A struggling Swedish market has had repercussions for the Nordic online gambling operator, the Stockholm-listed Global Gaming.
The company just released its financials for the second quarter of 2019, showing a drop in revenues at 42%. Profits clocked in at SEK132.2m (US$13.7m) with an operating loss of SEK11.1m for the three-month period.
Regulations can hurt
As a result, Global Gaming is cutting its payroll in half. CEO, Tobias Fagerlund calls Q2 the most turbulent in the company’s history. It has been struggling with Sweden’s newly regulated market, particularly the July 17th revoking of its gaming license by the Spelinspektionen, the country’s regulatory body.
The problem started when Global Gaming’s Ninja Casino brand was under fire for failure to address its anti-money laundering and social responsibility obligations.
The charges have been rejected and the company has made many appeals.. The company has made many appeals to the Swedish courts.
Meanwhile, Global Gaming has launched NanoCasino, a Swedish-facing brand piggybacking on Finnplay’s local license.
According to Fagerlund, this deal makes good financial sense because, while Finnplay remains fully responsible for NanoCasino’s operations, a Global Gaming subsidiary acts as the site’s marketing partner, securing many of the marketing commitments the group had made at the beginning of the year.
New organizational changes
Global Gaming has a “game plan” and will be making organizational changes. They may be Draconian measures but they will help damage control, cost control and finding solutions to continue moving forward and creating the conditions for a return to profitability.
The payroll for one will shrink by half shortly. In the interim, the company will shut down its Swedish tech teach. Of note, the Malta-based operations have already shrunk quite a bit.
“The company’s rebounding plan involves a much broader approach, including new brands and new markets. The company must live with the consequences of past mistakes.”
Nonetheless, Global Gaming’s fighting spirit and will to prevail are very much alive. This is good news for investors who have pushed up company shares by more than one-fifth in recent trading. Share prices still have a ways to go to recover former levels.