A sharp decline in operating income has sparked a sell off in Betsson shares despite the group maintaining steady revenue through the end of 2025. Heavy tax burdens and a slowdown in the Nordic markets have forced the operator to lean on its casino vertical and emerging Latin American territories to sustain its global position.
The Swedish gaming giant Betsson has seen its share price take a significant hit following the release of a preliminary financial update for the final quarter of 2025. Investors reacted poorly to news that operating profit is expected to plummet to 53 million euros, which represents a sharp 24 per cent decline from the 70 million euros reported in the same period a year ago. This profit squeeze comes despite the group maintaining a stable revenue stream of 304 million euros compared to 307 million euros in the previous year.
The primary driver behind this bottom-line erosion is a combination of rising operational costs and a shifting regulatory landscape. Betsson reported that its share of revenue from locally regulated markets reached a record high of 68 per cent during the quarter. While this move provides greater long-term stability, it has come at a price. Total gaming taxes surged by 23 per cent to reach 53 million euros for the three month period. Additionally, the company saw an increase in personnel expenses and continued spending on its internal product and technology platforms.
Regional performance during the quarter was notably split. The Central and Eastern Europe and Central Asia region remained the largest contributor, although revenue there fell by 9 per cent to 120 million euros. The Nordic markets suffered a more painful 15 per cent drop, with revenue landing at 34 million euros. These downturns were partially mitigated by strong double-digit growth in Western Europe, where revenue climbed to 61 million euros and steady progress in Latin America following recent launches in Brazil and Paraguay.
Product performance also showed a shift in the business mix. Casino revenue stayed strong with a small increase to 220 million euros but the sportsbook segment struggled. Sportsbook revenue fell by nearly 9 per cent to 83 million euros, hindered by lower margins and a decline in B2B license income. One specific B2B client reported significantly lower activity, which weighed heavily on the overall group figures. Gross margins for the quarter fell to 60.5 percent down from over 65 per cent in the prior year period.
Despite the immediate market reaction, the leadership team at Betsson is looking toward a recovery in 2026. Chief Executive Pontus Lindwall highlighted that the business remains diversified and that the significant investments made in proprietary technology will soon bear fruit. Early data for the first quarter of 2026 shows a slight uptick in average daily revenue. The group is particularly hopeful that the FIFA World Cup scheduled for later this year will provide the necessary spark to reignite growth in the sports betting vertical.
This latest update from Betsson is a classic case of the regulatory squeeze that many established European operators are currently facing. Having spent a decade watching this industry, I have seen many firms struggle to balance the transition from high-margin grey markets to lower-margin regulated ones. The fact that 68 per cent of their revenue now comes from regulated jurisdictions is a double-edged sword. It satisfies the compliance departments and provides a moat against legal risks, but it fundamentally alters the cost structure of the business, as evidenced by the record-high tax payments this quarter.
The slump in the Nordic region is particularly concerning because it was once the bedrock of the Betsson empire. A 15 per cent decline suggests that competition and strict local regulations in Sweden and beyond are finally taking a toll on their market share. While the expansion into Latin America and Western Europe provides a much-needed buffer, it is clear that these newer markets carry higher acquisition costs and different operational challenges. The decline in B2B revenue also highlights a vulnerability in their business model where the loss or underperformance of a single large partner can skew the results of the entire group.
Looking forward, the massive 20 per cent drop in share price feels like a visceral reaction to the margin compression rather than a lack of confidence in the brand itself. The 2026 outlook depends entirely on whether those increased personnel costs and tech investments can actually deliver a superior user experience that justifies the spend. With the World Cup on the horizon, there is a clear catalyst for a sportsbook recovery, but the company must find a way to stabilise its core Nordic business if it wants to regain the trust of the Stockholm market.
