First quarter 2017 was a solid quarter for Betsson. We continued our strong casino performance. We continued the conversion of revenues from markets with higher margin into locally licensed revenue. We continued our very strong growth in the Nordics, as we indicated last quarter, we turned back the Western European region into strong growth, growing in the period with 16%. During the quarter, we also migrated Europe-Bet to our common Techsson platform, and the acquisitions of NetPlay in the U.K. and the licensed operator Premier Casino in Spain was completed. Total revenue in the quarter grew by 10.2%, of which the majority, 78%, was organic, taking us to a total of SEK 1.1 billion for the first quarter. This despite the quarter being somewhat suppressed by lower than average sports book margins throughout the quarter, particularly in February and March. We continue to have strong underlying activity.
Our deposits are growing by 8%, despite currency headwinds in Central, Eastern, and Central Asia region. We have an all-time high in active players, over 600,000 active players in the quarter. EBIT was SEK 241 million, slightly down 3.7%. This is partly or to a large degree related to the 50% increase we have in betting duties paid for local licenses in the quarter, now amounting to just above SEK 43 million. We also have negative currency impact on the EBIT line of about SEK 19 million. Sports book margin in the quarter 6.1%, compared to the rolling eight-quarter average of 6.6%. Looking at the quarterly revenue or quarterly development, revenue, as mentioned, up by 10%. Earnings per share slightly down due to the previous mentioned factors of local gaming taxes and currency, but also to slight increase in financing costs due to the bond we set.
Bridging the revenue from the first quarter last year to the first quarter this year, it's clear that we are growing very nicely in the very competitive region of the Nordics. We grow also now very nicely in Western Europe. The CECA region continues to be challenging, both due to the currency, the pretty steep drop in the Turkish lira we have seen throughout the quarter, as well as due to very low sports book margins at times. Rest of the world continue to grow nicely. Looking at the long-term trends for EBIT and the revenue, we know that Q4 is normally the strongest quarter. Consequently, the Q1 revenues are slightly below the Q4 number. We have had, as I mentioned, a low sports book margin throughout the quarter, particularly during February and March. On EBIT, SEK 241 million.
This is done despite a 16% decline in the Turkish lira throughout the quarter, which obviously puts pressure on our license fees from our associate partner, Realm Entertainment, and consequently our EBIT. We have a 50% increase in the betting duties paid, now amounting to, as I said before, SEK 43 million paid in the quarter. The trend we're seeing as converting revenues into locally licensed revenues will continue, and over time, we will be able to reap the benefits of this. Short-term, it puts slight pressure on our margins. However, having said that, we also see that the regulated markets that we're in, such as U.K., Italy, is some of our fastest-growing markets. The trend that we have talked about for over a year now is clearly there, that the growth tend to increase in pace following legislation or local regulation.
On the topic of the conversion of our revenue base, I wanted to sort of illustrate how this has looked from the first quarter in 2015 until the first quarter 2017. This conversion is fully in line with our strategy to grow our locally licensed revenue and our share of locally licensed business. If you look in Q1 2015, we had the acquisition of Europe-Bet, which added a chunk of locally licensed revenue for us. At that time, our associate partner, Realm, was 23% of our revenue, and our locally licensed revenues was about 8% of our total. Moving one year ahead to 2016 Q1, we had added four jurisdictions, four local licenses.
We have started to see a quite dramatic fall in the Turkish lira, which had as a consequence that our Revenue from our associate Realm declined to 14% of our total, while our share of locally regulated revenue grew from 8% to 13%. Looking into this quarter, Q1 2017, the trend continues. Our locally licensed revenue is now over 20%, and the share from our associate partner Realm is below 12%, 11.6% to be precise. On top of that, we have then, of course, acquired more revenue in locally licensed markets, NetPlay in the U.K. and so forth. We also see in the quarter a continued drop of the Turkish lira. This is a trend we've seen for the last two years, and this is a trend that will continue.
Underlying and fundamentally, we see this as very positive and in line with our strategy to convert our revenue base. Looking then a bit more in detail on Realm and the licensed revenue from our B2B associate. The revenue, the license fees in the quarter was SEK 128 million. This despite a 16% currency decline in the quarter, a currency decline that the year-on-year comparison continues into the second quarter. However, we did see 9% growth in local currency, and we had a slight growth also in the previous quarter. We see somewhat change in trend when it comes to the local performance of the company. I've been saying for quite a while now that we've seen a stabilization of that business, and I repeat that, and we see continued stabilization.
