Loto Québec’s revenue for the year ended 31 March dipped by 3.1% to CAD$2.74bn (US$2.08bn) and profit declined to $1.35bn, but the operator said both figures remained above target despite the effects of the novel coronavirus (Covid-19) pandemic in the final weeks of the year.
Despite the pandemic, casinos took the top spot as a source of revenue, bringing in $963.7m, up 5.0%, of which $694.8m came from land-based gaming, down 5.1%.
However, this was offset by online casino revenue rising 25.7% to $96.4m and internal restructuring, which meant that the Salons de Jeux gaming hall chain was included in the division’s figures, adding a further $66.5m.
A further $87.0m in casino revenue came from food and beverages, down 1.8%, and $19.2m came from accommodation, down 6.4%.
Lotteries, meanwhile, saw takings decline by 2.8% to $929.4m, though remained the main source of gaming revenue. Of this total, $702.6m came from draw-based games, down 3.8%, and instants brought in $162.7m, down 4.6%.
The lottery generated $24.7m from sports betting, down 3.1%, while online lottery games revenue increased 37.8% to $39.4m. The operator noted that online lottery sales jumped 159.6% since March alone.
Lynn Roiter, president and chief executive of Loto Québec, said a major reason for the decline was the fact that the previous year had seen a high number of large jackpots that boosted revenue.
“The lottery sector had had an excellent year in 2018-2019 due to an exceptional number of high major jackpots offered by Lotto 6/49 and Lotto Max, which explains the drop in sales this year,” she said.
Gaming machines in bars and other locations, the largest source of revenue in 2019, brought in $872.6m during the fiscal year, though this 11.0% year-on-year decline was largely due to the change in how Salons de Jeux revenue was reported. Bars brought in $853.5m of this, 4.6% less than in FY2019, while bingo brought in $12.4m and Keno $6.7m.
If Salons de Jeux had been counted as it was in 2019, this gaming establishment division would have remained the largest source of revenue and casino would have remained the smallest.
The operator paid $483.8m in costs of sales, down 3.4%. nCommissions made up $337.6m of this total, down 3.5%.
Royalty costs came to $34.8m, up 10.5% and printing costs $26.2m, a 14.7% decline. Food and drink costs were 2.5% below 2019 at $27.5m while goods and services taxes dipped 4.4% to $19.3m and sales taxes were down by the same amount at $38.5m.
After these costs, Loto Québec’s gross profit was $2.26bn, down 3.0%. Casino made a gross profit of $898.5m, lottery $735.5m and gaming establishments $224.8m.
Operating expenses were 1.8% less than 2019 at $892.1m.
Personnel expenses were the operator’s main outgoing, at $445.8m, dipping by just 0.6%. Administrative costs followed, down 2.3% at $276.8m.
Depreciation and amortisation costs fell 11.4% to $107.3m while non-recurring costs grew by 1.8% to $22.1m and the operator paid a further $41.0m in goods and services and sales taxes that were considered operating expenses.
This resulted in operating income of $1.36bn, down 3.8%. Loto Québec made $2.6m in financial income but paid $8.8m in financial expenses for net financial costs of $6.2m, up 2.4%. It paid an additional $5.3m in profit share to joint venture partners, up 26.2%.
This resulted in a profit of $1.35bn, down 3.9% year-on-year. Of this total, $1.33bn was distributed in the form of a dividend to the government of Québec. Hélène Fortin, chair of Loto Québec’s board of directors, said that although this figure was less than in FY2019, it remained above target for the year.
Fortin added that she was pleased to see how the business adapted to the effects of the pandemic.
“The board is also pleased with the reaction of Loto-Québec in the context of the pandemic,” she said. “In addition to having taken quick action to protect the health of its customers and employees,the organization has made several gestures of generosity to contribute to collective efforts and support the most vulnerable.”
The lottery shut down kiosk sales because of the outbreak from March 21, having already shuttered its land-based casinos and gaming halls weeks before. Sales did not resume until May. Casinos and gaming halls, meanwhile, began reopening from July, with social distancing measures in place and capacity reduced.