WE SHOULD THINK ABOUT WHAT IS BEST FOR OUR CUSTOMERS

It is obvious that discussion about the future of gambling business is going on all over the world. It doesn’t matter so much what kind of legal structure you have in gambling business. Of course, there are many differences between monopoly based and license-based systems, but the main challenges & problems are same. The Danish gambling expert Morten Ronde, who I appreciate a lot, compared our situation to previous development of tobacco industry and attitudes against it. It’s possible that the public opinion might turn to be even more against gambling.

I agree with Morten that it sounds familiar when I think what has happened in public opinion about tobacco. Anyhow I don’t think that the same should happen. I admit that gambling will cause serious problems and that should effect on the ways how we run our business. But gambling or gaming is not dangerous for all of us. It’s more like alcohol than tobacco. I think that tobacco is dangerous for all smokers, but alcohol is not for all drinkers. I don’t have any facts about that but it’s just my personal feeling. Of course, alcohol like gambling will cause problems if you consume it too much.

What we should do then? It was again Morten Ronde who said that everything should start from operators. We should have serious will to make everything as good and safe as possible for our customers. If gambling companies just do things because regulator has forced them to do, the situation won’t change. Fake actions are not so effective than serious ones!

I’m not trying to tell what gambling companies should do in practice, but I try to describe the principles which could make things to be better. I have got idea about that from the strategy seminar of KPMG. I believe that if companies, in whatever business they are operating, would follow these advices their business would be better in long term!

You should be trustworthy. If your customers don’t trust on your operations, you are in big problems. You should take integrity issues seriously. It’s absolutely not enough if you just do something in that area and write nice text in your Annual Report but act in different way. Customers will notice that for sure and they will lose trust on you.

I believe in personalization! You should understand the needs of your customers and try to offer your products and services in personalized ways. I think that AI technology will help us here a lot. I hope that AI will help us also when it’s about potential gambling problems. I’m not deep expert on that area but I believe that AI could already quite soon recognize potential problem gamblers.

Maybe I say this too many times, but you should know what your customers are looking for. What are their most important expectations? You should have will to give your customers even better service than they expect to get. You could manage to do it, if you listen to them and utilize data what is available about them. Same for everybody is not the solution in that area.

Now gambling companies seem to have quite big problems with their reputation. There could be many reasons why that’s the cause – too much marketing, too less actions in problem gambling area etc… You should know what the main reasons are and try to make much better actions in the areas which have caused those problems. It would be great to see cases where company could turn week actions to strong ones.

As I have wrote in some of my previous blogs, I think that there lots of different customer groups and their have different kinds of expectations. There are some active customers (active sports and horse punters) who are willing to spend lots of time in gambling but in average customers are looking for simple and quick services. You should develop quick and simple processes where everything will work fine and in a way which customers understand.

I admit that I haven’t been very empathic guy but now, maybe thanks to becoming older, I really believe on that. We should really take care of our customers. We should do everything to secure them although some of them are not willing to be secured. That’s extremely important in businesses like gambling!

LOTTERY INNOVATIONS – CASE LOTTOLAND

I participate in World Gaming Executive Summit event in July in Barcelona. I had opportunity to be one of the members in panel where we discussed about lottery innovations. One of the fellow panelists was Nigel Birrell, CEO of Lottoland. I was surprised how much we agreed on current situation and also about the further development in lottery business. My company Veikkaus, the national monopoly operator, and Lottoland, the market “hooligan”, look lottery/gambling business from very different perspectives but finally we are trying to reach about same goals. I’ll now tell what I personally think about companies like Lottoland and also what are main changes needed in lottery business.

I was asked to give my “confession” about Lottoland in ICE Vox seminar in February 2018. Although as a protest I’m not used to give any confessions, I made presentation about that and here are 7 points I made 1½ years ago. I think that they are still valid.

