Online gambling operator Kindred Group reported falling profits in the first quarter of 2019 thanks to rising costs in Sweden’s new regulated market.

On Wednesday, the Stockholm-based Kindred reported revenue of £224.4m in the three months ending March 31, an 8% improvement over the same period last year. However, earnings slipped 35% to £30.6m and after-tax profit was cut nearly in half to £15.1m.

The company blamed the falling returns on the need to distinguish itself from the herd of new online licensees in Sweden’s regulated market, which launched January 1. Kindred offered bonuses to all its legacy and new Swedish customers, and CEO Henrik Tjärnström said the “significant uptake” on these offers resulted in overall bonus expenditure coming in £6.6m higher than in Q1 2018.

The Swedish market also cost Kindred an extra £3.8m in marketing costs and £5.2m in additional betting duties. All told, the launch of Sweden’s new market reduced Kindred’s Q1 earnings by £18.9m. Tjärnström said the company expected “significant short-term margin pressure” but remained confident that its efforts would ultimately pay off in spades.