Gauselmann Group on path to match pre-pandemic revenues as it deepens international expansion, casino strategy

German gaming giant Gauselmann Group announced Thursday that it is on path to achieving similarly high sales revenues in 2022 as in the pre-pandemic 2019 financial year. The first six months of 2022 closed with sales revenues at 1.746 billion euros ($1.757 billion), showing an increase compared to the pre-pandemic 1.740 billion euros ($1.751 billion) recorded in 2019. The cumulative sales revenues of all group entities that year were approximately 3.4 billion euros ($3.42 billion).

Company founder and Management Board Chairman Paul Gauselmann said: "It is great news that the pandemic has bottomed out and we are finally back in charted territory again. This success is primarily the fruit of our good ideas and the dedication of each and every one of our employees and once again goes to show what you can achieve with hard work and team spirit."

During the pandemic, the group saw its gaming arcades, casinos, sports betting shops, and shipboard casinos across Europe - as many as 1,000 outlets altogether - close down for around nine months, costing the company some 2 billion euros in lost sales revenues. Operating costs, however, remained largely unchanged during this time.

According to a company announcement, the positive post-pandemic development is also attributable to the group’s increasing diversification. The group is working to position itself on an ever-broader base, thus reducing its dependence on individual markets and business models.

The company explained that a return to pre-COVID levels was only possible because, with the development and expansion of international business operations and casinos, the company tapped into two business areas that compensate for the increasingly difficult situation in the German home market. The most important markets in other European countries are currently the UK and Spain.

"From an entrepreneurial point of view, it was hugely important to drive forward our international business activities," the company’s founder explained, adding that in the meantime, an ever-larger share of sales revenues – around 60% - is generated abroad. 

In addition to internationalization, the company also credited its sales success to casinos, including the venues in Saxony-Anhalt and the investments in Berlin and Rhineland-Palatinate. The casinos in North Rhine-Westphalia have also been an important addition to this business segment since 2021.

Company founder and Management Board Chairman Paul Gauselmann

The company deemed the casinos in Saxony-Anhalt as an area with "enormous potential" based on the figures obtained, highlighting that in the second year of operation by the Gauselmann Group, the number of visitors doubled several times over.

In line with the legally defined channeling mandate, it was thus possible to "redirect more players from illegal to legal offerings and protect many customers from the big risks" of illegal gaming. "I have never experienced such a percentage rise in any other sector so far," Paul Gauselmann pointed out.

However, the company stated that the political conditions that govern commercial gaming in Germany are a "bitter pill." The ever-increasing restrictions have not only led to a reduction of more than 30% of gaming machines, the closure of gaming arcades, and thus also to the selective loss of jobs but have also diminished the attractiveness of the legal gaming offering.

This, in turn, increases the appeal of illegal gaming offerings – a context in which consumer protection and responsible gaming are "alien concepts." However, according to the company patriarch the Gauselmann Group has nevertheless managed to defend its market leadership. "This is very gratifying, but also necessary in order to uphold our standards even under the more difficult conditions," he said.

The positive development of the company in Eastern Westphalia is also reflected in the "personnel growth" factor. The number of employees increased by 10.7% in 2021, with the company now employing almost 15,000 people worldwide.

"All of this allows the Gauselmann Group to look to the future with renewed confidence," the company stated. One source of hope for further building on this successful track record lies in particular in the area of online gaming in Germany, which is currently being developed on a legal footing under the new State Treaty on Gambling that came into force on 1 July 2021, and for which the first licenses were recently issued. However, this presupposes that the state intervenes "to put a stop to illegal online business as quickly as possible."

According to media reports, the new German Federal States’ Joint Gambling Authority has already started calling on illegal providers to discontinue their activities. Failure to do so comes with fines of up to 500,000 euros.

Experience in the UK market has shown that land-based gaming and online gaming meaningfully supplement rather than cannibalize each other, the company says, provided that the legislator permits a sufficiently attractive range of online gaming offerings; an area where Germany has so far significantly lagged behind other counties.

"We will definitely be making an active contribution with good ideas in the online segment," promised Paul Gauselmann. "If we perform and can draw on more reasonable framework conditions going forward, success will follow."