Gross gaming revenue (GGR) tax for Swedish operators increased from 18% to 22% on 1 July this year. This came despite strong opposition from stakeholders, including Skarplöth at ATG, who branded it a “horse tax”, noting it will hit the monopoly the hardest.
Q3 was the first quarter in which the higher tax applied to ATG, with Skarplöth (pictured) saying it had a negative impact on performance. Coupled with less revenue, this led to a 19% drop in net profit.
ATG sees revenue dip 4.7% in Q3
Detailing its performance in Q3, ATG saw net gaming revenue decline by 4.7% year-on-year to SEK1.29bn (£93.7m/€112.6m/$121.6m).
Net gaming revenue from horse betting fell 6.5% to SEK956m across both Sweden and Denmark operations. This, ATG said, was partly due to Q3 this year having one fewer Saturday than last year, as well as increased competition from major sporting events such as the Olympics and Euro 2024 football tournament.
On the other hand, sports betting revenue edged up 1.3% year-on-year to SEK161m, helped by Euro 2024, which ran from mid-June to mid-July. Meanwhile, ATG said casino revenue remained stable at SEK169m for the quarter.
As to where revenue came from in terms of channels, online accounted for SEK1.17bn (90.7%) of all revenue, down 2.4%. ATG also noted a 22.7% drop in retail revenue to SEK119m.
Geographically, operations in Sweden generated SEK1.20bn in revenue, down 4.5% from last year. Denmark saw a similar fate, with revenue dropping 7.6% to SEK85m.
Higher tax hits bottom line
Operating profit for the quarter fell 20.1% to SEK397m on the back of the gambling tax rise. ATG paid SEK331m in gambling tax in Q3, compared to SEK278m in 2023.
After finance costs, pre-tax profit amounted to SEK412m, down 18.6% from last year. After also paying SEK13m in income tax, ATG was left with a net profit of SEK400m, down 19.0% year-on-year.
“I’ve said it before – the increased gambling tax is a horse tax,” Skarplöth said. “ATG accounts for approximately 40% of the state’s new tax revenue from the gaming industry. The tax increase affects our surplus to our owners, Svensk Travsport and Svensk Gallop, and thus the entire Swedish horse racing industry. That could not possibly have been the purpose of increased tax.
“It can be added that ATG worked hard to reduce costs in order to improve results. Excluding the tax change, the period’s operating profit and operating margin had improved compared to last year.”
Year-to-date figures do not tell the full story
In terms of year-to-date performance, covering the nine months to 30 September, revenue increased 2.3% to SEK4.54bn. However, the first six months of this period were not impacted by the tax rise.
As such, operating profit was down by only 0.5% to SEK1.24bn, while pre-tax profit actually edged up 0.2% to SEK1.27bn.
After paying SEK39m in income tax, ATG was left with a SEK1.23bn net profit, level with last year.