Keeping it in the family: Changing relationships in the lottery sector

I have written this text for www.ice365.com, and it is partly edited by Robin Harrison-Millan.

The lottery sector was once made up of state-owned monopolies, all with similar interests – and usually an aversion to the private sector. But as businesses evolve through spin-offs, acquisitions, and public listings, is there such thing as the ‘lottery family’ in 2021?

I remember how surprised I was when I moved from a horse betting company to a lottery in the mid-1990s. I hadn’t expected the lottery not to maximize business results. This commercially-minded young man was somewhat shocked to have to press the brakes so that sales would not have grown too much after the economic depression.

Another equally significant surprise was the attitude prevailing in the lottery business. There was a perception among the company’s management and employees that “we are better than any other gambling company”. The lottery saw itself as on a different moral plane to horse betting and casino operators. Pretty quickly, that attitude fixed itself in my mind too.

When I was involved in international cooperation between lotteries, I noticed this attitude was global, and not just a Finnish specialty. The lotteries organized, and continue to hold, an annual congress that brought together several hundred lottery leaders.

In retrospect, those congresses were like a religious ceremony to emphasize the right and superiority of one’s own cause over other gambling operators. Lotteries think that, in particular, the casino business has been bad, almost sinful, but lottery games have been harmless and good for customers.

Until recently, ‘gambling’ was a ‘forbidden word’ at lottery events. So, according to lottery people, lottery games have not been gambling but gaming.

The development of technology and business has changed the way lotteries operate, and the situation in many countries is different from what it was just over 25 years ago. My own company, Veikkaus, was one of the first companies to jump into the digital business when we launched an internet gaming offering as early as the end of 1996. Before that, we have already added sports betting to our product range. All Nordic lotteries followed the same development path.

Business development and customer-oriented thinking spread to many other lottery companies. Many companies’ directors and experts understood that lottery games are part of a larger business entity. It is not just about gambling but also about spending on entertainment and leisure.

Although that was understood in many lotteries, the word ‘competition’ also found itself on the list of ‘forbidden words’ for a long time. Almost all lotteries have the exclusive right to operate lottery games in their own jurisdictions.

Therefore, the thinking was the lottery cannot compete with other companies because it is not possible for a monopoly company. Such thinking created a dilemma where lotteries sought to increase market share at the operational level, but at the same time talked like a monopoly.

Today, the operations of lotteries are more divergent. Unfortunately, some companies still cling to that 90s mindset. The business has been developed, but only in the field of lottery games.

I have often compared the activities of these companies to a state office, where the most important task of officials is to avoid mistakes. It has been impossible for such lotteries to succeed in an increasingly fierce competition. At the very other extreme are those lotteries that operate purely commercially.

These companies follow precisely the same business principles as any large private gambling operator. The state office-type lotteries and public-listed companies have little in common, although they still belong to the ‘lottery family’.

Almost all companies inside the lottery organizations, such as the European Lotteries, have exclusive rights to lottery games. In fact, these companies have nothing else in common anymore.

Lotteries are used to planning things together, although business cooperation is generally limited to a few joint lottery products. The best-known examples of collaboration in Europe are the EuroMillions and EuroJackpot lottery games.

Although there are hardly any other joint projects, lotteries have been willing to work together, despite differences in how businesses are run. The state office-type lottery, under strict state control, is ready to discuss cooperation with a listed lottery business. But at the same time, a private gambling operator with a background in sports betting will still be considered a ‘bad’ company.

We heard some exciting news just before Christmas. One of the gambling giants, Flutter Entertainment, announced that it would buy the Italian company Sisal. Flutter counts the likes of Paddy Power, Betfair, Sky Bet, PokerStars and FanDuel among its brands.

To lotteries these are all seen as dangerous ‘gambling’ – rather than ‘gaming’ – brands. On the other hand, Sisal is part of the ‘lottery family, although its activities and ownership have always deviated from the mainstream of lotteries.

Sisal participates in the EuroJackpot game together with the Nordic, German, and many other European lotteries. Now, suddenly, Flutter is involved in that collaboration. How well can such an operator mentality fit into this lottery group? Will Flutter become a member of the ‘lottery family’ after the Sisal acquisition, or will that group begin to disintegrate?

Another interesting example of a change in the Lottery family is the tender process for the next UK National Lottery license. Camelot, Sazka, and Sisal, the largest European lottery companies, competing for the contract.

In principle, the cooperating companies have become each other’s worst potential competitors, although they do not yet compete with each other in business terms. It hasn’t been long since the directors of these three companies sat on the board of the European Lottery Association, where they were planning measures against private operators.

There is stiff competition for billion-pound businesses against partners that sit in the same organization. All three of these lotteries are owned by private investors, further increasing the weight of the business in strategic choices. Can such companies again be satisfied members of the lottery family after the UK competition as before? I doubt it, but perhaps that’s not a bad thing.

The time for traditional ‘lottery family’ thinking is over. Instead, I think new, slightly smaller groups may form among the existing lotteries, which will still be able to work together among themselves.

Cooperation should be developed between companies in a similar fashion. There is a much better basis for cooperation if the companies’ goals and values are identical. Lotteries that are state-owned and only allowed to operate lottery games have very little in common with the private companies that offer all gambling verticals across all channels.

As I said earlier, the values of a state lottery and a public-listed company are not likely to be a “match made in heaven”.

I believe that the cooperation between the lotteries will continue, but the nature of that cooperation is likely to change. Not all lotteries can and do not even want to, enter into open competition in the gambling market. It is important that companies operate based on their values and strategies and find suitable partners for that.

Vähentääkö Suomen uusi arpajaislaki peliongelmia?

Kirjoitin tämän kolumnin rahapelialan digitaaliseen www.lotterydaily.com julkaisuun ja teksti julkaistiin englanniksi 4.1.2022. Koska asia koskee lähinnä Suomea, niin kirjoitin nyt saman tekstin suomeksi.

Aloitan vuoden 2022 kirjoittamalla oman kotimaani Suomen rahapelijärjestelmän tilanteesta. Kirjoitin noin vuosi sitten ehdotetusta uudesta arpajaislaista, joka oli silloin lähdössä EU:n notifikaatioprosessiin. Suomen eduskunta hyväksyi tuon uuden lain juuri ennen joulua ja laki tuli voimaan 1.1.2022. Laissa on muutamia kohtia, joille on annettu siirtymäaika, minkä vuoksi osa uudistuksista toteutetaan vasta viimeistään vuoden 2023 aikana.

Hallitus on kertonut, että uuden arpajaislain tarkoituksena on auttaa Suomen säilyttämään rahapelien yksinoikeusjärjestelmä ja samalla mahdollistaa rahapeleistä aiheutuvien haittojen vähentäminen. Aiemmin faktisena tavoitteena on ollut myös rahapeleistä valtiolle ja edunsaajille kerättävien tuottojen optimointi, mutta nyt näyttää siltä, että tästä tavoitteesta on luovuttu. Vastuullinen pelaaminen on siis Suomen rahapelijärjestelmän selkeä uusi virallinen päätavoite. En kuitenkaan ole varma, että uusi laki auttaa saavuttamaan tämän tavoitteen.

Ennen kuin perustelen näkemystäni siitä, että uusi laki ei ole hyvä ratkaisu, käyn läpi lain myötä Suomessa muuttuvia asioita. Uuden lain myötä offshore-rahapeliyhtiöiden (ulkomaiset yhtiöt & PAF) toiminta tulee olemaan Suomessa entistä hankalampaa. Suomalaiset asiakkaat saavat edelleen pelata ulkomaisille peliyhtiöille, mutta yhtiöt eivät saa markkinoida ja suunnata myyntitoimenpiteitä Suomeen. Markkinointirajoitukset koskevat nyt myös yksittäisiä henkilöitä. Tällä muutoksella pyritään estämään erityisesti sosiaalisessa mediassa tapahtuvaa lähinnä julkisuuden henkilöiden harjoittamaa toimintaa. Markkinointikiellon osalta on haasteena se, että laissa ei ole riittävän tarkasti määritelty sitä, mikä katsotaan markkinoinniksi ja myynninedistämiseksi.

