Cherry pulls Klubblo lottery backing
Casino operator takes hit of nearly 1m as regulatory change in Sweden impairs sports lottery business
Cherry AB is to “phase out” its involvement in Swedish sports lottery Klubblo after a recent amendments made to lottery regulation in the country effectively reduced the size of its potential market.
Klubblo, which launched last year, provides online lottery games for a variety of sports associations, however the Swedish gaming regulator has since changed its regulatory framework so that lotteries must only partner with members of the country’s sports alliance network Idrottsalliansen.
Furthermore, major federations, including the Football Federation and Ice Hockey Federation, are prevented from joining the Idrottsalliansen due to current exclusivity agreements with Swedish gambling monopoly Svenska Spel.
“The goal was that Klubblo, with its focus on the grass root sports, would take a strong position as a partner to Swedish sports within the area of gaming and lotteries,” Fredrik Burvall, acting Cherry CEO, said.
“Under the prevailing conditions, Klubblo does not fit into Cherry’s strategy,” he added.
The company said financial implications of the decision would be reflected in its forthcoming Q4 2014 results with liquidity – or cash holdings – set to be reduced by approximately SEK1.5m (160,000) while SEK7.7m (820,000) in restructuring costs would be charged to financial income from associated companies.
The company also took the opportunity to reiterate its growth plans via a long-term strategy “to grow within online gaming, both organically and through acquisitions, with the goal to quickly reach profitability”.
Earlier this week Cherry announced it had made a strategic 1.4m investment in Nordic-facing affiliate business Game Lounge, with a conditional agreement to invest a further 2m into the business next year.