  1. Lottery business has no competition
    1. Lotteries have believed that competition is in casino and sports betting business but in lottery business.
    1. Due to previous point lottery innovations haven’t been significant at all.
    1. Lotteries have been and unfortunately still are in protection mode – we have believed in lobbying & EU Law.
  2. The business idea of Lottoland is great
    1. Betting on lottery results and the Lottoland business model is something like “Uber” of the lottery business.
    1. What Lottoland has done would be possible for lotteries. Why lotteries haven’t done that by themselves?
    1. There are excellent business solutions from Lottoland.
  3. Scared & angry
    1. I felt scared & angry when I noticed what Lottoland was doing -> protection mode again
    1. I think that it was steal of our brands!
    1. There wouldn’t be Lottoland without lotteries because they business was based on our products.
  4. Wakeup call- thank you!
    1. We should develop our own business.
    1. The key issue is to understand motivations of our customers – huge jackpots is not the only reason to play lottery.
  5. New surprise(s)
    1. Lottoland moved to B-to-B business and that was new surprise.
    1. What will be next surprise – maybe “Super Lottoland”?
  6. Speed of development increases uncertainty
    1. How much and quick gaming and gambling businesses will merge?
    1. Blockchain or something else – there will be new technologies all the time.
  7. We are going to fight!
    1. Lotteries or at least some of us are ready for fair competition!

Lottoland is just one company and I use it only as an example to describe what would happen if companies don’t develop their businesses and don’t put effort on innovation. Then there will be someone else who is doing that and will win the battle. It’s extremely important that you understand and serve your customers as well as possible. In old days it was possible that company decided what they were selling but nowadays customer is decision maker and he/she has lots of alternatives where to select – also in lottery business despite of monopolies.

I realized at the latest in that panel in Barcelona that there are still lots of lotteries who are not trying to innovate anything. I knew that it was the case some years ago, but I was a little bit shocked that it still is. Due to that fact there is lots of empty space in lottery/gambling business where newcomers, companies like Lottoland, have excellent business opportunities. If lotteries believe that they will win the battle in courtrooms, they are totally wrong!

I know that it is not easy to keep monopoly and at the same time innovate new business solutions, but we should try to do that anyhow. I’m happy and proud that my company Veikkaus is going to host EL’s (European Lotteries) Innovation seminar here in Helsinki in November. We try to increase the level of knowhow, understanding and spirit of innovations among lotteries. I hope that after few years the reputation of lotteries is not anymore old-fashioned, and we could still run profitable and responsible business!

THE FINNISH GAMBLING MONOPOLY – TO HAVE OR NOT TO HAVE IT?

I’m still on my summer holiday and try to avoid to do too much work but now it’s almost impossible to avoid that. There is the most active discussion about the Finnish gambling system going on and I believe that I understand very well what it is about. I should mention once again that all opinions are my own ones and my company Veikkaus has nothing to do with this blog.

We got new government about two months ago and I gave my estimations what that will mean for the Finnish gambling policy and system. I believed that the importance of responsible gaming will increase, and the current monopoly-based system will stay until the end of 4 years period of the new government. I still believe on that but now the probability of system change has become a little bit higher. Our Prime Minister Antti Rinne has said that Finland should make deep analyze about other possibilities too.

There are two main areas which have caused lots of discussion. The first one has been those 18000 slot machines which Veikkaus has all over the country in shops, cafeterias and gasoline stations. The second item has been ads where Veikkaus has given too positive feeling of gambling. It’s quite obvious that there have been too big mistakes in those ads where for example “therapist” has encouraged “patient” to make some horse betting. But are those mistakes so serious ones that due to them we should discuss about the gambling system? Are those mistakes sign of something bigger problem which we have?

The new Veikkaus is in bad situation. The company is 100 % owned by the Finnish State. It’s obvious that management should follow the guidelines which owner will give but has it been clear what the owner is willing to have? The operational profit from Veikkaus to the state has been over 1 billion euros a year and gambling tax has been about 200 million a year. The Finnish State has got from Veikkaus totally about 1,2 B€ which is over 2 % of the state budget. So, we are talking about the huge financial issue. But as you know, the fiscal revenue can’t be the official reason for gambling monopoly. The only acceptable reason for monopoly system could be prevention of social problems like crime and problem gambling. The Finnish State has decided that monopoly is the best way to prevent those gambling problems. But would it be possible to maintain that revenue level and at the same time prevent problems?

The Finnish State should decide which is the primary goal of Veikkaus – money or responsible gaming. If they will select responsible gaming, it will mean that they should accept that the revenue level will go down quite a lot. I think that it would be quite easy to increase responsibility if we don’t have to care about the profit at all. But Veikkaus doesn’t have monopoly anymore in real life and our regulators don’t have tools to regulate those offshore companies which have already quite big market share in online gambling business in Finland (their GGR from Finland is about 300 M€). If Veikkaus will increase the responsible level and regulator can’t control those unregulated companies the gambling revenue will go outside the Finnish borders and gambling problems won’t decrease. If the Finnish State will select profit as a main goal, it will mean the end of monopoly and we’ll do the same what has happened for example in Denmark and Sweden.

