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Paf has achieved a record revenue of €177.1m (£150.8m/$191.4m) in its 2023 financial year, marking a 6.9% increase from the previous year. The Nordic gaming operator also posted a notable 23% rise in net profit to €55.1m, setting a new annual record. However, alongside this financial success, Paf has issued a warning about the potential negative impact of rising gaming taxes on future profitability.

CEO Christer Fahlstedt acknowledged the positive financial results in a company press release while cautioning about the future. He highlighted that increasing gaming taxes in several markets are likely to affect net profits in the coming years.

In Finland, the temporary reduction on lottery tax has concluded, raising the rate from 5% to 12%. Similarly, the gambling tax in Sweden is set to increase from 18% to 22%, while Estonia and Latvia will see their rates rise from 5% to 6% and 10% to 12%, respectively.

“We can be happy and proud with the past year,” Fahlstedt said. “We have gained a larger customer base, and the number of active customers has increased by 27%, which explains some of it. However, we are also well aware that the temporarily low gaming taxes in Finland have helped the result. The trend of increasing gaming taxes will continue.”

Fahlstedt also discussed the impact of enhanced responsible gaming measures. Paf recently reduced loss limits for players aged 20 to 24 to €8,000. This follows an earlier adjustment in April 2023, when the mandatory online loss limit was lowered from €20,000 to €17,500.

“Changes will result in reduced profitability and many operators will find it more difficult,” Fahlstedt stated. “But Paf is well prepared for the times ahead.”

Sources of Growth in Detail

A detailed analysis of Paf’s 2023 revenue performance reveals the sources of its growth. The operator’s online business saw an 8.2% increase, bringing in €153.8m. Strong growth was particularly noted in Sweden, Spain, and Latvia. The latter benefited from Paf’s acquisition of Latvia-facing William Hill Latvia SIA and SIA Mr Green in June 2023, which added €5.1m to online revenue.

Paf also experienced a 27.3% increase in registered online customers, reaching a record 615,557. The company expects this number to continue growing in 2024, supported by ongoing marketing efforts. Conversely, revenue from Paf’s land-based and ship segment decreased slightly by 0.9%, totaling €23.3m. This decline came despite a 4% increase in the overall number of ship passengers in 2023.

Paf secured new agreements with Tallink Group and Eckerö Linjen and welcomed the new Finnline ship, M/S Finnsirius. Additionally, Paf launched its first land-based GameRoom in partnership with Pikseli in Helsinki, offering a mix of amusement games and entertainment.

The company also noted a rise in cashless payments, with all amusement games and nearly half of the money slot machines now offering cashless options, meeting customer demand for smoother payment methods.

Regarding expenses, the cost of materials and services increased by 7.9% to €42.6m. Staff costs remained steady at €24.2m, while depreciation and impairment saw a slight rise to €10.6m. Other operating expenses were reduced by 2% to €52.9m. Paf also benefited from €723,605 in net financial income.

As a result, Paf achieved a pre-tax profit of €60.0m, marking a 27.9% year-on-year increase. After accounting for €5.2m in taxes and €305,468 in deferred taxes, the net profit for 2023 stood at €55.1m, up 23%. Additionally, the higher revenue and profit enabled Paf to distribute €31.4m in funds throughout 2023. These funds support various societal benefits, including social activities, culture, youth work, sports, and environmental initiatives.

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