenue also fell in Q1, with the SEK143 million reported down 13.3% year-on-year.
However, there was more positive news from the operator’s sports betting segment. Revenue climbed 14.5% year-on-year to SEK198 million, with Skarplöth noting ATG is the largest licensed sports betting operator in Sweden.
The report said 1.4 million users gambled with ATG during the quarter, which was stable year-on-year.
Tax hits bottom line at ATG
Turning to costs, personnel spend edged up although this was offset by a reduction in other expenses. However, the impact of higher tax was felt, with gambling tax payments rising 11.8% to SEK303 million.
Coupled with lower revenue, this pushed operating profit down 31.4% to SEK267 million. Pre-tax profit was also 33.3% lower year-on-year at SEK267 million.
After accounting for income tax and foreign currency impact, ATG was left with a net profit of SEK258 million. This is 33% lower than Q1 last year.