Rahapelitoiminnan valvoja, Poliisihallitus, ylläpitää mustaa listaa yhtiöistä, joiden se katsoo rikkoneen markkinointikieltoa. Mikäli peliyhtiö ei muuta toimintaa, jonka regulaattori on katsonut laittomaksi, joutuu yhtiö mustalle listalle. Suomen on tarkoitus ottaa vuoden 2023 alusta alkaen käyttöön rahansiirtojen estot, jolla estetään suomalaisten asiakkaiden rahansiirrot offshore-yhtiöille. Pankkien ja maksuvälitysyritysten tulee estää rahansiirrot niille yhtiöille, jotka ovat joutuneet Suomen mustalle listalle. Tavoitteena oli myös estää rahansiirrot toiseen suuntaan eli peliyhtiöiltä asiakkaille. Tätä estoa ei kuitenkaan voitu toteuttaa, koska perustuslain tulkinnan mukaan asiakkailla on oikeus saada voitot laillisesti pelatuista peleistään. Koska pelaaminen ulkomaisille yhtiöille on edelleen laillista, niin voittojen maksua ei voida estää.

Äkkiä ajatellen saattaa näyttää siltä, että uusi arpajaislaki pyrkii suojelemaan monopoliyhtiö Veikkauksen toimintaa. Näin ei kuitenkaan käytännössä tapahdu. Veikkauksen toiminnalle tulee lisää rajoituksia. Yhtiön markkinointia rajoitetaan, pelaamisen määrälle tulee rajoituksia, vuoden 2023 loppuun mennessä kaikki rahapelaaminen on mahdollista vain tunnistautuneille asiakkaille, raha-automaattien määrää supistetaan paljon jne. Kaikkien näiden toimenpiteiden tavoitteena on vähentää Suomen rahapeliongelmien määrää.

Edellä mainitut toimenpiteet ovat jo aiheuttaneet merkittävän laskun Veikkauksen tuotossa. Suomen valtio ja edunsaajat saivat vielä muutama vuosi sitten rahapeleistä vuosittain noin 1,2 miljardin euron rahasumman. Nyt tuo summa on laskenut jo noin 700 miljoonan euron tasolle, eikä uusi laki tuo tähän tilanteeseen parannusta. Suomalaiset ovat kyselytutkimusten mukaan tukeneet rahapelien monopolijärjestelmää poikkeuksellisen vahvasti. Laaja edunsaajaverkosto on saanut monopoliyhtiön tuottoja vuosittain noin miljardi euroa, ja tuo verkosto on ollut suurin syy monopolijärjestelmän puolustamiseen. Nyt nuo syyt puolustaa järjestelmää ovat ainakin vähentyneet merkittävästi.

Veikkaus saa uuden lain myötä joitakin pieniä helpotuksia toimintaansa, mutta niiden tuottoja lisäävä vaikutus on kuitenkin korkeintaan muutamia kymmeniä miljoonia euroja. Tämän lisäksi Veikkaus saa nyt oikeuden perustaa B2B liiketoimintaan keskittyvän tytäryhtiön, josta odotetaan pitkällä tähtäimellä kymmenien miljoonien eurojen vuosituottoja. Uusi yhtiö keskittynee myymään rahapelituotteita ja niitä tukevia teknologisia ratkaisuita toisille peliyhtiöille. En voi tätä asiaa kommentoida neutraalisti, koska erimielisyys toiminnan sisällöstä oli suurin syy Veikkauksesta irtisanoutumiseeni. Joka tapauksessa toivotan onnea uuden yhtiön pyrkimyksille!

Uudesta laista aiheutuu siis harmia offshore-yhtiöille, monopoliyhtiö Veikkaukselle ja sen nykyisille edunsaajille. Tavallisten asiakkaiden näkökulmastakin laki aiheuttaa ainakin jonkin verran harmia, eikä siinä olen keskimääräisen asiakkaan kannalta mitään erityisen hyvää. Uusi arpajaislaki voi kuitenkin olla hyvä ratkaisu, jos se auttaa saavuttamaan valtion suurimman tavoitteen eli peliongelmien määrän laskun. Suomi on nyt selkeästi valinnut linjan, jossa rahapeleistä saatavilla tuotoilla ei ole enää samanlaista merkitystä kuin aiemmin. Vielä muutama vuosi sitten Veikkaus joutui tasapainoilemaan omistajansa ristiriitaisten tavoitteiden välillä, kun valtio odotti samaan aikaan lisää tuottoja ja vähemmän peliongelmia.

Avainkysymys on siis, tuleeko peliongelmat vähenemään Suomessa uuden lain myötä. Toivottavasti näin käy, mutta en ole siitä lainkaan varma. Virallisten tutkimusten mukaan noin kolme prosenttia suomalaisista kärsii peliongelmista, ja vajaat prosentti vakavista ongelmista. Tämä peliongelmien taso on pysynyt suunnilleen samana lähes koko 2000-luvun ajan. Veikkaus tekee omaa epävirallista rahapeliongelmien määrän seurantaa. Yhtiön tutkimusten mukaan peliongelmien määrä on vähentynyt koronaviruksen aikana hieman alle kahden prosentin tasolle. Suomen peliongelmista suurin osa on aiheutunut raha-automaattitoiminnasta. Nyt automaattien määrän vähentäminen, niiden pelaamisen salliminen vain rekisteröityneille asiakkaille sekä kyseisten laitteiden väliaikainen sulkeminen koronan takia ovat todennäköisesti parantaneet peliongelmien tilannetta. Uuden lain mukaan Veikkaus voi edelleen pitää raha-automaatteja kaikkialla Suomessa niin kutsutuissa avoimissa tiloissa kuten supermarkettien aulatiloissa, kahviloissa ja huoltoasemilla.

Nykyisessä monopolijärjestelmässä viranomaisen mahdollisuus valvoa toimintaa kohdistuu käytännössä vain monopoliyhtiöön. Uuden lain myötä regulaattori saa jonkin verran välineitä ja resursseja puuttua myös offshore-yhtiöiden toimintaan. Suomen rahapelaamisesta suuntautuu jo noin 1/3 muille yhtiöille kuin Veikkaukselle. Digitaalisissa kanavissa ulkomaisten yhtiöiden, mukaan lukien ahvenanmaalainen PAF, markkinaosuus on jo noin puolet. Joissakin tuoteryhmissä, kuten kiinteäkertoimisessa vedonlyönnissä, Veikkauksen markkinaosuus on enää korkeintaan neljännes. Pelaamista koskevat pelirajat eivät siis ulotu offshore-yhtiöihin, jolloin kenelläkään ei ole käsitystä yksittäisten ihmisten pelaamisen volyymeistä. Tässä tilanteessa mahdollisten peliongelmien ennalta ehkäiseminen on erittäin vaikeaa.

Suomessa järjestetään eduskuntavaalit huhtikuussa 2023. Sitä ennen emme saa virallisia tietoja uuden arpajaislain vaikutuksista peliongelmiin, mutta joku käsitys asiasta toivottavasti kuitenkin on. Edunsaajien saamat rahat eivät todennäköisesti enää tule suoraan Veikkauksen tuotosta vuoden 2024 alusta alkaen. Jos siis käy niin, että peliongelmat eivät vähene, edunsaajat eivät enää puolusta voimakkaasti Veikkauksen monopolia ja offshore-yhtiöiden markkinaosuus jatkaa kasvuaan, niin todennäköisyys siitä, että uusi eduskunta tekee päätöksen lisenssijärjestelmään siirtymisestä, on erittäin suuri. Ennustan, että Suomi seuraa Ruotsin tietä noin viiden vuoden sisällä.

Will Finland’s new Lottery Act reduce gambling problems?

I have written this text for http://www.lotterydaily.com, and Charlie Horner has partly edited it.

I start 2022 by writing about the situation of my home country’s Finnish gambling system. Less than a year ago, I wrote about the proposed new Lottery Act, which was after that in the EU‘s notification process until August. The Finnish Parliament passed that new law just before Christmas, and the law came into force on January 1st, 2022. A few points in the law have been given a transitional period, which is why some of the reforms will be implemented later, at the latest, during 2023.

The government has stated that the purpose of the new Lottery Act is to help Finland maintain its monopoly system of gambling and at the same time enable the reduction of harm caused by gambling. In the past, the de facto goal has also been to optimize the revenue collected from gambling for the state and its beneficiaries, but now it seems that this goal has been abandoned. Responsible gaming is thus a clear new main goal of the Finnish gambling system. However, I am not sure that the new law will help achieve that goal.

