After PayPal stopped accepting online casino payments in Germany, gambling operator LeoVegas is expecting a 20% to 30% dip in its local revenue.
German authorities order the action
German authorities ordered the digital wallet platform PayPal to stop providing services to some industries, including gambling. In August, PayPal confirmed that it would follow the orders and finished applying the changes to its services in October. LeoVegas, one of the most prominent gambling companies in Germany, believes that this move affected their revenue by €1 million and €1.5 million per month.
The EU bigwig expects a permanent regulatory framework for the gambling industry by 2021. Till then, online casinos will remain legal only in the state of Schleswig-Holstein. Once the most populous member of the EU creates a regulated nationwide market, affiliates will start pouring in. Business Matters reports that even with its limited reach, the German gambling market is worth more than €3 billion. Most states are unregulated, and players may land in trouble for using an EU-based operator soliciting German users. The authorities wanted to curb this tendency and ordered PayPal to comply.
LeoVegas still going strong
While there is a significant impact of PayPal clampdown on revenue, LeoVegas is still going strong in other markets. In the quarter ending in September 2019, the group’s total revenue reached €88.2 million. This marks a 12% growth over Q3 last year when it earned €78.6 million. Most of the company’s growth comes from classic casino games, which makes up 3/4th of its third-quarter revenue. While the company’s new customers dropped by 4%, the number of returning customers grew by 12%.
Gustaf Hagman, President and Chief Executive of LeoVegas, commented on the situation and said that the company has made progress in a difficult environment. He said that the firm registered double-digit increased in operating profit and sales. Growing regulatory issues in some of its primary markets may create short-term challenges for the business. He added that the company gets 50% of its revenue from locally regulated markets. It helps in lowering business risks and increasing stability.