The Newgioco Group, a provider of online wagering services, reported that its income for the initial six months of 2020 experienced a decrease of 18.5% compared to the same period in the previous year. However, the company’s net deficit was cut in half due to a reduction in operational expenditures.
Earnings for the six-month period ending on June 30th declined by 11.1% to $210 million. Online revenue saw an increase of 4.0% to $182.2 million, but this was counterbalanced by a 54.4% drop in retail revenue. During this time frame, Newgioco’s 150 betting establishments in its primary Italian market were closed from March 8th to May 4th due to the COVID-19 outbreak, along with the cancellation or postponement of significant sporting events.
All land-based betting shops and kiosks did not resume operations until June 19th.
Following the payment of $192.5 million in winnings, Newgioco’s gross gaming revenue decreased by 14.6% to $17.6 million. After paying $2.6 million in Italian gaming taxes and $24,797 in platform revenue (a decline of 85.7%), Newgioco’s revenue for the first half of the year amounted to $15 million, representing a year-on-year decrease of 18.5%.
The closure of retail outlets and the suspension of sporting events did result in a reduction in operational expenditures for the period, which decreased by 21%.
Operational deficits shrank to $896,472 as sales decreased by 5% to $15.9 million.
However, other expenses plummeted, from $2.6 million in the initial six months of 2019 to $881,377. This was due to a $722,500 profit on marketable securities, a reduction in interest expense to $173,073, and a 64.3% decrease in debt amortization expense to $737,074.
This resulted in a pre-tax loss of $1.8 million, which, after subtracting income taxes of $590,097, led to a net loss of $2.4 million, down 51.6%. After taking into account a $93,514 foreign exchange loss, Newgioco’s combined loss for the first half of the year declined 50.3% to $2.5 million.
Previously, second-quarter sales dropped 47.2% to $4.8 million. However, revenue for the three months ending June 30 fell only slightly, by 5.2%, to $94.1 million, as growth in online wagering offset a decline in retail betting to $4.2 million.
Costs and expenses decreased 29.0% to $6.8 million, resulting in an operating loss of $2 million, considerably higher than the $523,703 loss in the same period a year ago. Similarly, other expenses fell sharply due to lower interest expense, reduced debt amortization expense, and profits on marketable securities.
However, this still resulted in a widening loss due to the decrease in revenue for the quarter. The pre-tax loss expanded to $2.5 million. After subtracting income taxes of $62,059, Newgioco’s net loss grew 42.0% to $2.5 million, and after deducting a $18,516 foreign exchange gain, the period’s consolidated loss was $2.5 million, up 46.7%.
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