We actually saw some growth, but I would say that growth is still fragile, and I would like to stick to the statement that we see continued stabilization. Realm is now 11.6% of group revenues, and as I said, stable outlook in local currency, and we have continued currency uncertainty in that business. Clearly, we're very excited about the growth in Western Europe. Very competitive region, and region in Western Europe now with the growth of 16% in the quarter is bigger than our CECA region. Nordics also grow very strongly at 14%, and I think it's fair to say that we take market shares in both those regions at the moment. Decline in CECA, primarily due to the 16% drop in the currency, as I mentioned before, but also due to various low sportsbook margins.
As indicated before, we continue to see recently weak outlook for the CECA region for the next quarter or 2. On the product side, casino grew incredibly strong at 23%. Our mobile casino grew by 65%. Again, it is fair to say that we take significant market share in the casino space. Again, casino represents 75% of Betsson's business overall. Sportsbook down 15%, primarily due to the lower sportsbook margin that are well-known at this point and our negative currency fluctuations. Looking at the underlying sportsbook business, the turnover bit. Although the sportsbook turnover is down on the top number from SEK 6.7 billion to SEK 6 billion, the underlying turnover on our B2C brands is actually up 15%. It is important to remember that the total turnover number for sportsbook includes 100% or consolidates 100% of our B2B turnover while our license revenue share is obviously not 100%.
Reiterate sportsbook margin at 6.1%, and the eight-quarter rolling average is at 6.6%, which is a quite significant deviation. Other than strong underlying sportsbook turnover growth for our B2C business, we see strong underlying growth in active players, all-time high in active players for the quarter, and deposits up 8% despite currency impacts. A little bit about our business. NetPlay acquisition. Most of these numbers are known by now, but the total consideration of GBP 26.4 million, net of cash, that equals about GBP 19 million. The acquisition closed on the 31st of March this quarter. We expect revenue for the full year 2017 to be around GBP 25 million. We are starting to extract the synergies, but we are also having some restructuring costs in doing so. The EBIT effect of the acquisition in 2017 will be limited.
A long-term view of NetPlay, and it is very important for us to strengthen our position in the market. With this addition of GBP 25 million in locally regulated revenue, we feel we are very well positioned to continue to grow strongly in the U.K., which is obviously one of the world's largest gaming markets. Also closed the acquisition of Premier Casino, locally licensed operator in Spain. This is a perfect example of a sub-scale operator that really do not have the volume to be able to grow in a regulated environment. The acquisition closed on the 31st of March as well, consideration of EUR 3 million. That gives Betsson access and a foothold in the Spanish markets. It is also important to mention that although this is a casino-only operator, they do have all licenses, including a sportsbook license.
260,000 registered customers. It will be rebranded and operated under the name of StarCasino, which is the same name as our casino operator in Italy, obviously. On the product side, we added some products, snooker, to our sportsbook offering. Added more live markets. Interesting to note, Betsafe was also the first operator to actually pay out on Chelsea as Premier League winners before the Manchester United game a few weeks back. We have a lot of exciting things coming in our sportsbook in the second quarter that I will talk to you about next time we meet. Casino, we are now at almost 1,500 games on mobile, continue and reinforce our position as the world's largest casino. A number of exclusive games launched. One of the most exciting one was, of course, Blood Suckers 2, which was a huge success. Europe-Bet migration.
It took a while. It was one of the most complicated migrations we have undertaken, but it's now migrated to our Techsson platform, and it gives them access to a brand-new mobile casino, mobile solution, which clearly is the best mobile offering in that region. We have high expectations of that coming into the latter part of this year and in 2018. On the regulatory side, then, we added license to our portfolio. We now have 11 licenses across Europe. We had 20.3% of our revenue was locally regulated or locally taxed. We paid SEK 43.3 million in betting duties. As you all know, there has also been a report in the period on the Swedish new law for gambling regulation. This proposes an 18% tax on GGR. It proposes licenses for all products, and implementation of that estimated to be at the earliest Q1 2019.
As for the re-regulation of the Netherlands, there is some uncertainty around that, but as it stands now, we look at mid-2019 for an implementation of that license. Short trading update on the revenue side. The revenue in the beginning of the second quarter was higher than the daily average for the same quarter last year and lower than the daily average for the first quarter 2017. Again, that is in line with seasonality, where the second quarter is normally seasonally weak. The underlying activity, however, turnover, actives, deposits, remains very strong. Other outlooks or outlook. As I said, second quarter is normally seasonally weak. We will continue to invest in marketing and in our product development.