I would say that the current situation is strange where Veikkaus is in the middle and ”shots” are coming from socially responsible bodies which are looking for much more responsible gaming actions and require Veikkaus to stop business development and marketing. At the same time ”shots” are also coming from total other side from more business-oriented bodies who would like to break monopoly-based system and promote offshore gambling companies. It is almost fun to follow that kind of discussion where those two totally opposite bodies have found the common enemy. I would say that it would be similar case when in politics extreme right and extreme left will find common enemy.

The new government decided just two months ago what kind of gambling policy they will follow. Despite of that our Prime Minister Antti Rinne said few days ago that they will consider that policy again, but it should be based on facts and deep understanding of gambling business. Quite many EU countries have moved from monopoly system to license-based system and we have lots of bench marking information from those changes. I think that we could utilize the experiences from France, Denmark and Sweden and could estimate what that kind of gambling systems would mean here in Finland from business and responsible gaming point of views. I have been surprised that there is not so much information about responsible gaming results from those other countries – it even seems that they haven’t care about that so much when they have changed their systems. As far as I know they didn’t make any problem gambling research in Denmark before they moved to the license system.

I’m not saying that it’s impossible to take care profit and responsible gaming at the same time but it’s very difficult to do. I’m saying that decision makers should know what they are looking for and what those changes might mean. As an economist I would say that monopoly as such will decrease the business activities. So, if Finland will follow the Swedish way, it would mean that at least that gambling activities will increase and we’ll have more marketing actions. But at the same time our regulators could control all those current unregulated offshore companies which are nowadays out of their scope and that would be positive thing. I don’t know what will happen here in Finland, but I know that we’ll interesting time ahead.

RAHAA VAI VASTUULLISUUTTA?

Mitäpä sitä kesälomallaan muutakaan tekisi kuin kirjoittaisi omaan työhönsä liittyvää blogia… Kuten olen jo blogeissani aiemminkin todennut, niin kirjoitukseni ovat täysin omaa käsialaani ja työantajallani Veikkauksella ei ole näiden tekstien kanssa mitään tekemistä. Ajatukseni ja mielipiteeni ovat siis täysin omiani, vaikka tietysti työtehtäväni ovat edesauttaneet tietojen saamista ja näkemyksien syntyä.

Kirjoitin pari kuukautta sitten arvioni Suomen uuden hallituksen mahdollisista vaikutuksista suomalaiseen rahapelipolitiikkaan ja -järjestelmään. Totesin silloin uskovani mm. siihen, että vastuullisuuden merkitys tulee korostumaan ja nykyinen yksinoikeuteen perustuva järjestelmä tulee säilymään ainakin tämän hallituskauden loppuun asti. Olen edelleen samaa mieltä, vaikka tuon jälkimmäisen asian todennäköisyydet ovat tämän viikon kommenttien perusteella muuttuneet.

Veikkauksen mainonta on saanut viime aikoina osakseen kovaa kritiikkiä. Virheitä on varmasti tehty, mutta kyseessä ovat toistaiseksi olleet yksittäiset ylilyönnit ja/tai virhearviot, joiden ei mielestäni pitäisi millään tavalla vaikuttaa siihen, minkälainen rahapelijärjestelmä Suomessa on. Vai pitäisikö kuitenkin? Onko mainoksista tunnistettava linja rahapelaamisen kannustamiseen sittenkin merkki jostakin isommasta rakenteellisesta ongelmasta?