Before I justify my view that the new law is not a good solution, I will go through the things that change with the law in Finland. With the new law, the operations of offshore gambling companies in Finland will be even more difficult. Finnish customers are still allowed to play to foreign gambling companies, but the companies are not permitted to market and have sales operations in Finland. Marketing restrictions now also apply to individuals, and that change is intended to prevent social media activity, mainly from celebrities. Concerning the marketing ban, the challenge is that the law does not define what is considered marketing and promotion in sufficient detail.

The gambling regulator, the National Police Board, maintains a blacklist of companies that it thinks have violated the marketing ban. If the gambling operator does not change the activity that the regulator has deemed illegal, the company will be blacklisted. Finland plans to introduce payment blocking from the beginning of 2023, which will prevent Finnish customers from transferring money to offshore gambling operators. Banks and payment service providers must prevent money transfers to those companies that have been blacklisted in Finland. The aim was also to prevent money transfers in the other direction, i.e., from gambling companies to customers. However, this blockade could not be enforced because, according to the interpretation of the Constitution Law, customers are entitled to winnings from their legally played games. As gambling for offshore companies is still legal, the payment of wins cannot be blocked.

It may appear that the new Lottery Act seeks to protect the operations of the monopoly operator Veikkaus. However, that is not the case in practice. There will be more restrictions on Veikkaus‘ operations. The company’s marketing will be restricted, there are maximum limits for gambling, by the end of 2023, all gambling will only be possible for registered customers only, the number of slot machines will be reduced a lot, etc. All these measures aim to reduce gambling problems. 

The above measures have already caused a significant decrease in Veikkaus’ revenue. A few years ago, the Finnish state and beneficiaries received about 1.2bn euros a year from gambling. Now that amount has already fallen to around EUR 700m, the new law will not improve the situation. Finns have been highly supportive of the gambling monopoly system. An extensive network of beneficiaries has received a monopoly revenue of around EUR 1bn a year, and that network has been the main reason for defending the monopoly system. Now the reasons to support the system have at least diminished significantly.

Veikkaus will receive some slight relief for its operations with the new law, but their total revenue-increasing effect will not exceed, even in the best case, a few tens of millions of euros. In addition, Veikkaus will now have the right to establish a subsidiary focusing on the B2B business, which is expected to generate tens of millions of euros in annual revenue in the long term. The new company will likely focus on selling games and supporting technology solutions to other gambling companies, mainly lotteries. I cannot comment on this matter neutrally because the disagreement over the content of the operation was the main reason for my resignation from Veikkaus. In any case, I wish Veikkaus good luck with the new company’s operations!

Therefore, the new law will be detrimental to offshore companies, the monopoly company Veikkaus and its current beneficiaries. Even from the point of view of ordinary customers, the law causes at least some difficulties, and there is nothing particularly good about it for the customers. However, the new Lottery Act can be a good solution if it helps achieve the state’s biggest goal, reducing the number of gambling problems. Finland has now clearly chosen a line in which the income from gambling no longer has the same significance as before. Veikkaus has been balancing between conflicting goals, while the state has expected more revenue and fewer gambling problems at the same time.

The critical question is whether gambling problems will decrease in Finland with the new law. I hope so, but I’m not sure at all. According to official research, about three percent of Finns suffer from gambling problems and less than one percent from serious ones. That level of gambling problems has remained roughly the same throughout most of the 21st century. Veikkaus runs its own unofficial monitoring of gambling problems. According to the company’s study, the number of gambling problems has dropped to just a 2 percent level during the Covid-19. Most of Finland’s gambling problems are due to slot machine operations. Now, reducing the number of slot machines, allowing only registered customers to play them, and temporarily shutting down those devices because of Covid are likely to have reduced the number of problems. According to the new law, Veikkaus can still keep slot machines all over Finland in so-called open spaces, such as supermarket lobbies, cafés, and petrol stations.

In the current monopoly system, the possibility for the regulator to control is limited to the monopoly company. With the new law, the regulator will also have some tools and resources to intervene in the operations of offshore companies. About 1/3 of Finland’s gambling is already played at companies other than Veikkaus. In digital channels, the market share of offshore companies, including PAF from Åland, is already about half. Veikkaus’ market share is no more than a quarter in some product groups, such as fixed-odds sports betting. Gambling limits thus do not extend to offshore companies, so no one has an idea of the volumes of gambling by individuals and cannot control it. In that situation, it is challenging to prevent potential gambling problems.

Finland will hold parliamentary elections in April 2023. We will not receive official information on the effects of the new Lottery Act on gambling problems before that, but hopefully, we will have some idea about it. The money received by the beneficiaries will probably no longer come directly from Veikkaus’ profit from the beginning of 2024. Thus, if the gambling problems do not diminish, the beneficiaries no longer strongly protect Veikkaus’ monopoly, and the market share of offshore companies continues to grow, then the probability that the new parliament will decide to change to a license-based system is very high. I predict that Finland will follow the path of Sweden in about five years.

The changing operating environment for lotteries

I have written this text for http://www.ice365.com, and they have partly edited it.

I’ve been lucky to have been working in the gambling industry for most of my business career. For most of that time, I have worked with lottery companies. 

The past 18 months, during which I have been consulting in the gambling industry, have opened my eyes to the enormous change our entire industry is currently undergoing. I’m a little worried about how well lotteries understand that need for change and whether they will be able to react fast enough.

The lottery world has already changed a lot in recent years. In the past, lottery companies were largely state-run entities, but this is no longer true, at least not in Europe. States still own lotteries in many countries, but more and more companies are privatized. 

The operating model of an investor-owned listed company is very different from that of a state-owned company, and this has inevitably affected the operation of lotteries as well. 

I’m confident that lotteries, which operate similar to private businesses, will thrive in this evolving environment. The likes of Camelot, La Française des Jeux, Sazka Group and Sisal examples have shown this is possible, as have Nordic lotteries such as Danske Spil and Svenska Spel.

Not so different

The interesting question is how lotteries under the strict control of the state will cope with the challenges of the future, or even the hurdles they face today. Lotteries often see themselves as distinct from what is traditionally considered a gambling business. This is not the case. I would argue that when it comes to customers’ decision-making, they consider lotteries as part of the overall gambling industry or even the entertainment and leisure market. 

Lotteries, therefore, need to understand that they are competing, despite their nominal monopoly position, against other gambling offerings. If this is not acknowledged, the state-run businesses will have little chance of success in the years to come.

Accepting and adapting to a competitive situation does not mean that lotteries should change their entire operations. Having said that, it is important to understand the most critical choices for customers when considering where to spend their money. 

Lotteries need to know their customers better and understand the motives for gambling, or as many insist on calling it, gaming. In this way, lotteries can find the right strategic solutions that will help them continue to succeed in their markets. 

Changing channels

It is clear that lotteries need to invest heavily in digital channels. The traditional retail model is no longer enough. Of course, there are still significant regional differences here. In any case, products must be available where customers spend their time anyway. 

Another key area for change relates to the scope of the product range. Private gambling operators are one-stop shops today, offering all gambling verticals under a single brand. For consumers, it is much easier to bet, play slots, and have a game of bingo via one provider than it is to jump between offerings. 

Therefore offering lotto games and scratchcards is no longer enough; customers expert more. Equally, it is essential to understand that digitizing operations and expanding the product range should not mean abandoning responsibility requirements.

State of play

Perhaps the biggest challenge lies in the changing relationship between the lottery and the state. From my experience, I know that the directors at several lotteries have spotted what is required to future proof their businesses – but the state has not given permission to make the necessary changes.

There are two distinct roles that the state plays when it comes to lotteries. One is as the “parent company”, with the power to guide decision making, and the other is as a regulator of gambling activities. Through this second role, the state can play a decisive part in whether the lotteries under their control are able to remain relevant in a changing industry. 

Strict regulation, for example, can prevent the lottery from digitizing its operations and expanding the product range as required. In many cases, a lottery’s apparent refusal to change with the times is seen as laziness – or even stupidity – on its part. The real reason for these entities being slow-moving is often down to the state. 

The changes set out above require a change in mindset among the key decision-makers in the lottery world. Lottery chief executives and their management teams must first understand the need for change. Then they must work with their boards to enable the necessary changes to the business and set out what can be considered a success in competing against the private sector. 

