Monitoring matters hit Global Gaming hard in the first six months of 2019, with the company seeing profits and returns severely hit by the cancellation of its Swedish operating license.
During a period, Tobias Fagerlund chief executive of Global Gaming described as “the most raging and difficult” in the worker’s history, from May – August profits cut down 42% yearly to SEK132.2m (£11.4m/€12.3m/$13.8m). On 17 June Global’s Swedish licence was canceled by the country’s gambling regulator as a result of significant failings in its player defense and anti-money laundering controls. This cost the company an valued SEK20m over the final 13 days of the month.
“When we got to the month of June, we positively thought we could realistically expect to be back into black figures already in the second quarter, thus achieving the intended turnaround, Everything changed on the morning of 17 June, when the Swedish Gambling Authority announced that they had withdrawn – with immediate effect – the gaming license that lay at the foundation of the group’s Swedish operations. Those who have followed the extensive media coverage of the decision know that we do not share the Swedish Gambling Authority’s opinion and have therefore appealed it.”
The group posted returns of SEK 132.2m, down from SEK 227.8m yearly. Functioning expenses related to gaming activities fell 31.3% to SEK63.0m, whereas marketing costs fell by 51% to SEK34.1m. Personnel expenditures, however, raised from SEK 17.7m to SEK 26.9m, although the company also experienced an SEK11.6m cost on write-down of capitalized development costs. Fagerlund said that the regulator’s decision over-blown expenses as well as profits, as the company had to ease the effects of cancellation of contracts with contractors.
“In one fell swoop, most of the group’s revenue was wiped out and, as a not unexpected direct consequence, reactions from suppliers and partners were not late in coming, as an example, the company auditor, KPMG, terminated their contract without any further explanation or notice. These events forced us to act quickly. And act we did.”
Global Gaming made significant personnel cuts after this, which will see its total headcount fall from 190 full time workers and advisors to as low as 90 by the end of the year. The company’s technology center is in Sweden and that will be completely shut down, whereas its Malta office will see activity and staff.
The operator has also signed an agreement with Finnplay, allowing it to move actions under its own licences to the dealer’s platform.
“This enables us to act more quickly and in multiple markets so we can focus on what we historically have been best at: reaching customers and generating traffic,” “The collaboration gives us a flexibility we are going to need not only to have control over fixed costs but also to improve margins.”
Moreover, it has re-entered Sweden with Nano Casino, a fresh brand operating under Finnplay secondary Viral Interactive’s license. Viral, as the license holder, is fully accountable for operating the site, with Global serving as marketing partner.
“Along with a long list of legal experts, we are of the opinion that Viral Interactive’s operations rest on a very solid and secure legal basis, and that the conditions for the license to conduct online casino operations granted to them by the regulator are met.”
The company will also work to develop a more extensive policy going forward, moving into new markets with new products.
Further Fagerlund said:
“Although we will do everything in our power to be active in Sweden, including with our brand NinjaCasino, we need to have a much broader approach, which we need to adopt in the foreseeable future.”
Global Gaming stated SEK 294.3m revenue for the first six month of the year, with the Ninja Casino brand accounting for 93% of the group’s returns. Functioning costs in gaming events totaled SEK 147.7m, down from SEK 179.1m the last year. Marketing costs failed 12.5% to SEK 116.9m, whereas personnel expenses raised up to 75.8% to SEK 53.1m as total expenses increased to SEK 201.1m. As a result, the operator swayed from a SEK 70.3m profit last year to a loss of SEK 54.5m.
“Despite the draconian measures and drastic organizational changes we are facing, we cannot fail to notice that, internally, our fighting spirit and will to prevail are very much alive, which in itself creates conditions we should not underestimate, The future will undoubtedly place great demands on us as an organization, as well as on me as its CEO. We must live with the consequences of past mistakes, but we can also learn and grow stronger because of them. What I can promise is that we will do our utmost to get back to profitability and growth – and I believe we’ll be successful.”
On 8 August, an application for momentary release from the regulator’s ruling was refused, the latest in a series of court defeats suffered since the license cancelation.