Kansanedustaja Juhana Vartiaisen lausunto Veikkauksen tilanteesta oli kuin suoraan omasta suustani. Uusi Veikkaus on joutunut hankalaan tilanteeseen. Osakeyhtiön tulee kuunnella omistajansa mielipiteitä. Veikkaus on 100 % Suomen valtion omistama yhtiö, joten Suomen valtion ääni on omistajan ääni, mutta mitä tuo ääni kertoo yhtiölle? Veikkaus tuottaa edunsaajilleen vuositasolla yli miljardi euroa ja sen lisäksi valtio saa rahapelitoiminnasta noin 200 miljoonan euron verotulot. Fiskaalisen tuoton taso Suomen valtiolle on siis noin 1,2 miljardia euroa, joka on yli 2 % koko valtion tulobudjetista. Taloudellisesta näkökulmasta puhutaan omistajan kannalta valtavan suuresta asiasta. Toisaalta taloudellinen tuotto ei ole pätevä oikeudellinen peruste yksinoikeusjärjestelmän ylläpitämisen syyksi. Rahapelien järjestämisen yksinoikeus on mahdollista, jos järjestelmä ehkäisee pelaamiseen liittyviä ongelma, joita ovat mm. rikollisuus ja peliongelmat. Veikkauksen omistajan eli Suomen valtion tehtävänä on siis myös ohjata yhtiötä toimimaan mahdollisimman vastuullisesti. Nyt näyttää siltä, että omistajan kaksi eri näkökulmista syntyvää tahtotilaa iskevät toisiaan korville.

Toistan varmasti itseäni liikaa, mutta Suomen valtion tulisi päättää, kumpaa asiaa Veikkauksen tulee ensisijaisesti tavoitella. Vastuullisuuden priorisointi tarkoittaa väistämättä nykyisen tuottotason merkittävää putoamista. Vastuullisuustoimenpiteiden lisääminen lienee kohtuullisen helppoa, jos tuottojen alenemisesta ei tarvitse välittää. Toisaalta vain Veikkauksen tekemät erityisen kovat vastuullisuustoimenpiteet eivät välttämättä juuri poista ongelmapelaamista, mikäli viranomaisilla ei ole nykyistä enemmän keinoja puuttua Suomen reguloinnin ulkopuolella tapahtuvaan pelaamiseen (= offshore peliyhtiöt). Tällaisessa tilanteessa aktiivisten pelaajien rahat vain siirtyvät toisille peliyhtiöille, joiden vastuullisuustoimenpiteet ovat yleisesti ottaen selkeästi Veikkauksen nykytason alapuolella. Mikäli taas Suomen valtio päättää priorisoida tuottotasoa, niin yksinoikeusjärjestelmästä pitänee luopua ja siirtyä esim. Tanskan ja Ruotsin seuraksi lisenssijärjestelmään tai ainakin osittaiseen sellaiseen.

Veikkaus näyttää joutuneen ristituleen, jossa toisaalta ”ammuksia” tulee peliongelmia korostavilta tahoilta, jotka vaativat yhtiötä toimimaan nykyistä vastuullisemmin ja lopettamaan tai ainakin merkittävästi hidastamaan tuotekehityksen ja myynnin edistämisen. Toisaalta ”pommitusta” tulee aivan toisilta tahoilta, jotka pyrkivät edistämään yksinoikeuteen perustuvan rahapelijärjestelmän murtumista ja suuressa määrin myös yksityisten kansainvälisten rahapeliyhtiöiden liiketoimintamahdollisuuksien avautumista Suomessa. On ollut ”huvittavaa” seurata viime aikaista keskustelua, jossa nämä kaksi täysin eri asiaa ajavaa tahoa ovat yhdessä arvostelleet Veikkauksen toimintaa. Vertaisin tilanne politiikkaan, jossa äärioikeisto ja -vasemmisto hyökkäävät yhteisen keskellä olevan vallanpitäjän kimppuun.

Olen pääministeri Rinteen kanssa samaa mieltä siitä, että suomalaisen rahapelijärjestelmän perusteita tulee jälleen kerran tarkastella, vaikka Suomen uusi hallitus vain pari kuukautta sitten teki hallitusohjelmassaan asiasta selkeitä linjauksia. Uskon vahvasti faktaperusteiseen päätöksentekoon ja toivon, että tätä periaatetta noudatetaan myös rahapeliasiassa. EU:ssa on viimeisen kymmenen vuoden aikana tapahtunut monessa maassa muutos rahapelien yksinoikeudesta lisenssijärjestelmään. Näistä muutoksista, mm. Italiassa, Ranskassa, Tanskassa ja viimeisimpänä Ruotsissa, on saatavissa paljon faktatietoa. Taloudelliset vaikutukset on helppo analysoida, mutta yllättävää on se, ettei kaikissa maissa ole kiinnitetty huomiota peliongelmissa tapahtuneisiin muutoksiin. Esimerkiksi edistyksellisessä Tanskassa ei tehty ennen muutosta ongelmapelaamisen määrän arviointia lainkaan, joten vertailukohtaa muutoksen vaikutuksille ei ole olemassa. Vaikuttaakin siltä, että monen maan päätöksentekoa on ohjannut taloudelliset tavoitteet.