After that, they have to get support and acceptance from the state for their planned changes – they must “sell” the proposal at the highest level. This requires a significant shift in the ways many think of lotteries and their purpose. That new mindset must also be applied internally, so staff can change how they present and promote products to customers.

Fortunately, this is hardly rocket science. Even within the lottery world, several successful case studies are available in which a lottery has succeeded in modernizing its business. Benchmarking and best practices are a reasonable basis for change, but there can always be an even better way to do things. When making decisions, efforts must be made to find the best possible solution to the current market situation.

All of the above will also help lotteries prepare for possible changes in the legislative environment. I do not think that the future lottery business will be based on a monopoly system. If a company is competitive, it will thrive regardless of the gambling system. In the following columns, I will elaborate on my views on the possibilities of modernizing lottery activities.

Horse betting in the lotteries product portfolio

I have written this text for http://www.lotterydaily.com, and Conor Porter has partly edited it.

Traditionally, horse betting and lotteries have not belonged together. The gambling business is almost everywhere based on a model in which gambling is divided into three or four different areas of activity. Casino operators have run casinos and in recent years, also online casinos. Betting companies have operated sports betting, including in many cases, horse betting. 

On the other hand, there have also been separate horse betting companies in the market that have taken care of on-track betting and later also online horse betting. In addition to these, there have been lottery companies whose product range has included lotto games and scratch cards. The product range of lotteries has expanded to sports games in many countries, and in some cases, to casino games and horse betting.

As we know, the consolidation of the gambling industry is happening at a rapid pace. New operators from outside the gambling industry have entered or are entering the industry. In addition to this, the division within the industry is breaking down. More and more operators today offer almost all different product groups for gambling. The digitalization of operations and online sales have made this more accessible than it was in the old retail channel model. For example, many traditional sports betting operators now make most of their revenue from casino games. Several lotteries have also realized that they have the potential to succeed in the competition if they expand their business to other gambling verticals.

Customers’ demands on businesses have grown tremendously. Companies can no longer succeed with old-fashioned operating models. Products should be available where customers are anyway. That has placed great demands on the digitization of operations. It is already impossible to do an effective gambling business in many countries without an online sales channel. For example, about half of all gambling sales take place on digital channels in Nordic countries. Customers also seem to prefer companies from which they can buy all products from one place. This implementation requires expanding the product range to cover all major product groups. The competitive advantage of lotteries is so far quite strong, as private operators have not found a sensible way to offer lottery jackpots. However, lotteries should also be active and expand their product range to other gambling verticals.

As I said earlier, lotteries don’t easily come to mind when you think about horse betting. When you look at it a little more closely, the image turns out to be at least partially wrong. One member company of the World Lottery Association (WLA) is the Hong Kong Jockey Club (HKJC), one of the world’s largest horse betting companies. In addition to HKJC, WLA’s member companies include dozens of lotteries that also offer horse games. In Europe, companies like SISAL, IGT Lottery, Veikkaus, Loterie Romande, Svenska Spel, and Danske Spil have horse betting in their product portfolio. According to the experience of European companies, customers who actively play horse betting also play other games offered by lotteries and are therefore very profitable customers.

The WLA recently added an interesting new member company in Europe’s biggest horse betting company, the French PMU. PMU has been working closely with lotteries, mainly in French-speaking countries, for a long time. Several of the lotteries in the French-speaking countries of Africa sell PMU horse betting, which accounts for a large proportion of the total revenue from those lotteries. PMU also cooperates with European lotteries at two levels, commingling and technology.

The strength of lotteries compared to other gambling operators is the large number of customers and the tradition of cooperation. As we know, the big lottery products in North America and Europe are the result of collaboration. Individual lotteries could not have produced products like Euro Millions and Powerball. In such pool-based products, collaboration allows for huge jackpots. The same model could work in the area of horse betting. Lotteries have an extensive customer base and sales network in their own countries. When combined with an exciting product, there is a “winning combination” in size. Of the WLA members, both HKJC and PMU already have betting products that would seem to appeal to customers of other lotteries.

Last week, WLA organized a horse betting webinar, where lottery companies were introduced to the World Pool horse betting that is already up and running. Lotteries from countries where horse racing is a popular sport should consider joining that World Pool game. The easiest way to expand your product range to the field of horse betting could be to work with PMU. I believe that other member companies in the lottery world that already run horse betting are also ready to help other lotteries join.

The development where lotteries are getting involved in the horse betting business is exciting to me personally. My gambling business career started with a horse betting company, where I had time to be the CEO for a while before joining the lottery company. I’m still an active horse bettor and involved in Board-level horse racing activities here in Finland. That’s why I think I’m qualified to help lotteries who want to understand the potential of horse betting. So, I’m ready to help if contacting the giants of the lottery world is not the most interesting option of all.

Lottery license bidding

I have written this text for http://www.lotterydaily.com, and Conor Porter has partly edited it.

Lottery gaming is still based on a monopoly system in almost all countries. At the same time, however, the activities of other gambling verticals are based in more and more countries on a licensing system with dozens or even hundreds of gambling companies. Is the traditional monopoly system based on law already too old-fashioned to conduct lottery activities?

Gambling operations cause significant problems for some customers. It is therefore up to society to restrict this activity. The situation is the same as in alcohol and tobacco businesses. In the area of gambling, states have decided not only to regulate operations but also to own the companies that run the lottery business by themselves. From this background, state lotteries have emerged, in which the state acts as the owner of the companies. In some cases, state lotteries are part of the state administration and do not operate like regular business ventures. In such a situation, there is certainly no attempt to maximize business results.

The interesting question is, why have states ended up controlling lottery businesses in particular? From society’s point of view, the starting point would seem to be the precise regulation of hazardous activities. In gambling, however, the situation appears to be just the opposite. The most problematic activity for players, casino games, has always been in private business in most countries. The next most dangerous area, betting, has also moved into the normal course of business almost everywhere. Of course, states continue to control these gambling areas through legislation and regulation, but there is no longer any state’s direct ownership of these activities – if at all. In contrast, the situation is different for the least problematic gambling vertical, lottery games, the situation is different – why?

The European Court of Justice has outlined the justification of the gambling monopoly system for EU countries. According to court rulings, Member States are free to decide on their gambling legislation as long as the rationale for the schemes is credible. A monopoly system can be a legitimate model for carrying out gambling activities if the primary purpose is to prevent problems related to gambling activities – problem gambling and criminal activities (including money laundering). According to the ECJ, fiscal targets, gambling revenues are not legitimate for a monopoly system. Against this line, it is fascinating to consider how and why rather dangerous casino activities are much less under the control of Member States than reasonably harmless lottery activities.

I’m not even trying to be a lawyer, so I’ll stop legal reflection on this. However, it is interesting to think about how states should organize lottery activities to meet legal requirements while still generating significant revenues for states. I do not favor full liberalization / licensing of lottery activities, although, in principle, I favor a free-market economy. There are usually so many gambling companies in a free competition that the business is decentralized to several operators. In lottery games, this would not necessarily be in the interest of customers because, in lottery games, the big jackpot is the primary motive for playing. In a competitive situation, the size of the jackpots would collapse compared to the current monopoly situation, and I do not consider that to be a good thing for customers.

In my current role as a gambling consultant, I have had the opportunity, for a small part, to be involved in the lottery exclusive license bidding process in a couple of countries. That is, in my view, the best way to combine the monopoly system and the market economy to preserve the legal legitimacy of the system and optimize the revenue on the operation. The bidding process would also avoid the strange situations in which countries have given privately-owned companies the exclusive right to run lottery activities. I have wondered why no one has questioned such cases, which are numerous in Europe, for example.

Bidding for a lottery license is undeniably a very laborious process. The UK is probably the most famous country that uses the lottery license. There, the license is in principle granted for ten years at a time. If I have understood correctly, Camelot UK, which has had the license since the beginning of the system, starts preparing for the bidding about a couple of years before the expiry of the current license. Dozens, unless the hundreds, employees will be involved in preparing tender documents, and costs are indeed very high. I have heard that the tender documents have contained more than 1,000 pages of text per participating company. It is also a tremendous job to evaluate the offers and decide who will win the license.

