Zeal profits halve due to “unfavourable jackpot environment”

Lotto-betting operator Zeal Network today reported a near 50% drop in profits for the first nine months of 2017, as EBIT hit €12.5m, down from €23.3m in the same period in 2016 .

Total operating profit (TOP) also slid 3.6% year-on-year, from €101.2m to €97.6m, with billings, equivalent to handle, also down to €201.7m from €204.1m.

The firm attributed the decrease in EBIT to an “exceptionally unfavourable jackpot environment”, especially in Germany, where jackpots in the Lotto 6 aus 49 and Euro jackpot lotteries were on average 50% lower than last year, as well as changes to the Euro Millions which saw hedging costs rise.

Despite the lower jackpots, the firm focused on new customer acquisition through email and affiliate marketing campaigns and saw active monthly users grow to 372k from 366k.

CFO Jonas Mattsson remained confident that Zeal would rebound in Q4 after the firm delivered the launch of US lottery Powerball in October, as well as a full launch in Norway through an online charity lottery partnership with UNICEF.

“We are looking forward to next year. To have delivered solid performance despite some of the issues we’ve encountered gives me great confidence and comfort for 2018,” said Mattsson.

Zeal Group CEO Dr. Helmut Becker added: “The future is bright for Zeal – despite the unfavourable jackpot environment and higher than average prize pay-outs, our financial performance in the third quarter was solid.”