Olen todennut aiemmissa blogeissani, että vastustan lähtökohtaisesti monopoleja. Olen kuitenkin saanut työskennellä rahapelejä yksinoikeudella hoitavissa yhtiöissä kohta 28 vuoden ajan ja ymmärrän sen vuoksi hyvin, että joissakin tapauksissa yksinoikeudella päästään parempiin tuloksiin kuin vapaalla kilpailulla. Uskon näin olevan aloilla, joilla on todellinen tarve säädellä asiakkaiden kulutusta. Suomessa tällaisen kuluttajia koskevan erityisen suojelun aloiksi on katsottu mm. alkoholi ja rahapelaaminen. Vaatiiko kuluttajien erityinen suojelu yksinoikeusjärjestelmää vai ei?

Ruotsin lisenssimallissa viranomaiset ovat saaneet säätelyn piiriin aiemman parin yhtiön sijaan yli sata yhtiötä. Viranomaisen mahdollisuus puuttua asioihin on siis tässä mielessä lisääntynyt merkittävästi. Toisaalta aiemman parin virallisen toimijan (ATG & Svenska Spel) mallista siirtyminen yli sadan rahapelibrändin malliin on aiheuttanut mainonnassa räjähdysmäisen kasvun, joka taas väistämättä lisää peliongelmia. Järjestelmäratkaisuun ei siis ole itsestään selvää ratkaisua. Elämme kiinnostavia aikoja…

PREDICTIONS ABOUT SPORTS BETTING

It’s already 1½ months when I last time wrote my blog. I should be more active but there have been so many other things to do…

I participated in World Gaming Executive Summit few weeks ago in Barcelona. That was good event where I got some ideas for my blog. I had excellent panel discussion about the future of lotteries with CEO of Lottoland and I’ll write about that after my summer vacation but now I’ll concentrate on Sports Betting – again.

Sergey Portnov, CEO of Parimatch, gave interesting predictions about the future of Sports Betting. I’ll summarize what Sergey told and make my own predictions too. Let’s see how well we could see the future of Sports Betting.

Portnov presented 10 points and gave odds all of them. Here is short version about his predictions without those odds:

  • there will be 100+ new betting sites targeting 18 – 25 years old segment
  • marketing massacre is imminent, budgets doubling and LTV also growing
  • bookmakers will run their own sports competitions to ensure always on live betting propositions
  • majority of companies will transform management teams
  • ICE event will be overfilled with payments solutions, bookmakers will finally start building USPs around payments
  • sport streaming in its current form will become obsolete
  • individual product offerings will overtake generic offerings
  • all major players in the market will rebrand
  • offshore market will grow faster than regulates market
  • esports will account for 10 % revenue for betting operators

It’s very logic that I look Sports Betting from different perspective than Sergey does. Finland versus Ukraine/Cyprus and state-owned monopoly versus private owned offshore company are totally different worlds. Anyhow we both know Sports Betting business well and that’s why I could agree with Sergey about many of his points.

My 10 predictions about the future (5 years) of Sports Betting are:

  • GAFA companies will enter to gambling/Sports Betting business
  • big media companies will utilize their sports media rights also in Sports Betting business
  • companies will have separate Sports Betting brands & offering for active customers and average customers
  • individual products & services will increase their popularity
  • esports will be the second biggest sport in Sports Betting (includes new esports formats)
  • marketing of Sports Betting will be banned – at least in EU
  • bonuses won’t be allowed
  • regulated companies will have at least 80 % market share in Europe and North America
  • there will be new popular Sports Betting products which are different ones compared to current fixed odds Sports Betting
  • the importance of responsible gaming will increase dramatically

WHERE THE FINNISH GAMBLING POLICY WILL MOVE?