However, the bidding model seems very good otherwise. The competition will help to preserve the best aspects of lottery activities while at the same time dismantling the dual role of states. The state acts as a self-regulator in a traditional monopoly system, which is not the best possible situation. It is certainly challenging, if not impossible, for states to forget the importance of lottery revenues when making regulatory decisions. In a competitive-based model, this can be expected to be more accessible.

I know that there has also been criticism of lottery licensing in the UK. I think that the participating companies present their estimates of revenue development during the licensing period, which has a reasonably significant weight in selecting the licensee. However, I assume that that return estimate is not a promise of any kind. If the winning company does not produce the amount presented to the state, it will face no financial consequences. Admittedly, there may be some inconvenience in getting the following license.

No system is perfect, but I still see lottery monopoly licensing as a model that other countries should seriously consider. It would be interesting to consider a similar model, based on a limited number of licenses, for other gambling verticals too.

Suomen rahapelitoiminta – tilannekatsaus elokuu 2021          

Olen kirjoittanut tämän tekstin yhteistyössä yhtiökumppanini Reijo Anttilan kanssa.

Markkinatilanne H1/2021

  • Koronavirus on edelleen vaikuttanut negatiivisesti Veikkauksen fyysisessä kanavassa tapahtuvaan rahapelitoimintaan. Pelisaleja ja raha-automaatteja on jouduttu pitämään kiinni.
  • Fyysisten raha-automaattien pakkotunnistautuminen tuli hajasijoitetuissa automaateissa voimaan tammikuussa 2021. Tämä tulee jatkossa pienentämään Veikkauksen pelikatetta merkittävästi.
  • Omien pelisalien raha-automaattien pakkotunnistautuminen tuli voimaan heinäkuussa 2021. Veikkauksen käyttämissä ulkomaisissa raha-automaateissa ei ollut tunnistautumisominaisuutta valmiina. Tämän vuoksi nämä automaatit jouduttiin sulkemaan Veikkauksen omissa pelisaleissa. Kyseiset automaatit tullaan avaamaan uudestaan, kun asiakkaan tunnistautuminen on niillä mahdollista. Epävirallisen tiedon mukaan asiakkaan tunnistautumispakko on romahduttanut Veikkauksen omista pelisaleista kertyvän pelikatteen.
  • Veikkaus käynnisti YT-neuvottelut elokuussa 2021. Yhtiön ilmoituksen mukaan sen tarkoituksena on vähentää myyntipaikkaorganisaatiosta noin 200 työpaikkaa. Tämän lisäksi yhtiö pyrkii tekemään satoja muita työntekijöitään koskevia organisatorisia muutoksia.
  • Digitaalista nopearytmistä rahapelaamista koskevat pelirajat laajentuvat syyskuussa 2021 koskemaan myös fyysisissä pelipisteissä tapahtuvaa raha-automaattipelaamista. Tämä tulee laskemaan Veikkauksen tuottoja edelleen. Fyysisiä raha-automaatteja on saanut tähän asti pelata niin paljon kuin haluaa, mutta jatkossa pelaajan on asetettava itselleen raja niin päivä- kuin kuukausikulutukseen. Digitaalisen kanavan kokemusten mukaan rajat tullaan asettamaan tiukoiksi. Arvioiden mukaan ongelmaisesti raha-automaatteja pelaavien määrä lasketaan kymmenissä tuhansissa, ja tämän joukon pelaaminen tulee laskemaan paljon. Arvioiden mukaan osa vähentyvästä pelaamisesta siirtynee tapahtuvaksi offshore-toimijoiden pelipalveluissa.  
  • Useasta eri lähteestä saatujen tietojen mukaan offshore-yhtiöiden pelikate Suomesta on ollut korona-aikana voimakkaassa kasvussa.
  • Erityisesti Veikkauksen fyysisessä kanavassa tapahtuva rahapelaaminen on valtavassa muutoksessa. Veikkauksen H1/2021 osavuosikatsauksen mukaan enää vain 45 % rahapelaamisesta tapahtui fyysisessä kanavassa ja 55 % kertyi digitaalisesta myynnistä. Vuonna 2019 fyysisen myyntikanavan osuus kokonaismyynnistä oli lähes 60 %. Tällä hetkellä jo noin 65 % suomalaisten kaikesta rahapelaamisesta tapahtuu digitaalisissa kanavissa. Parin vuoden sisällä tuo osuus ylittää 70 % rajan.

Arpajaislakiesitys 2021

  • Hallitusohjelman mukainen arpajaislain uudistamishanke käynnistettiin tammikuussa 2020, jolloin nimitettiin asiaa valmisteleva työryhmä.
  • Työryhmä sai esityksenä valmiiksi loppuvuodesta 2020. Lausuntokierrokset esityksestä käytiin alkuvuonna 2021.
  • Lakiesityksen avainkohdat ovat:
    • Laissa säädetään offshore-rahapelitarjonnan saavutettavuuden rajoittamiseksi maksuliikenne-estoista. Estot kohdistetaan arpajaislain vastaisesti markkinoiviin rahapeliyhtiöihin. Lakiesityksessä ei määritellä sitä, mikä katsotaan laittomaksi markkinoinniksi. Rahapelitoimintaa valvova viranomainen (Poliisihallitus) tekee asiasta tulkinnan. Regulaattori pitää laittomasti markkinoivista peliyhtiöistä ”mustaa listaa”. Pankkeja ja maksuliikenne palveluita tarjoavia yrityksiä velvoitetaan estämään rahaliikenne ”mustalla listalla” oleviin peliyhtiöihin.
    • Lakiin lisätään säännöksiä pelaajan pakollisesta tunnistautumisesta. Tämä koskee alkuvaiheessa luonnollisesti ainoastaan Veikkauksen toimintaa, mutta sitä voidaan pitää linjauksena, joka on voimassa myöhemmin myös mahdollisessa lisenssimarkkinatilanteessa.
    • Lakiin lisätään säännös arpajaislain vastaisten rahapelien markkinointia koskevan kieltopäätöksen ulottamisesta luonnollisiin henkilöihin. Tämän lisäksi tulee mahdollisuus hallinnollisen seuraamusmaksun määräämisestä arpajaislain vastaisesta markkinoinnista
    • Lakiesityksen mukaan Veikkaus saa luvan markkinoida vedonlyönti- ja totopelejä, vaikka niiden katsotaan kuuluvan pelituotteisiin, jotka voivat aiheuttaa merkittävästi peliongelmia.
    • Laissa täsmennetään Veikkauksen markkinointia ja rahapelien toimeenpanon valvontaa koskevia säännöksiä. Lisäksi lakiin lisätään säännökset raha-automaattien sijoittelusta ja omavalvonnasta.
    • Lakiin lisätään säännökset Veikkauksen mahdollisuudesta perustaa yritysten välistä liiketoimintaa harjoittava tytäryhtiö muuta kuin rahapelitoimintaa varten sekä perustettavan tytäryhtiön toimintaa koskevista edellytyksistä ja rajoituksista.
  • Esitys lähetettiin huhtikuun 2021 lopussa EU:n notifikaatioprosessiin. EU-prosessin aloittamisella oli niin kiire, ettei Lainsäädännön arviointineuvoston lausuntoa ehditty saada ennen prosessin aloittamista. Arviointineuvoston myöhemmin tulleessa lausunnossa todetaan lakiesityksen valmistelussa olevan useita puutteita. Erityistä huomiota kiinnitetään siihen, ettei valmistelussa ole selvitetty muita mahdollisia vaihtoehtoja (esimerkiksi lisenssijärjestelmään perustuvaa lainsäädäntöä). Lakiesityksen perusteluista myös puuttuu taloudellisia laskelmia ja lakiesityksen vaikutusarvioita Ahvenanmaan PAF-yhtiön toimintaan.
  • Malta esitti heinäkuussa 2021 EU-notifikaatioprosessin yhteydessä lakiesityksestä ”Detailed opinion”-lausunnon. ”Detailed opinion” haastaa Suomen valtion perustelemaan tehtyjen ratkaisujen tarpeellisuutta ja oikeasuhtaisuutta. Suomella on 3 kuukautta aikaa antaa vastauksensa ja tehdä mahdolliset tarvittavat muutokset. Vaikka lakiesityksessä olevat toimet vaikuttavat esitettyjen tavoitteiden saavuttamiseksi suurilta, niin lopputulema lienee se, että lakiesitys tulee pääpiirteittäin samana eduskunnan käsittelyyn. Epävirallisten tietojen mukaan Suomi on jo antanut vastauksensa ja ilmeisesti tehnyt lakiesitykseen vain pieniä muutoksia. Lakiesityksen odotetaan tulevan Suomen eduskunnan käsittelyyn lähiviikkoina – syyskuussa 2021.
  • Todennäköisyydet sille, meneekö esitys lainkaan läpi, meneekö se läpi esitetyn kaltaisena vai meneekö se läpi muutettuna vaihtelevat koko ajan. Veikkauksen taloudellisen tuloksen romahtaminen puoltaa lakimuutoksen jyräämistä läpi nopealla aikataululla. Lakimuutoksen lopputulos ei muuta tilannetta merkittävästi sen suhteen, että vakava keskustelu lisenssijärjestelmään siirtymisestä on edessä joka tapauksessa.
  • Tietojen mukaan näyttää varmalta, että nykyinen malli, jossa edunsaajien avustukset on kytketty suoraan Veikkauksen tuottoon, tullaan purkamaan. Muutosta valmistelemaan on nimetty työryhmä, jonka odotetaan antavan esitys asiasta vuoden 2021 loppuun mennessä. Tavoitteena on saada muutos voimaan vuoden 2024 alusta alkaen. Edunsaajien ja Veikkauksen tuoton suoran yhteyden katkaiseminen vaatii muutosta myös arpajaislakiin. Tämän vuoksi laki joudutaan avaamaan uudelleen joko vuonna 2022 tai 2023. Tässä yhteydessä on ainakin teoreettisesti mahdollista, että lakiin voitaisiin tehdä myös muita merkittäviä muutoksia.

