LOTTERIES SHOULD BE MORE RESPONSIBLE OPERATORS

I have wrote this column for www.lotterydaily.com and they have published it few days. This text is partly edited by Chris Murphy – thanks to him about that!

There seems to be a general perception among lottery companies that the lottery business is fundamentally a responsible activity and, in every way, better than any other gambling business. 

If you only thought of gambling products, then slow-rhythm lottery games are certainly less problematic for players than, for example, casino games or fast sports betting (live). However, it is always dangerous to think that one is, in principle, better than the other, because then the risk is to be blind to one’s own operations. Furthermore, most lotteries today offer more than just traditional draw-based and instant games.

In practice all EU countries still have a monopoly system for lottery games. According to the European Court of Justice, Member States are free to decide on their gambling systems, as long as they respect the principles of legitimacy and are consistent in their actions. 

An important justification principle is the prevention of gambling problems which can be summarized into two groups – gambling problems caused to the player and gambling-related crime. For this reason, it is important that the prevention of gambling problems and thus responsible gaming also be given great weight in lottery activities. If anyone thinks this does not apply to lottery games, it would be interesting to hear why there is monopoly in that area…

How should the prevention of gambling crime be taken into account in lottery activities? In general, gambling involves the risk of two types of crime – the manipulation of the results and money laundering. Manipulating the results is not easy in traditional draw-based and instant games, but it has managed to happen sometimes. 

Manipulation of results is a particularly big problem in sports betting, which is also practiced by lotteries. The risk of money laundering is also higher in casino and sports games with high payback rates than in lottery games with lower payout percentages. But at least in theory money laundering can take place in all gambling activities and its prevention should be managed as well as possible. Lottery companies that run sports games have invested heavily in crime prevention through their involvement in the GLMS (Global Lottery Monitoring System).

Crime prevention is particularly important for the gambling business in terms of the reliability and reputation of its operations. If customers cannot trust the correctness of operations, there is not a very bright future in the industry. In this respect lotteries are very much in the same boat as private gambling operators. It is quite insane to think that the problem would not also apply to lottery companies if the general acceptability of gambling starts to fall even more than it currently does.

While the prevention of gambling-related crime is especially important, the prevention of gambling problems itself is even more important. Just one person with a gambling problem is one too many and companies need to do everything they can to keep the number of problems under control and even reduce it. It is unrealistic to think that gambling should be banned altogether, but states still have opportunities and, in fact, an obligation to regulate this fundamentally risky activity.

Gambling today is often compared to tobacco and alcohol, which also cause problems. Personally, I don’t like those comparisons, but I somehow understand the comparison to alcohol-related restrictions. I think tobacco causes more or less problems for all users, which gambling does not. 

Alcohol is closer in that sense because only a small percentage of alcohol users experience significant problems. Gambling is a relatively safe activity for 90-95% of customers. On the other hand, gambling causes awfully bad problems for about 1% of players and some problems for a much larger number of customers. I think it’s the responsibility of gambling companies, including lotteries, to do their best to keep those customers who are experiencing problems from getting into bad trouble.

Studies have shown that traditional lottery games don’t cause gambling problems almost at all and this may still have the wrong effect on the attitudes of the lottery world. Companies are accustomed to a situation where they may have blamed other gambling companies, usually casino operators, for the problems. 

However, in the 21st century, Lottery operations have changed with the digitization of new products and operations, so that gambling problems will certainly arise for lottery customers as well. Therefore, all companies must have tools in place to identify and prevent problems.

What should companies do? It must be possible to monitor and address customers’ gambling, either with restrictions or, in extreme cases, with bans. Gambling monitoring requires digitizing operations and making gambling possible only for identified customers.

There is no way to interfere with gambling anonymously, and there is not even enough information about it. Lottery companies must therefore build technical systems to transfer all gambling to identified gambling. This may sound like a completely impossible plan to most, but it is not. Just ask for advice from Norsk Tipping, which already did this years ago!

Mere recognized gambling alone is not enough. Recognized gambling is a prerequisite for restricting gambling activities. There must be limits to gambling that must be practically controllable. The Norsk Tipping scenario involves maximum loss limits for gambling. Personally, I am not in favor of uniform limits for all, because people’s income and wealth levels vary a lot. 

In addition, some people are, in principle, at greater risk of suffering from gambling problems than others. Due to these factors, I consider the best solution to be the possibility to change the general limits set by the company on the basis of substantiated information. 

If a player is able to prove his wealth and wants to raise the limits of the gambling, he/she should be given the opportunity to do so. Likewise, even low overall limits may be too high for some players. I have noticed that at least in Sweden and the UK, there has already been discussion of a player-specific affordability check model.

I am quite sure that gambling regulators in different countries will tighten their control of operations and to set the gambling companies increasingly more accountability requirements. This will certainly apply to lotteries as well. In many ways, it would be best for companies to act on their own initiative and not just under duress. 

Companies should prepare models in collaboration with or at least by listening to gambling problem researchers and possibly also in consultation / cooperation with the authorities. Implementing the changes will require a lot of resources, but hopefully it will save the gambling industry’s reputation!

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