We’ll finally get the new government here in Finland 7½ weeks after the Parliament election. It has taken more time than normally to establish that government than we are used to have. I believe that there are two main reasons for that. The first one was EU Parliament election. Parties weren’t willing to announce the new government program before EU election. The other reason has been quite strange result of Parliament election. The biggest party got just a little more than 17 % of votes (for the first time under 20 % ever) and there was no clear winner at all.

Anyhow now it seems to be sure that the new government will be there soon. We shall face strong movement from the “right side” to the “left side”. There will be four former opposition parties in the government and just one party will continue in that new government too. That will mean that many things will probably change in next four years. I’m keen on seeing what it will mean for gambling business.

As you know we have monopoly system in whole gambling business here in Finland. My company Veikkaus is taking care of all possible gambling businesses. As far as I know all big parties have supported that system at the principle level. So, new parliament and government won’t necessarily mean anything from gambling system point of view. But there is more and more discussion about our system anyhow and I’ll now give just my personal estimation/guess what might happen in next few years.

The Ministry of Interior Affairs is responsible for the gambling legislation and regulation. Civil servants of that ministry have made study about what kind of needs our gambling legislation would need. The published a memo about that last week and you could find it here: http://julkaisut.valtioneuvosto.fi/handle/10024/161645 (only in Finnish). That memo describes well how our regulator sees gambling business. Civil servants are not the final decision makers, but they will have lots of influence towards politicians.

The Finnish Lotteries Act (= gambling law) is a little bit strange. Veikkaus has monopoly in all gambling verticals (lottery, casino, sports & horse betting) and it’s the only company which has right to market it’s gambling product but not all of them. From customer point of view it’s anyhow legal to use services of other gambling operators and the Finns are doing that more than ever. Those offshore companies are not allowed to have any marketing & sales actions in Finland, but regulator can’t control that in online channels. Finland is not using any kind of blocking to prevent gambling abroad. Now discussion about need of blocking is increasing and something might happen in that area.

The Ministry of Interior Affairs has now analyzed if blocking could restrict gambling abroad and at the same time reduce gambling harms caused by those operators. They have found out that blocking could reduce total gambling and gambling problems. They also say that if there would be blocking then Veikkaus doesn’t need to market its gambling products and doesn’t have to develop games that attract players to gamble. I believe that it might be the case in short term but in long term that would mean big problems. The Finnish customers would be forced to use worse products than the other ones could have, and they would know that. What that would mean for the reputation and acceptance of gambling monopoly and Veikkaus as the best lottery company in the world? What would happen then when the monopoly system will anyhow change to licensed system – how Veikkaus could be ready in that situation?

The main purpose of monopoly system is to reduce gambling problems and whole gambling. The regulator doesn’t think about the gambling profits at all but politicians do. It would be easy to reduce gambling – make it illegal and stop it totally. That would mean “some” financial challenges – the total amount of money to the Finnish State from gambling business is over 1,2 B per year. It has been quite interesting situation where the state has at the same time required Veikkaus to slow down its operations and make at least the same amount of profit as before. Veikkaus must take responsible gaming really seriously and there will be more and more changes in that area. Maybe the biggest change will be mandatory identification in slot machine gambling from the beginning of 2022. I’m not expert in that business but I would say that it will mean 100 – 200 M€ less profit.

Veikkaus has nowadays international business co-operation in lottery and horse betting businesses. Eurojackpot and Vikinglotto are popular products in Finland! Common horse betting pools with the Swedish ATG have big share of the whole horse betting in Finland. There has been discussion could we continue that kind of co-operation. According to the study it seems to be possible to continue that kind of existing co-operation, but civil servants are skeptic to let Veikkaus to have more than kind of operation. Veikkaus would like to have more international B2B businesses but would it be possible?

I try to guess what the new government might decide about those four main themes in that study of the Ministry of Interior Affairs.

  1. Blocking – it would be easy to decide that we should have blocking system also in Finland if I think about that from the principle ideology of government parties. But I don’t believe that there would be any kind of blocking due (or thanks) to RKP (small Swedish speaking party). Blocking would have serious effect on PAF and RKP won’t let that happen.
  2. Responsible gambling – every parties is willing to take that even more serious and I guess that balance will move to that direction. I won’t be surprised if we’ll have mandatory identification in whole gambling business in next four years or at least the decision about that.
  3. Money – the government program sees to be maybe too positive about financial future and I’m afraid that they will realize that quite soon. So, there will be need for that 1,2 B€ also in the future. The challenge will be the balance between responsible gaming and gambling profits. I guess that the new government will accept some hundred million decline of gambling profits and take responsible gaming more seriously.
  4. International business co-operation – Veikkaus could continue the current international co-operation and could get permission for some other new areas if the will be channeling reasons for that. I believe that due to previous point – there should be some ways to get more gambling revenues from “not so dangerous” business verticals (lottery and other pool-based games).