As a consequence of that, our operating expense in the second quarter 2017 will grow slightly more than 10%, including acquired entities, compared to the operating expense for the first quarter in 2017. I talked about conversion of our revenue base. We expect that our revenue from regulated market will continue to grow. The conversion will continue. This results, as I said, in lower margins over time, which is in line with our strategy to transform our business to a higher share of regulated revenue. It's also important to say that, again, reiterate, we do see this as a very positive thing because the local regulations creates new opportunities for growth. Before we open up to questions, I wanted to introduce you to the newest member or one of the newest members of the Betsson family.
Arguably, Sweden's biggest athlete, possibly behind only Zlatan Ibrahimović at the moment, Olympic gold medalist, world record holder, 100- butterfly. Welcome to Betsson, Sarah Sjöström. I wanted us to just listen to Sarah and what she has to say about her challenge working with Betsson.
It takes enormous amounts of training to break eight world records. This might be my biggest challenge yet.
Obviously, you all wonder what that is, but follow that space on betsson.com. Thank you so much for listening. I would like to open up for questions.
Okay, thanks. Martin Arnell with DNB. My first question is on the trading outlook for Q2. You mentioned you're up year-over-year, but down quarter-over-quarter. It's normal seasonality, I guess. Could you also comment on the performance of the sportsbook margin in April?
Yes. Sportsbook margin in April has been on the low side, and I think that's no news at this point. I saw some of our colleagues commenting the same way yesterday. It's been very low coming into April. However, as we know, it tends to even out over time.
Okay, thanks. Do you care to give any sort of comment on the OpEx for the full year? You have now started to guide a bit on the next quarter, what do you see in sort of the medium term on the OpEx growth?
You always want more, huh? No, we don't guide on that. What we've said previously is that last year we had a step change in cost of personnel and other costs, those two line items. We're not going to see a step change this year, we will increase our marketing expenditures somewhat.
This one Betsson group initiative that you have taken in the casino, you're about to launch that in the sportsbook. Can you tell us more on that, the timing and also, what sort of expectations do you have on that for sportsbook? Is the similar effect you expect there as in casino?
We've done a very extensive job on the OBG, generally. Rolled out casino, you all seen the effect of the OBG rollout on casino, growing 20% last quarter, 23% this quarter. The rollout for the OBG sportsbook will start during this quarter, towards the end of this quarter, on betsson.com will continue to be rolled out during the fall. We have obviously very high expectations of that as well. We feel that product, and we've talked about that before, is due for an update. Effect of that, we should be able to expect towards the fourth quarter.
Okay. When you're in the casino, what's the main driver of your casino growth when it comes to product? What's the most successful product you have now in the casino?
In terms of-
Live or slots or, I mean-
Yeah. We grow very strong in all verticals. Obviously, live is coming from slightly lower levels, percentage-wise, the live numbers will stick out and look incredibly impressive. The product as itself and what's driving the growth is the experience. It's the total end-to-end experience that we feel possibly and arguably is second to none at the moment.
Finally, just on Turkey, you're back at growth in local currencies. Anything that you could share on the local performance that, any initiative that Realm has taken that you feel is behind this or any more color on the performance in Turkey?
No, we work very closely with them, to help them any way we can throughout this period, some of those initiatives are clearly having some effect. Realm is also eagerly awaiting the OBG sportsbook rollout towards the fall, which will help them further. They've done a better work, clearly, this quarter than previously. Again, I wanted to reiterate that I look at it as a very fragile return to growth, I wouldn't rule out that we will be flattish again at some point. We still have some more work to do, with that, I primarily refer to the OBG rollout of the sportsbook. That is one of the key components for Realm to get back to the growth number that we have been used to.
Thank you.
Hi, Christian Hellman from Nordea. A question on the guidance for this quarter. At the time of the Q4 report, you were talking about OpEx in Q1 being up in the high single digits, it came in at flat. What happened to the costs.
Well, it's basically.
In Q1? Why didn't it decrease?
Yeah. It's basically us managing the business. As I said, the first quarter started very strongly. We had a very challenging bit in mid-quarter, starting 26th of February, coming into March with very low sportsbook margins. We decided to postpone some investments that was planned at this point into the second quarter, basically to manage our business.
All right. The cost that you were planning on taking, you will take, and that's why you're guiding for plus 10%.
Yes
into Q2?
Yes.
All right.
Correct.
A question just on acquisitions. NetPlay, when will that be migrating to Techsson? Do you have any timeframe for that, or?
The timeframe we said is 2019, simply because of the reason that's when the current agreement expires. Obviously we will at some point have discussions about breaking those possibly earlier or making some sort of commercial agreement. At this point, current best thinking is that this will go on that platform until that agreement expires.
Which platform are they on right now?
They're on Playtech.
They're on Playtech. All right. Okay, thanks.
Questions from telephone conference?
