Loto Quebec’s revenue fell 11.1% to $685.6m as a lack of larger jackpots slashed lottery revenue, while revenue from other verticals also declined in the quarter ended 31 December, the third of the operator’s fiscal year.
Of Loto Quebec’s $685.8m in revenue, $247.8m came from casinos, down 5.0% year-on-year. Gaming establishments (VLTs in bars and bingo halls) brought in $225.6m, down 8.2%, while revenue from lotteries – the largest driver of revenue in Q3 of 2018 – fell 19.5% to $219.2m.
Lynne Roiter, president of Loto Quebec, said that the decline in lottery revenue was due mostly to a decline from 2018’s unusually high number of MaxMillions draws, which occur when a jackpot of at least CAD$50m is not won. This lack of large jackpots also led to revenue declines in Q1 and Q2.
“On the lottery side, let’s first remember that Lotto Max had offered an exceptionally high number of Maxmillions in 2018-2019,” Roiter said. “The drop in income from this sector was therefore expected.”
The operator made $9.0m from online lottery sales in the quarter and $23.4m from online casino.
Loto Quebec’s costs of sales also declined, but at a slower pace,by 7.7% to $131.4m. Costs of sales from gaming establishments were the highest, at $58.1m, down 8.0%.
Costs of sales from lotteries declined 11.1% to $55.0m, while casino costs of sales rose 5.1% to $18.3m. This resulted in a gross profit of $554.5m, down 11.9%.
Loto Quebec paid $206.6m in expenses, down 8.1%. Personnel costs made up almost half of this, at $101.8m, down 7.7%. Operating and administrative costs for casinos came to $36.5m, while for lotteries this came to $21.5m and for gaming establishments $6.0m.
Depreciation costs of material items totaled $23.6m, down 24.4%, while Loto Quebec incurred a further $1.8m in depreciation expenses for right-of-use assets, a new cost for 2019.
Loto Quebec paid $5.4m in special payments and $3.3m in taxes on products and services, both increases form 2018.
These expenses resulted in an operating profit for Q3 of 2019 of $347.9m, down 13.6%. After $1.6m in finance related costs, Loto Quebec’s net profit for the quarter stood at $346.2m, also down 13.6%.
However, the operator said it is on track to meet its annual net earnings target of $ 1.295 billion.
Loto Quebec also received level 4 World Lottery Association certification for responsible gambling during the quarter.
“This testifies to the quality of our practices in this field, as well as their integration into our activities and our ability to ensure continuous improvement,” Roiter added.