As a joker I would like to guess what the new government will decide about the gambling system. As you probably have already noticed from my previous blogs I have though that we should ask “when Finland will move to licensed system?” instead of asking “is Finland going to move to licensed system?”. I still believe on that but now I would say that the gambling system won’t change during the next four years. The new government will try to make Veikkaus monopoly even stronger!

ABOUT ESPORTS AGAIN

I already wrote about esports three months ago when I admit that I’m fan of esports. In that blog I try to describe that “rising star” in general level and I’ll do that again. There are two reasons why I’m going to continue with the same theme – it’s so important one and I’ve visited two esports seminars in last few weeks (New York & Helsinki).

The total revenue from esports was over 900 M$ in 2018 and growth was almost 40 %. It seems that the same kind of development will continue also this year and it would mean that revenue will be 1,2 – 1,3 B€ this year. It’s not anymore just hobby of nerds at garages…

Sponsors have already found out esports and money from those pockets is increasing rapidly – last year the sponsorship growth was over 50 % and there are nowadays big companies like Coca Cola, Intel and Audi among those sponsors. The area which is increasing even faster than sponsorship is media rights. One challenge in esports is that fans are not used to pay about picture and media companies should find out new innovative ways to get money from customers. But there are huge opportunities ahead because there were 380 million people who were keen on following esports.

The most important bodies in esports ecosystem at this moment are game publishers (f.ex. Riot, Valve, Blizzard), platforms (YouTube, Twitch), competitions, teams, players, sponsors and of course fans. From my point of view one important and interesting body is missing from that list and it is of course Sports Betting companies. I’m sure that the importance of those bodies in esports ecosystem will change but I don’t know how but I would like to speculate a little bit.

At this moment the money to esports is coming mainly from sponsors, advertisers, media rights buyers and of course players/fans. As I already said the revenue from the three first bodies seem to increase all the time and I don’t see any reason why that development would stop – the speed of increase will reduce after some years. The more interesting question is what will happen to money coming from the big audience and what other income resources there will be?

Esports is so young phenomenon that real big audience hasn’t found it yet and despite of that there are already now that 380 M people who are interested in that sports and approximately 165 M real active fans. The number of active fans is by the way about 50 million more than ice hockey has. I believe that most of those fans have used to play esports (or video) games before and there is huge possibility that other kinds of fans might find out esports also in next few years. I’m sure that it will happen thanks to media companies who are going to show more and more esports in their channels. There are over 100 M ice hockey fans in the world and I guess that just minor part of them are former ice hockey players. Why the case wouldn’t be the same in esports?

Esports industry should concentrate more on two separate customer groups. The first one is “hobby players” who are keen on those games and things/features related to that sports. The business model for them could be extra elements to those games – they would be ready to pay for new kind of weapons or whatever is need in games which they are playing. That’s what game publishers are doing nowadays. The other more interesting group is fans of esports. Nowadays those two groups seem to be same group but quite soon there should be totally different business and service model for fans. Many of them are now former esports hobby players who have became too old to be active players anymore. But as I already mentioned there will be big group of fans who are not or haven’t been players by themselves at all.

Would the same business model which big teams are using in other sports work in esports too? I have heard that NBA fan is using about 20 times more money than fan of esports. There seems to be huge business potential but how to monetize that? Merchandise and tickets might be one traditional way? The other possibility is to develop extra services related to live feed like for example Formula 1 has done. Sports Betting and other type of gambling might be one solution. I’m sure that all those things will raise already this year but for some reason I have feeling that we’ll see something totally new in next few years…

I know that almost everyone in current esports ecosystem is thinking and planning about “something totally new”. We are also doing that because we believe on esports and would like to play bigger part in that “raising star” of sports. That’s the reason why my company is going to organize “Innovation Challenge Week” where the theme is esports next week. I’m sure that we’ll get interesting ideas from there and I’m afraid that I’m not willing to share those ideas with you – yet…!