Enlabs Updates Impact of COVID-19 on its Operations
The Latvian Government has released the amended version of the law “On Measures for the Prevention and Suppression of Threat to the State and Its Consequences Due to the Spread of COVID-19”. But none of the sections of online gaming had been included in the amendment.
In such a situation, Enlabs assess that the Latvian gaming authority will officially send out written orders temporarily suspending all online gaming licenses in the country during next week. Until this order comes into effect, Enlabs Latvian online operations will remain open without risk of breach of any regulation.
The license suspension will remain effective as long as a state of emergency is declared by the government of Latvia. Currently, the state of emergency is until April 14.
Latvia is a significant market for Enlabs’ operations. The financial impact will depend on the time span of the temporary license suspension. Enlabs can manage its cost base efficiently as 50% of costs are direct meaning will not occur without revenue.
Enlabs expects that it can operate during this period on a break-even level on its bottom line. Both online and land-based gaming license suspension in Latvia will create strong pressure on competitors which are not geographically diversified. Enlabs has a strong financial position to withstand and in the longer-term benefit from this temporary turbulence.
During the time of Latvian online license suspension, Enlabs will perform a critically important technology migration of its Latvian business from the old to the new gaming platform. This migration will bring significant user experience and operational improvements. Operational improvements will result in a shortened time to market of any new product and content release as well as estimated cost savings of approximately 1.0 Meur annually. Work on the launch of online gaming operations in Belarus is proceeding as planned. Enlabs expects to make significant progress on this project during Q2 2020. Enlabs main priority is to keep the team intact and safe.
“We did not expect such a political development in Latvia. It is clear that governments all over the world aim to demonstrate care of their people. Main argument of Latvian parliament voting for temporary suspension of online gaming operations was to protect the financially vulnerable people from excessive expenditure. In our opinion this goal will not be achieved as suspension of regulated market will only open doors for illegal operators. Customers received significantly higher protection with us in the business offering a vast set of gaming behavior controlling tools and integration to the central self-exclusion registry. But in these unprecedented times common sense sometimes is not an argument and we think that globally, other countries might follow this trend if the corona virus situation does not improve soon. Our goal is to create entertainment and do it in a safe manner. This adverse regulatory development will demonstrate to the politicians that the real threat to the financially vulnerable people are the illegal operators. Hopefully our voice about balanced regulation and market protection will get heard after the COVID-19 crisis. This is a temporary lockdown which we will easily survive. Upon return our Latvian customers will see an enhanced product and we will achieve new heights. Meanwhile we get back to work. This time will require even more effort from the team than before. We will take care of each other and will come out strong,” George Ustinov, CEO and Group president, said.