Poliittinen tilanne

  • Poliittinen turbulenssi on kova. Hallituspuolueita sitoo hallitusohjelma, mutta tilanne on vaikea Veikkauksen tuottojen romahduksen takia. Poliitikot haluaisivat tukea Veikkauksen markkina-asemaa, mutta siihen ei ole keinoja. Tämän hetken tiedon mukaan arpajaislakiesitystä ajetaan edelleen läpi. Monopolijärjestelmään perustuvan rahapelilainsäädännön järkevyydestä on kuitenkin syntynyt keskustelua, ja hallituspuolueiden kansanedustajat ovat esittäneet asiasta eriäviä näkemyksiä.
  • Veikkauksen ja sen edunsaajien yhteys ollaan katkaisemassa viimeistään vuonna 2024. Sitä ennen Veikkauksen edunsaajien saama valtionavustus laskee jo melkoisesti. Veikkauksen tuotot ollaan siirtämässä normaaliin budjettiin, josta edunsaajien avustukset maksetaan kulloisenkin hallituksen tekemien budjettipäätösten mukaisesti.
  • Koko rahapelijärjestelmän muuttamisesta on alkanut poliittinen keskustelu. Veikkauksen markkinaosuus suomalaisten koko rahapelaamisesta laskee seuraavien vuosien aikana alle 70 %. Digitaalisissa kanavissa Veikkauksen markkinaosuus on lähellä 60 % rajaa, ja kilpailluilla pelituotealueilla (kasinopelit ja kiinteäkertoiminen vedonlyönti) arvion mukaan vain noin 35 %. Tämä kehityksen perusteella ei enää ole järkevää ja mahdollista jatkaa monopolijärjestelmällä. Kysymys on lähinnä siitä, missä vaiheessa järjestelmä muutetaan lisenssipohjaiseksi ja minkälainen monilupajärjestelmä luodaan.
  • On epätodennäköistä, että vielä seuraavakin Suomen hallitus päättäisi jatkaa rahapelien monopolijärjestelmällä. Seuraavan kerran vuonna 2023 toteutettavassa rahapeliongelmien väestötutkimuksessa ei voida odottaa ongelmien määrän laskeneen merkittävästi. Vähentynyt raha-automaattipelaaminen vähentää koettuja peliongelmia jonkin verran. Tämän vaikutuksen näkyminen väestökyselyssä on hyvin epätodennäköistä, koska digitaalisen rahapelaamisen osuus on räjähtänyt niin pelaamisessa kuin peliongelmien määrässä.
  • Digitaalisen pelaamisen osuus Suomen koko rahapelaamisesta saavuttaa pian 70 % tason. Veikkauksen markkinaosuus tuosta pelaamisesta on laskenut nopeasti lähelle 60 % tasoa. Tietyillä kilpailluilla tuotealueilla Veikkauksen osuus pelaamisesta on jo erittäin alhaisella tasolla, esimerkiksi kiinteäkertoimisessa vedonlyönnissä arvioilta vain noin 25 %. Tällaisessa markkinatilanteessa monopolijärjestelmällä ei voi enää jatkaa.

Development of Finnish gambling situation – August 2021

I have written this short analysis of the Finnihs gambling situation together with my business partner Reijo Anttila.

Market situation H1/2021

  • The Covid-19 has continued to have a negative impact on gambling activities in Veikkaus’ physical channels. Gaming arcades and slot machines have had to be partly closed.
  • Compulsory identification-based gaming of physical slot machines came into force in the decentralized slot machines in January 2021. That will significantly reduced Veikkaus’ gross gaming revenue.
  • Mandatory identification of slot machines in Veikkaus’ own gaming arcades came into force in July 2021. The foreign slot machines used by Veikkaus did not have an identification feature ready. As a result, these slot machines had to be closed in Veikkaus’ gaming arcades. Slot machines will be reopened when it is possible that customers can identify themselves in those machines. According to unofficial information, the customer’s obligation to identify himself has collapsed the gaming margin accumulated in Veikkaus’ gaming arcades.
  • Veikkaus started collective bargaining in August 2021. According to the company’s announcement, its purpose is to reduce approximately 200 jobs from the point-of-sale organization. In addition, the company is working to make organizational changes for hundreds of its other employees.
  • In September 2021, the gambling limits for digital, fast-paced gambling will be extended to include slot machine gaming at the physical point of sales. That will further reduce Veikkaus’ revenues. Until now, physical slot machines have been allowed to be played as much as customers want, but in the future, the player will have to set a limit on both daily and monthly consumption. According to the experience of the digital channel, the limits will be set tight. It is estimated that there are tens of thousands of problematic slot machine players, and playing of that group will go down a lot. It is quite possible that some of the declining gambling is likely to move to the digital gambling services of offshore operators.
  • According to information obtained from various sources, the gaming revenue of offshore companies in Finland has been growing strongly during the Covid-19 period.

Gambling in Veikkaus’ physical channel, in particular, is undergoing a considerable change. According to Veikkaus’ H1 / 2021 interim report, only 45 % of gambling took place in the physical channels, and 55 % came from digital sales. In 2019, the physical sales channel accounted for almost 60 % of total sales. At present, about 65 % of all Finnish gambling takes place on digital channels. Within a couple of years, that share will exceed 70 %.

