I’m deep expert on horse betting and I understand horse punters very well, because I’m one of them! I believe that horse betting customers are thinking about the same way globally and that’s why I’m ready to share my knowledge from Finland and try to give views and advices to other markets. But, to be honest, I’m not 100 % sure if I could give good advices for example for Norwegian decision makers, but I’ll try to do it.
There is monopoly-based gambling legislation in Norway. Norsk Tipping is the big state-owned lottery company which is taking care of lottery products, VLTs and sports betting but not horse betting. There is another company (foundation) called Rikstoto which has monopoly for horse betting. Rikstoto is owned by horse racing associations and the profit is going to that industry.
Rikstoto managed extremely well about ten years ago when there were lots of restrictions for the development of Norsk Tipping. The sales of horse betting increased from the level of 250 M€/year to the level of 350 M€ in few years. They almost reached 400 M€ in 2012 and again in 2017. But now Rikstoto has faced big challenges and they have gone down to 350 M€ level and their future doesn’t look like very promising.
Horse betting seems to have global challenges to compete against other gambling areas. There are just few countries where horse betting is still developing well, but mainly that business is suffering quite a lot. I think that the main problem is actually inside the sport, horse racing, and not so much inside the horse betting. When horse racing is not ready to make big changes, they can’t expect good results in the future. Actually, in many cases they are expecting those results which are unrealistic ones…
I don’t know well enough which are the main problems in the Norwegian horse racing and that’s why I’m not able to give advices to that. But I have some ideas what the main challenges in horse betting might be and I’ll tell my views about that. I know that it’s illogical compared to what I just wrote in previous paragraph where I told that the main problems are inside horse racing not in horse betting, but don’t concentrate on that logic too much now.
Rikstoto is using more and more the Swedish horse racing in their horse betting. They are commingling with ATG daily and the role of Norwegian horse racing in horse betting has decreased rapidly. They have reduced the number of Norwegian horse racing events. In principle that’s not bad, but the way how they have done that is not good at all. There are nowadays many days without horse racing event in Norway. Maybe the biggest challenge is that they have taken away some big Saturday races. I know that the reason for that has been to raise the price money in the other races, but from customer/horse punter point of view it is not good solution.
Those Swedish races with bigger turnover and jackpot level are good for the most active horse punters like me. It’s not big problem for active customers to get information from Sweden and it’s easy to follow those races too. Big turnover and higher jackpot make horse betting even more attractive for active horse punters. BUT what that development has meant for normal, not so active, customers and for potential new-comers? The mass media is not following horse racing as much as they used to do before, because from their perspective there is no reason to report on the Swedish races. Local big events would get more publicity at least in local media and that might interest not so active customers too.
One of the key issues is to understand that the needs of customers are not same! It might be a good solution in the short term to concentrate on serving active customer, because they are bringing the most of the money, but that development might cause big challenges in long term. How you will get new customers and activate your average customers? The motivations of horse betting are probably totally different to them than to active horse punters.
Norway seems to take responsible gaming really seriously and due to that they have already introduced the maximum loss limit for the customers of Norsk Tipping. That 2000 €/month limit is high limit for “normal customers”, but it’s low limit for active sports and horse punters. There is a plan to introduce that limit for the customers of Rikstoto too. It was supposed to be there already from the beginning of this year, but now they have postponed that max 2 years. As far as I know the most of Rikstoto’s sale is coming from quite small group of customers. Due to that the max loss limit would be dramatical from business results point of view. The research company Oslo Economics has estimated that due to common development + that new max loss limit the total horse betting market in Norway might fall 27 % by 2026. I think that this is very optimistic scenario. I would make a bet that it will drop much more!
I’m not saying that this maximum loss limit is bad idea. It’s good solution from the responsible gaming point of view, if regulator could control all gambling – also offshore operations. Norway is trying to keep monopoly-based gambling solutions and that’s why they are doing all needed to maintain that situation. They have introduced internet and payment blockings and are planning to introduce even tighter version of that. It’s logical that they have decided that max loss limit, when the prevention of gambling problems is the main reason to maintain monopoly-based solution. The potential next new feature in the maintenance of gambling monopoly is the merger of Norsk Tipping and Rikstoto. If that will happen, then there would be just one gambling monopoly in Norway.
In that case the max loss limit will effect on horse betting much more than in current situation, because as far as I have understood the max loss limit would be still 2000 € and that would cover all gambling. If there are two separate companies, the max loss limit will be per company. I’m sure that maximum loss limit will cause problems to keep active punters as customers of Norwegian company. There is big risk that those active horse punters will continue to play big amounts and they will find out ways to do that directly to ATG. Actually, that is also the problem when we are talking about blockings. It’s easy to avoid internet blocking and quite easy to avoid payment blocking. Those are good prevention tools for normal customers but don’t work for active customers. So, blocking works among customers who are not using lots of money and don’t work among customers who state is willing to control.
I have already written about our experiences from that kind of merger here in Finland. I would shortly say that the results haven’t been as good as we expected them to be. There are many reasons for that, but is there anything what Norway could learn from our experiences? In big picture that kind of merger would help regulator to control total gambling. It would also reduce competition between existing two companies and that would reduce marketing and gambling at least a little bit. In the best case the merger would help to reduce the cost level, but it will happen in long term. In short term it might even increase the costs due to mainly IT-costs. I would say that the merger of Norsk Tipping and Rikstoto would be good solution if Norway is mainly thinking about responsible gaming.
What that kind of merger would mean for horse betting and horse racing? Here in Finland it has meant decrease of horse betting (about -5 %/year) but more money for horse racing industry (about + 15 % compared to 2016) – in short term at least. We have noticed that horse betting can’t compete against modern type of new games like live betting and online casino games. When all games are in one company, the company can’t pay any extra attention to one specific game group. I don’t believe that it’s possible to get so many new horse betting customers if they are not interested in horse racing. It should be horse racing industry, mainly racetracks, who should concentrate on marketing.
The Finnish parliament decided that the money for horse racing and breeding industry is based on the total revenue of Veikkaus. Horse industry gets 4 % of our total revenue and it has nothing to do with the turnover and profit of horse betting anymore. I don’t like that model, because nowadays there is no motivation for racetracks to think about horse betting. We recognized that risk before the merger but failed despite of recognition. If it would be legally possible, I would develop the “mixed model” where the money for horse industry would come partly from the total profit and partly from horse betting. I think that Norway should try to introduce that kind of model if they will do that big merger. The State of Norway should spend enough time for discussion with horse racing industry to make model which horsemen could really support. Otherwise they will have “some” difficulties ahead.
It’s always dangerous if you decide something without any analysis. When the state is considering changing the gambling legislation, they should analyze all potential alternatives. Hopefully the Norwegian state would also think about license-based model. Of course it’s ok to continue with monopoly if the decision is based on professional analysis. The decision makers should set up goals what they are trying to reach by legal changes and then analyze what different solutions would mean from those perspectives and select the best model for that whatever it will be. It’s stupid to drop some alternative away due to “feeling” reason.
Although I haven’t made any serious analysis of the Norwegian gambling market, I would guess that from the financial point of view the best model for horse racing industry could be license-based model. Of course there are many features which will effect on that – like how good negotiators they are.