LatAm growth and sportsbook help Betsson achieve record profit in Q2

| By Daniel O'Boyle
Betsson recorded record-high profit in the second quarter of 2021 of SEK 337.9m (£28.3m/€33.0m/$39.0m), thanks to growth of sports betting and expansion in Latin America.
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However, the operator also revealed that its US launch would be delayed until early 2022.

Betsson chief executive Pontus Lindwall said high sports betting revenue was the main reason the operator was able to record record profit, as not only did the vertical bring in extra revenue, but operating margins for betting tend to be higher.

“Important reasons behind us being able to reach an all time high profit are the strong sportsbook activity, primarily driven by the football tournaments, high sportsbook margins, and positive gross margin effect as a result of a larger share of total revenue coming from the sportsbook,” he said.

“The second quarter is proof of the strength of our business model. We have achieved an all

time high profit based on our scalability and geographic spread.”

For the second quarter of the year, Betsson’s revenue was SEK1.75bn.

Most of the operator’s revenue came from casino, which brought in SEK1.22bn, though this was down 5.0% from 2020. Sportsbook brought in SEK510.1m, up 125.6%, on turnover of SEK8.34bn, as the comparative quarter in 2020 saw a large number of sporting events suspended.

By region, the Nordics moved into first place, bringing in SEK550.4m, up 13.5%. This was followed by central and eastern Europe and central Asia, which led the way in revenue in Q1 and brought in SEK501.9m in Q2, representing 38.0% year-on-year growth. 

Western Europe, which had led the way in revenue in Q2 of 2020 as the most casino-dependent region, saw the only decline, by 36.6% to SEK402.9m. 

The rest of the world experienced the fastest growth, with revenue growing 121.4% to SEK296.5m as the operator expanded significantly in Latin America during the quarter. The rest of the world was the only region in which sportsbook revenue was greater than online casino.

“Betsson is now the market leader in Peru and in Brazil a marketing campaign has gone viral by a sponsorship of the ‘world’s worst’ football team,” Lindwall said. “Betsson was also the official regional sponsor of CONMEBOL Copa América, which contributed to strong growth in new active customers in the region during the quarter.”

The operator then paid SEK578.6m in costs of revenue, 0.4% more than 2020. This consisted of SEK157.8m in licence costs, SEK114.3m in betting duties, SEK116.8m in commission to affiliates and partners – all slightly down from 2020 – and SEK190.4m in other costs of revenue, an increase of 13.8%.

This led to gross profit of SEK1.17bn, up 22.4%. Betsson then paid SEK322.9m in marketing expenses, up 25.7%, SEK247.6M in personnel costs, 12.8% more than in 2020, and SEK197.9m in other external expenses, down 11.0%.

After SEK88.9m in depreciation and amortisation costs, SEK2.1m in other income and cancelling out SEK65.7m worth of expenses due to capitalisation of development costs, Betsson’s operating income was SEK383.4m. This was 76.1% more than in Q2 of 2020 and easily broke the operator’s previous record from Q4 of 2020.

The operator reported a SEK13.8m net loss from financial items such as investments and interest, leading to pre-tax income of SEK369.6m, up 78.7%.

Betsson paid SEK31.8m in tax, resulting in net income of SEK337.9m, up 75.1% year-on-year and also a record high, as Betsson’s profit surpassed SEK300m for the first time.

Looking at the entire first half of the year, revenue came to SEK3,344, up 13.0%. After SEK1.14bn in costs of revenue, Betsson recorded a gross profit of SEK2.21bn, 15.9% more than in 2020.

After it paid operating expenses of SEK1.55bn, up 8.9%, Betsson’s operating income was SEK659.5m, up 38.1% year-on-year.

After accounting for financial items and taxes, Betsson’s net profit was SEK577.9m, a 37.3% increase from 2020.

Looking ahead, Lindwall mentioned the operator’s plans to launch its Betsafe brand in the US, starting with Colorado. He said that as the operator plans on using the Strive platform – in which it acquired a 35% stake in April – rather than one that is already certified, its launch would be pushed back. Rather than launching in the second half of 2021, Betsson now intends to launch the brand in Q1 of 2022.

During the quarter, Betsson also agreed a deal with German media business ProSieben Sat.1 and will launch a Betsson-powered ProSieben brand in the German market.