Drafted Lottery Act 2021

  • The project to reform the Lottery Act in accordance with the Government Program was launched in January 2020, when a preparatory working group was appointed.
  • The working group completed the proposal in late 2020. Opinions on the proposal were given in early 2021.
  • The critical points of the drafted law are:
    • The law provides for payment blocking to limit the availability of offshore gambling. Blockings are targeted at gambling companies that market in violation of the Lottery Act. The law does not define what is considered illegal marketing. The regulator (the National Police Board) makes an interpretation. The regulator maintains a “blacklist” of illegally marketing gambling operators. Banks and payment service providers are required to block payment transactions to “blacklisted” gambling companies.
    • Provisions on mandatory player identification are added to the law. In the beginning, of course, this only applies to Veikkaus’ operations, but it can be considered a policy that will be valid later also in a possible licensing market situation.
    • A provision is added to the law to extend the decision prohibiting the marketing of gambling that violates the Lottery Act to natural persons. In addition, there will be the possibility of imposing an administrative penalty fee for marketing in breach of the Lottery Act.
    • According to the bill, Veikkaus will be allowed to market horse and sports betting, even though they are considered to be gambling products that can cause significant gambling problems.
    • The law specifies the provisions concerning Veikkaus’ marketing and supervision of the implementation of gambling. In addition, conditions on the placement and self-monitoring of slot machines will be added to the law.
    • The Act adds provision on the possibility for Veikkaus to establish a subsidiary engaged in business between companies (B2B) for non-gambling activities and on the conditions and restrictions concerning the subsidiary’s operation to be installed.
  • The drafted law was sent at the end of April 2021 to the EU notification process. The start of the EU process was so urgent that the opinion of the Legislative Evaluation Council was not available before the process started. A subsequent opinion of the Evaluation Council noted several shortcomings in the preparation of the law. Particular attention will be paid to the fact that the preparation work has not explored other possible options (e.g., legislation based on a licensing system). The explanatory memorandum to the Lottery Act also lacks financial calculations and impact assessments of the law to the operations of the Åland-based PAF company.
  • In July 2021, Malta issued a “detailed opinion” on the law in the context of the EU notification process. The “detailed opinion” challenges the Finnish state to justify the necessity and proportionality of the decisions. Finland has three months to give its answer and make any necessary changes. Although the measures in the law appear to be significant in order to achieve the stated goals, the result is probably that the bill will be essentially the same for consideration by parliament. According to unofficial information, Finland has already answered and apparently made only minor changes to the bill. The law is expected to be submitted to the Finnish Parliament in the coming weeks – in September 2021.
  • The probabilities of whether a proposal will go through at all, whether it will go through as it is presented, or whether it will go through modified will vary all the time. The collapse of Veikkaus’ financial result favors rolling the change in the law on a tight schedule. The outcome of the changes in the law will not significantly change the situation. So, a serious debate on the transition to a licensing system is ahead in any case.
  • According to the information, it seems certain that the current model, in which the beneficiaries’ revenue is directly linked to Veikkaus’ income, will be dismantled. A working group has been appointed to prepare for the change, which is expected to present a proposal by the end of 2021. The goal is for the change to take effect from the beginning of 2024. Breaking the direct link between the beneficiaries and Veikkaus’ income also requires an amendment to the Lotteries Act. As a result, the law will have to be reopened in either 2022 or 2023. In this context, it is theoretically possible that other significant changes could be made to the law.

Political situation

  • Political turbulence is severe. The governmental program binds government parties, but the situation is difficult due to Veikkaus’ revenues collapse. Politicians would like to support Veikkaus’ market position, but there are no ways to do so. According to current information, the Lottery Act is going to be accepted in parliament. However, there has been debate about the rationale for monopolistic gambling legislation, and MPs, also from governmental parties, have expressed differing views.
  • The connection between Veikkaus and its beneficiaries will be severed by 2024 at the latest. Before that, the state subsidy received by Veikkaus’ beneficiaries will already decrease considerably. Veikkaus’ revenues will be transferred to the state budget, from which the beneficiaries’ grants will be paid in accordance with the budget decisions made by the respective government.
  • A political debate has begun on changing the entire gambling system. Veikkaus’ market share of all Finns’ gambling will fall below 70 % in the coming years. In digital channels, Veikkaus’ market share is close to 60 %, and in the competitive gambling product areas (casino games and fixed-odds betting), it is estimated to be only about 35 %. Based on these developments, it is no longer sensible and possible to continue with a monopoly system. The question is mainly at what stage the system will be converted to license-based and what kind of multi-license system will be created.
  • It is unlikely that the next Finnish government will decide to continue with the gambling monopoly system. The next population survey on gambling problems will be conducted in 2023. It is assumed that the number of gambling problems will not decrease significantly in that survey. Reduced slot machine gambling lowers the gambling problems experienced to some extent. It is doubtful that this effect will be seen in the population survey, as the share of digital gambling has exploded in both gambling and the number of gambling problems.
  • The share of digital gaming in Finland’s total gambling will soon reach 70 %. Veikkaus’ market share of that gambling has fallen rapidly to 60 %. In certain competitive product areas, Veikkaus’ share of gambling is already at a very low level; for example, in fixed-odds sports betting, it is estimated at only about 25 %. In such a market situation, the monopoly system can no longer continue.

Huonoa arpajaislakia ei kannata runnoa väkisin läpi

Olen mielenkiinnolla seurannut Suomen pyrkimystä uudistaa rahapelilainsäädäntöään. Kuten jo tiedämme, niin tavoitteena on edelleen jatkaa yksinoikeuteen perustuvassa järjestelmässä niin, että monopolitoimija Veikkauksella olisi edelleen mahdollisuudet kanavoida rahapelien kysyntää omaan tarjoamaansa. Veikkaus ei voi kuitenkaan tehdä enää mitä tahansa, vaan tarjontaan tulee entistä enemmän rajoituksia, jotta vastuullisuutta voidaan lisätä ja sitä kautta mahdollisimman paljon ehkäistä rahapeliongelmien syntymistä. Tavoitteet kuulostavat hyviltä, mutta toteutus ontuu pahasti ja lopputulema ei vaikuta enää olevan tätä päivää.

Tarkennettu ehdotus uudesta arpajaislaista saatiin valmiiksi vihdoin huhtikuussa. Koska tavoiteaikataulu, laki voimaan 2022 alusta, on niin kiireinen, niin Suomi lähetti lain saman tien EU:n notifikaatioprosessiin. Tavoitteena oli saada EU:n kanta selville heinäkuun loppuun mennessä, jotta lakiin ehdittäisiin tehdä mahdolliset tarkennukset niin, että se tulisi eduskunnan käsittelyyn heti syysistuntokauden alussa syyskuussa.

Menettelyssä kiirehdettiin niin, ettei prosessiin kuuluvaa lainsäädännön arviointilausuntoa ehditty liittää mukaan. Lainsäädännön arviointineuvosto antoi myöhemmin kriittisen lausunnon arpajaislakiesityksestä. Neuvoston mukaan esitys on teknisesti valmisteltu hyvin, mutta siinä ei ole selvitetty muissa EU-maissa käytössä olevaa lisenssipohjaista rahapelijärjestelmää. Ehdotettujen toimenpiteiden vaikutuksia ei ole myöskään analysoitu riittävästi tai lainkaan. Vaikuttaa siis siltä, että päätökset on tehty ensin ja sitten niille on vain kirjoitettu perustelut.

Uusi arpajaislaki sisältää mm. esityksen muille rahapeliyhtiöille kuin Veikkaukselle tapahtuvien rahansiirtojen estosta. Lakiesityksen perusteluissa estoilla arvioidaan olevan vähän vaikutusta Veikkauksen kanavointikykyyn ja tuottoihin. Arviointineuvosto toteaa ”Näin ollen valittu keino ei mahdollisesti ole kovin tehokas ongelmapelaamisen vähentämiseksi”. Miksi tällaista pankeille suurta työtä vaativaa lainsäädäntöä suunnitellaan? Suomalaisten asiakkaiden rahaliikenteen estämisestä aiheutuisi pankeille ja maksuvälitysfirmoille jopa suuremmat kulut kuin Veikkaus mahdollisesti saisi lisätuottoja. Jos maksujen blokeerauksella ei pyritä vähentämään peliongelmia, eikä lisäämään Veikkauksen tuottoja, niin mikä voi olla syynä tällaiseen ehdotukseen, joka lähtökohtaisesti on jo länsimaalaista ajatusmaailmaa vastaan?

Lakiesityksen perusteluissa ei ole myöskään kerrottu, minkälaisia vaikutuksia lailla olisi Ahvenanmaan peliyhtiön PAF:n nettiliiketoimintaan Manner-Suomessa asuvien asiakkaiden osalta. Tiedän, että rahaliikenteen estämisellä olisi dramaattisia vaikutuksia PAF:n toimintaan, joka pahimmillaan saattaisi loppua kokonaan. Tällä olisi iso vaikutus koko Ahvenanmaalle, joka saa yhtiön toiminnasta vuosittain noin 20 M€ tuotot. Rahansiirtoja on erittäin vaikeaa estää PAF:lle niin, ettei se koskisi myös yhtiön täysin luvallista rahapelitoimintaa Ahvenanmaan mantereella sekä laivoilla. Sellaiset toimet, joilla rahaliikenne estettäisiin myös laivoille ja Ahvenanmaalle, olisivat Ahvenanmaan itsehallintolain vastaisia, eikä sellaista päätöstä voida antaa.

