Sports Toto’s 2QFY24 sees lower gaming, motor dealership revenue

Sports Toto Bhd’s (Sports Toto) net profit for its second quarter of financial year 2024 (2QFY24) was down 62.7 per cent year on year (y-o-y) to RM24.2 million due to lower revenue and higher operating cost for both the gaming and motor dealership operations.

Its cumulative first half (1HFY24) results were below expectations, accounting for only 40 and 39 per cent of Public Investment Bank Bhd (Public Research) and consensus fullyear estimates.

“STM Lottery reported a 6.3 per cent decline in revenue primarily due to fewer number of draws conducted – namely 42 draws versus 48 draws in 2QFY23.

“2QFY24 net profit declined by 62.7 per cent y-o-y, mainly dragged by higher prize payout and operating cost for the gaming segment. Also, the motor dealership earnings was dragged by higher operating, depreciation and interest costs.”

Following the completion and full operation of the Hatfield Centre, Sports Toto’s depreciation charges have increased while the increase in interest rate has led to higher finance cost.

As a result, this segment posted an operating loss of RM6.9m compared to a profit of RM2.7m in 2QFY23.

“The legal numbers forecasting operator (NFO) business is seen as a matured industry with limited variation to its product offerings,” it said.

“As the operations are largely governed by authorities, it remains a challenge for NFO operators to introduce new games in order to compete with the illegal operators.”

Over the years, legal operators have been losing market share as the preferred mobile betting is prohibited under the Pool Betting Act 1967 while illegal operators are not subject to the same restrictions, leading to an uneven playing field.

With the closure of outlets in the two northern states (Kedah and Perlis), Public Research said illegal operators have now further encroached into these underserved areas, activities of which can be curtailed if amendments are made to current legislation.