Paf reports record revenue for FY 2023 but warns of future profit challenges amid rising gaming taxes

Nordic gaming operator Paf has announced record-breaking revenue of €177.1 million ($192.27 million) for the 2023 financial year, marking a 6.9% increase from the previous year. 

Net profit also saw a significant rise, reaching €55.1 million ($59.82 million), a 23% year-on-year increase. However, despite these positive financial results, Paf cautioned about potential challenges ahead due to increasing gaming taxes in several markets.

CEO Christer Fahlstedt expressed pride in the company's record performance. “We can be happy and proud with the past year,” he said. “We have gained a larger customer base, and the number of active customers has increased by 27%, which explains some of it.”

However, gaming taxes in a number of countries will be increased in 2024, which the company says will create different conditions going forward. In Finland, a temporary reduction in lottery tax has ended, with rates now rising from 5% to 12%.

Fahlstedt also noted that Sweden's gambling tax is set to rise from 18% to 22%, Estonia's from 5% to 6%, and Latvia's from 10% to 12%. “The trend of increasing gaming taxes will continue,” Fahlstedt warned.

In addition to the impact of higher taxes, Fahlstedt said the company expects calls for increased responsible gaming measures. "The changes will result in reduced profitability and many operators will find it more difficult. But Paf is well prepared for the times ahead,” he stated.

This month, Paf reduced the annual loss limit for players aged 20 to 24 from €10,000 to €8,000, following a similar reduction in April 2023 when the overall mandatory online loss limit was lowered from €20,000 to €17,500. 

The growth in Paf’s revenue was primarily driven by its online business, which saw an 8.2% increase to €153.8 million ($166.98 million). Significant growth was observed in markets like Sweden, Spain, and Latvia.

The acquisition of William Hill Latvia SIA and SIA Mr Green in June 2023 contributed an additional €5.1 million ($5.54 million) to online revenue. Meanwhile, the overall number of registered online customers surged by 27.3% to a record 615,557, with expectations for continued growth supported by ongoing marketing efforts.

Conversely, revenue from Paf’s land-based and ship segments experienced a slight decline of 0.9%, totaling €23.3 million ($25.3 million). Despite a 4.0% increase in ship passengers in 2023, this segment faced challenges.

Analyzing the cost structure, materials and services expenses rose by 7.9% to €42.6 million ($46.25 million), while staff costs remained steady at €24.2 million ($26.2 million). Depreciation and impairment costs slightly increased to €10.6 million ($11.5 million). 

Other operating expenses decreased by 2.0% to €52.9 million ($57.43 million), and Paf benefited from €723,605 in net financial income. Consequently, pre-tax profit grew by 27.9% to €60 million ($65.14 million). 

“It’s undeniably great that Paf is achieving a great result, allowing us to distribute a total of €31.4 million ($34.09 million),” said Chairman Jan-Mikael von Schantz. “The employees have done a phenomenal job over the past year, and the board would like to thank all Paf employees who have made this possible.”

The Paf Board also saw changes with the addition of Daniela Forsgård, replacing Birgitta Eriksson. Von Schantz thanked Eriksson for her contributions and welcomed Forsgård, highlighting her financial expertise and previous experience with Paf.