Easing up on marketing and promos behind Q1-2014 profit loss
Sweden's gambling monopoly Svenska Spel treads a fine line between maintaining its monopolistic advantage in the market place on grounds of customer protection, and the intensity of its marketing efforts that could be construed as a contrary motive by bodies like the European Commission.
This week the consequences of the company taking its foot of the marketing gas pedal by chopping bonus and promotional activity were reflected in the quarterly bottom line as Svenska Spel reported net gaming revenues down year-on-year by SEK 186 million from SEK 2.48 billion to SEK 2.29 billion, and operating profit down SEK 83 million.
Management suggested that the implementation of a range of expensive responsible gambling initiatives — including the reduced marketing effort — contributed to the 6.2 dip in profits.
CEO Lennart Käll said he expected the trend to continue, but that cost-cutting to the value of SEK 36 million was being planned
Svenska Spel is only too well aware that the European Commission, which safeguards and enforces the equality and free trade principles enshrined in the European Union treaty, is watching it closely; many feel that was the motivation for its recent decisions to boost responsible gambling investment and cut back on marketing.
Sweden has in the past attempted to justify its protectionist attitude regarding Svenska Spel by saying that this was all in the interest of better protecting Swedish punters, but it's extensive marketing efforts to generate more profit raised bureaucratic eyebrows and the risk of infringement proceedings by the Commission.
Online Casino News Courtesy of Infopowa