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Scarcity of large jackpots drives Loto-Québec revenue decline


Loto-Québec has reported a 4.4% decline in revenue for the first quarter of its 2019-20 fiscal year, with a low number of large jackpots leading to a drop in the contribution from its lottery vertical.

Total revenue amounted to CAD$656.1m ($789.1m) for the three months to 30 June, with lottery revenue falling 11.6% year-on-year to $216.0m.

Loto-Québec president Lynne Roiter said this was due to a smaller number of “MaxMillion” prizes offered by the Lotto Max product, which occur after the jackpot reaches at least $50m. The period saw just 32 MaxMillion prize pots on offer, compared to 199 in the prior year.

The lottery vertical saw an increased contribution from online sales, with revenue up 7.1% to $7.6m.

The largest portion of revenue again came from gaming establishments, including gaming terminals at bars, which brought in $232.6m, down 0.6% year-on-year. The small decline was due to a lower contribution from machines in bars, and was partially offset by increased revenue from gaming halls.

Revenue from the state’s land-based casinos fell 0.2% to $213m as revenues at the group’s two largest casinos ⁠— in Montreal and Lac-Leamy ⁠— declined slightly to CAN$118.2m and CAN$59.1m respectively. Casino de Charlevoix also saw revenue fall, down 11.4% year-on-year.

However Loto-Québec’s Mont-Tremblant venue reported a increased revenue, albeit from a low base, to $4.1m.

The biggest growth was recorded for the operator’s EspaceJeux igaming offering, which saw revenue grow 30.9% year-on-year to $21.6m.

Roiter said that the period saw an impressive number of innovative new products introduced by Loto-Quebec.

“The gaming halls, bingo and Kinzo are growing,” she said. “Several innovations were deployed during the quarter in our various sectors.

“For example, changes have been made to the Lotto Max, original scratch tickets have been brought to market […] and our network bingo has been the subject of a redesign.”

Total expenses declined 1.4% to $202.8m, as tax bills and personnel expenses increased, but operating expenses fell.

Cost of sales declined slightly from $119.2m to 114.2m, driven by declines in the cost of sales of lottery products to $43.6m, again driven by the low number of MaxMillions jackpots.

Casino cost of sales increased from $13.3m to $14.3m, while gaming establishment cost of sales saw a decline of less than 0.1%, to $56.3m.

Personnel was Loto-Quebec’s largest expense, at $102M, up 4% from last year. Taxes on goods and services increased 15.5% to CAN$3m and Quebec sales taxes increased from $5.2m to $6m.

Lottery operating expenses declined from $18.9m to $15.7m, while for casinos costs were down marginally to $34.1m. For gaming establishments, operating expenses fell CAN$10.3m to CAN$9.2m.

Depreciation costs fell 18.5% to CAN$25.5m, though an extra $1.8m expense was incurred from the deprecation of assets under the right of use.

This left a net profit of $337.4m for the quarter, down 6.2% year-on-year.