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Loto-Québec sees igaming contribution grow in 2018-19 financial year


Canadian provincial lottery operator Loto-Québec has reported a 3.1% year-on-year increase in revenue to CAD$2.83bn for its 2018-19 financial year, with the contribution from its igaming offering growing to $105.4m.

For the 12 months ended March 31, 2019, Loto-Québec’s gaming establishment business, comprising gaming machines in bars alongside gaming, bingo and Kinzo halls, generated revenue of $979.5m, down 0.2% from the prior year. 

Loto-Québec president and chief executive Lynn Roiter attributed this to lower revenue from the network of machines in bar and restaurants, following a drive to reduce video lottery terminal (VLT) numbers across the operator’s network. Completed in December 2018, this saw the number of devices in service across the province reduced below 9,900. 

The lottery business was the second-largest source of revenue, with the year’s total of $955.7m representing an 8.7% year-on-year rise. The division had a “remarkable” year, Roiter said, as a result of high jackpots offered on the Lotto Max game, and supported by growth in betting and instant win games. 

Draw based game revenue rose 8.0% to $752.3m, with instant win games contributing a further $172.3m (up 12.9%). Sports betting, meanwhile, saw revenue increase 7.9% to $31.1m. 

The casino business – including online – also grew, albeit at a slower rate, with revenue up 1.2% to $917.9m. This, Loto-Québec noted, was aided by themed promotions to drive visitor numbers, resulting in visitor numbers across all venues reaching 10m.

While revenue for online gaming was split across the lottery and gaming establishment divisions, resulting in a $26.0m deduction from the full-year total, it amounted to $105.4m, up 23.2% year-on-year. Roiter attributed this to a project completed in Loto-Québec’s 2017-18 fiscal year, which saw a new portal launched to make it easier for customers to navigate between different product verticals. 

Online lottery revenue was up 34.6% from FY2017-18 to $28.6m, with a further $76.8m coming from online casino. 

Over the year a total of $1.16bn was paid out in winnings to players across the three divisions. 

Cost of sales amounted to $500.6m, largely comprising of commission paid to lottery and gaming establishment retailers, which accounted for $349.8m (69.9%) of the total. This left a gross profit of $2.33bn, up 2.2% from FY2017-18. 

Loto-Québec’s total expenses for the year, including personnel costs, sales and product taxes, amounted to $918.3m, down 2.3% year-on-year. This left a net profit of $1.41bn, up 5.4%. 

This allowed the operator to increase the dividend paid to the state of Québec to $1.38bn, with a further $181.6m paid out to the governments of Québec and Canada.

“Over the past five fiscal years, even with our total revenues on the rise, we’ve maintained tight control over our expenses. That’s helped to improve our productivity,” Roiter noted. 

“The ratio of net income over revenues has also risen from 45.5% in 2014–2015 to 49.8% in 2018–2019. 

“All of our business sectors are contributing to the increase in net income, which reflects the efforts being made right across the corporation.”

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