Thank you. Ladies and gentlemen, if you do wish to ask a question, please press zero on on your telephone keypad and you will enter the queue. Our first question comes from the line of Rasmus Engberg from Handelsbanken. Please go ahead, your line is open.
Yes, good morning. I wanted to ask you some detailed questions on, firstly, you have a profit tax in Georgia. Is that reported in betting duties or in the profit tax?
You have a profit tax in Georgia. The profit tax is reported in the betting duties number, as long as they're not fixed fees for licenses. If they're fixed fee for licenses, they're excluded.
Okay. Thank you. Then I wanted to ask you about how much acquisitions contributed. You gave us a figure for casino and then for Western Europe, TonyBet was more than casino, right? It was a sports betting operation, or is that discontinued?
No, it continues.
More than these two figures.
Yeah. We haven't reported TonyBet separately. That business continues and performs in line with the rest of our business.
Basically, what would you say the contribution from acquisitions to sales is in this quarter?
Well, we haven't said that specifically, but what we said was of the 10 point something- percent growth, about 7%-8% was organic.
Okay. Would you be willing to report this going forward, what the actual organic growth is? Just to increase the transparency.
Yes, we will also report NetPlay separately, coming into the second quarter.
On that matter, it's great that you report betting duties. Are you able to share with us the other quarters except Q1? I mean Q2, Q3, Q4 last year, for example.
We haven't done that in this report. Let me look into that and we'll get back to you, Rasmus.
Okay. Thank you. Finally, I just wanted to ask you again on the cost guidance. It seems that you have a very high flexibility on your cost side, because this is not the first quarter where you say that costs will increase much more, then when revenues don't follow plan, you cut back. Is that affiliate marketing or regular marketing? What is it that is so flexible? Because it can't be staff, right?
No, it can't be staff. Consultancy, of course, are flexible as well. I wouldn't say very flexible. I think that's a bit of a strong statement. There's always some flexibility in the P&L, obviously. Like I said, we try to manage this to the best of our ability to make sure that we adapt in the way it's possible to the current market conditions. I think you mentioned a few line items, and I think it's all of the above.
The difference between flat OpEx and mid to high single-digit growth is basically rapid cutback on marketing, or is that correct?
Like I said, your consultants, your affiliates, and you have the marketing line item that you can basically work around, yes.
Copy. Thank you.
Thank you. Our next question comes from the line of Viktor Bellak from SEB. Please go ahead, your line is open.
Yeah. Hi, good morning. I have a question. I don't know, can you hear me? It sounds a bit weird on my phone.
Yeah, we hear you.
It seems like I have a hard time seeing that top line will be up sequentially, given how April started. Of course, there's some sports book quarter-on-quarter effect in that and everything, but there's also some seasonality within the quarter and everything. If top line wouldn't be up this next quarter, you still see a 10%+ increase in OpEx?
First of all, like I said before, you got to bear in mind that the second quarter is seasonally weak.
Yeah, of course.
Sequential growth, organic, quarter-on-quarter between first and second quarter is reasonably rare.
Yeah, of course. I'm not talking organic. I'm talking with acquisitions.
That we don't guide on, obviously. What we've said is that the revenue for the start of the quarter has been above that of the average of last year and below that of the average of the first quarter.
Yeah. Okay, thanks.
Thank you. Ladies and gentlemen, if you do wish to ask an audio question, please press zero one on your telephone keypad now. As there appear to be no further audio questions, I will return the conference to the speakers.
Do you have another question, Martin? There is no questions from the chat.
Yeah, just a follow-up question from me. At the last reporting, I think you mentioned that 2016 was a year with a lot of focus on development and that you saw an opportunity this year to go out and market this new product. Do you still repeat that communication, and could you give us some flavor of what kind of effect you see on earnings from this sort of shift?
Well, I still stick by that statement. I think if you are looking over the year, we see increased opportunity to market the product throughout the year, depending on, of course, how quarters develop. On the second question, I think we have said that the increase of locally regulated revenue will have some impact on margins over time, as we saw in the slide. The marketing investment should not be impacting that. Should more be a shift from our development into our marketing, generally speaking, over the year.
Okay. Thank you.
One question from the web. Can you please be a little bit more specific on the growth in the U.K. and Italy? What are the main drivers behind the growth?
Well, last quarter we were quite specific on the growth in Italy and the U.K. We don't intend to keep reporting those markets individually. What I can say is that the drivers in the U.K. is what I've been talking about for a long time, and it's our casino product and our casino experience, our casino offering that I think holds up very well in these markets that tends to have a casino product or still have casino product that are single supplier solutions and so forth. Of course, in that environment, our casino product holds up very well.