Betsson AB reported its highest-ever third-quarter revenue of €326.5 million ($365.7 million), but this achievement was tempered by a significant decline in profits. The company’s EBITDA dropped 23% to €63.4 million ($71 million), while operating income fell 31% to €46.1 million ($51.6 million). The results reflect the growing impact of higher gaming taxes, reduced B2B licensing income, and increased operating expenses.
Shift to Regulated Markets Brings Higher Taxes
Betsson’s strategic focus on locally regulated markets continued, with these jurisdictions now accounting for 77.7% of total revenue, up from 63.8% a year earlier. This shift has led to a sharp rise in betting duties, which climbed from €41.4 million to €69.4 million ($77.7 million). The company also faced higher operating expenses, which increased to €135 million ($151.2 million).
B2B Revenue Drops, B2C Gains
During the earnings call, CFO Martin Öhman revealed that B2B revenue had declined by 39%, or about €30 million ($33.6 million), largely due to reduced activity from a major client. In contrast, B2C revenue rose 28%, but this growth was offset by increased direct gaming taxes, resulting in a contraction of the gross profit margin from 64% to 56%.
Regional Performance and Product Mix
Latin America was a standout region, with revenue up 51.8% to €116.1 million ($130 million), driven by strong positions in Argentina, Peru, Colombia, and Chile. Western Europe also saw growth, rising 13.8% to €64.8 million ($72.6 million), buoyed by Italian casino operations. However, revenue in Central and Eastern Europe and Central Asia dropped 16.8%, and the Nordics saw a 10% decline. The Rest of the World segment more than doubled, supported by Betsson’s expansion into Canada following its acquisition of Rhino Entertainment.
On the product side, casino revenue rose 13.7% to €253.5 million ($283.9 million), making up 77% of group revenue. Sportsbook revenue was nearly flat, up just 0.8% to €71.8 million ($80.4 million), as margins after free bets slipped from 8.8% to 8.1%. Active customers reached a record 1.87 million, boosted by major football events.
Implications for Industry Stakeholders
The latest results highlight the challenges operators face as they expand into regulated markets, where higher tax rates and compliance costs can erode profitability. Affiliates and suppliers may also feel the impact as operators adjust their spending and seek efficiencies. The shift from B2B to B2C revenue streams could lead to changes in partnership dynamics and product focus. Regulatory developments, particularly in markets like Brazil and Canada, remain a key area to watch for all industry participants.
Key takeaways
- Betsson posted record Q3 revenue but saw significant profit declines due to taxes and costs.
- Locally regulated markets now make up nearly 78% of revenue, increasing tax burdens.
- B2B revenue fell sharply, while B2C growth was offset by higher gaming taxes.
- Latin America and Canada drove regional growth, while other regions faced declines.