Jos rahansiirtojen esto ei koskisi PAF:ia, niin se ei voisi myöskään koskea muita rahapeliyhtiöitä, jotka kohdistavat Suomeen korkeintaan saman tason asiakastoimenpiteitä, mm. suomenkieliset pelisivut ja asiakasviestit, kuin PAF tekee. Yhtiöitä tulee kohdella yhdenvertaisesti. Mikäli PAF:ia kohdellaan eri tavoin kuin muita, vahvistaa se Suomen tilanteeksi duopolin, joka ei ole EU-lainsäädännöllisesti hyväksyttävää. Tällainen tilanne johtaisi käytännössä Suomen rahapelijärjestelmän romuttumiseen.

Suomen arpajaislakiesitys on kohdannut ”odottamattomia” haasteita EU:n notikaatioprosessissa. Tosin itselleni ei ainakaan ollut mikään yllätys, että Maltan valtio kyseenalaisti ehdotuksen. Sen sijaan vakavuusaste, jolla Malta asian teki, yllätti ainakin jonkin verran. Prosessissa on mahdollista pyytää lisätietoja ja ottaa asia pöydälle kuukauden ajaksi. Tätä ainakin itse odotin Maltalta. Mutta Malta on nyt mennyt astetta pidemmälle ja on antanut asiasta ”Detailed opinion”-lausunnon, johon Suomella on nyt aikaa reagoida kolmen kuukauden ajan. Käytännössä tämä tarkoittanee sitä, että arpajaislakiesitys voi tulla eduskuntaan aikaisintaan lokakuun lopussa. Lain saamiselle läpi niin, että se tulisi voimaan ensi vuoden alusta, tulee todella kiire.

Malta esittää lausunnossaan epäilyä Suomen ilmoittamista syistä kokonaismuutokselle. Suomi on ilmoittanut, että lainsäädäntöä uudistetaan, jotta rahapelaamiseen liittyviä ongelmia voidaan ehkäistä nykyistä paremmin. Malta kyseenalaista sen, että monopoli olisi paras vaihtoehto tämän toteuttamiseksi ja peräänkuuluttaa tutkimustietoa asiasta. Kuten jo olen useaan otteeseen todennut, niin käsitykseni mukaan valmisteluprosessissa ei ole edes tutkittu muita mahdollisia vaihtoehtoja. On siis mielenkiintoista nähdä, miten Suomi perustelee monopolin ehkäisevän ongelmia paremmin kuin lisenssimallit.

Malta toteaa myös, että Suomen suunnittelemat markkinointirajoitukset ja maksujen blokeeraukset ovat EU-sopimusten vastaisia, jolloin Suomen pitää pystyä osoittamaan, että vähemmät toimenpiteet eivät riitä. Suomen lainperusteluissa ei ole mitään tutkimustietoa, jolla voitaisiin osoittaa näin isojen toimenpiteiden tarkoituksenmukaisuus ja oikeasuhteisuus. EU-tuomioistuin on todennut, että vaikka valtiot voivat rajoittaa rahapelien tarjoamista alueellaan, näiden rajoitusten on oltava perusteltuja ja niiden on oltava oikeasuhteisia ja sopivia yleisen edun mukaisten tavoitteiden saavuttamiseksi. Suomen pitäisi nyt siis pystyä osoittamaan, että sillä on todellinen tarve toimia vastoin EU:n yleisiä periaatteita.

Olin yllättynyt siitä, ettei Malta kiinnitä lausunnossaan mitään huomiota suunniteltuun uuteen kansainväliseen B2B-liiketoimintaan. Odotin, että joku taho kyseenalaistaa varmasti tällaisen suunnitelman tilanteessa, jossa Suomi jatkaa edelleen omalla markkinallaan yksinoikeuteen pohjautuvaa rahapelitoimintaa. Merkitseekö tämä sitä, että asia on kaikkien puolesta ok, vai onko kyseessä ”juoni”, jossa asiaan puututaan vasta kyseisen B2B-toiminnan alkaessa?

Kaiken kaikkiaan Suomen hallituksen tavoitteena on ollut vahvistaa Veikkauksen asemaa. Uudella lainsäädännöllä kuitenkin enemmän vaarannetaan kuin suojellaan rahapelimonopolia. Tämä tietysti nopeuttaa väistämättä edessä olevaa siirtymistä lisenssijärjestelmään. Mielestäni paras ratkaisu olisi, että nykyisen arpajaislakiesityksen annettaisiin raueta. Saman tien pitäisi kuitenkin aloittaa uusi valmistelu, jossa myös muut vaihtoehdot analysoitaisiin kunnolla, jolloin päätös Suomen rahapelijärjestelmästä tehtäisiin faktapohjaisesti. Samassa yhteydessä voitaisiin myös purkaa nykyinen Veikkauksen tuottojen jakomalli ja siirtää rahapelituottojen jako normaaliin budjettikäytäntöön.

The purpose and future of lottery organisations

I have written this text for http://www.lotterydaily.com, and Conor Porter has partly edited it.

During my one-and-a-half year consulting career, I have mainly worked in lotteries and related matters. I have been surprised that even those who regularly cooperate with lotteries talk about lotteries as if they were somehow a homogenous group of companies. This is by no means the case. Understanding this is important both for the lotteries themselves and for other companies working with lotteries, as I wrote in my previous column.

Most lotteries are members of the World Lottery Association (WLA). In addition, the same companies also belong to similar continental organizations. Here in Europe, that regional organization is called The European Lotteries (EL). 

The WLA is an international, member-based organization of state-authorized lotteries, sports betting operators, and suppliers to the global lottery industry. The EL is the umbrella organization of national lotteries operating games of chance for the public benefit. Based on the organizations’ definitions, it can be concluded that the common feature for the members is to run lotteries under state license so that the profits are directed to charitable purposes.

Even a superficial analysis of the member companies reveals that there is no real common factor for the companies. All companies run lottery games from a monopoly basis in their jurisdiction, but even that is not the case. Some of the members of the organizations are gambling companies whose product range does not include lottery games at all. 

Another common factor identified in the definitions is revenue-sharing for public benefit. This is true in principle, but similarly, for example, other gambling companies operating under a state license can declare that they support state-decided targets with their gaming revenues. Only part of the profit of companies belonging to lottery organizations goes entirely for public benefit. In practice, therefore, it is not a common factor for member companies either.

EL has sought to promote the advocacy of its member companies towards the EU. This has, in principle, been an important area of activity, although around 30% of the organization’s members are not located in EU countries. 

What has the EL sought to promote towards the EU? In practice, the activity has been mainly the monitoring of EU legislation and the European Court of Justice decisions. The actual advocacy work has been difficult to do because the members of EL do not have a common will on things. 

EL lotteries are so different, and lottery/gambling laws vary so much from country to country that the target states of lotteries differ too much. It would be possible to find different subgroups within the EL that could have a common will to regulate at the European level, but such a will certainly cannot be achieved as a whole.

WLA has not even sought to influence social issues. The role of that organization is mainly to gather information, commission research, and organize seminars. These are, of course, important things for member companies, but those tasks could very well be done by someone else. WLA seminars, especially the biennial congress, are excellent networking venues for lottery directors and technology companies working with lotteries. These events strengthen the cohesion of the “lottery family,” but they do little to benefit the overall operation.

The problem with lotteries has been the desire to stay separate from other gambling operators. Lottery operations have been preferred to betting and especially casino games. From the point of view of gambling problems, this has certainly been justified. On the other hand, the majority of EL’s member companies now have sports betting operations. On top of all that, about 20% of EL companies run casino games. So there is no reason to say that lotteries are better than other gambling companies. Some of the lotteries are among the most responsible gambling companies globally but by no means all.

How, then, should lottery organizations be developed? The answer to the question depends on what the action is intended to achieve. Organizations may continue to exchange information and hold seminars within the framework of competition law. However, it is unnecessary to expect significant improvement in companies’ social and economic situation from such activities. Each company must be able to take care of advocacy work in its own country. However, such activities will not meet the biggest challenge in the gambling industry, which is to enhance the industry’s reputation.

If the lottery industry wants to make a difference, it has two options. Within the industry, it is divided into smaller homogeneous groups that can then pursue common goals. Such groups are more influential than individual companies, but are they strong enough actually to influence issues at the continental level? 

Another option is a cooperation between gambling organizations. I think it is possible that, by working together, lotteries and casino companies could improve the operation and reputation of the entire gambling industry. The aim of cooperation could be, for example, clear definitions of legal and illegal gambling activities. This could help improve the reputation of legal gambling, which would boost the operations of member companies.