Kiitos ja näkemiin!

Kaikki loppuu aikanaan, ei ainakaan tää, ei ainakaan tää… Tiesin, että tämä päivä koittaa joskus, mutta yllättävän kauan siihen on mennyt. Olen työvuosieni aikana ollut useaan otteeseen head huntereiden juttusilla lähinnä uteliaisuuttani. Vajaat kymmenen vuotta sitten eräs head huntereista totesi minulle, että he kutsuivat minut keskusteluun pitkän harkinnan jälkeen, koska on tunnettu tosiasia, ettei se Vähänen sieltä Veikkauksesta minnekään lähde. No, nyt lähtee!

Olen saanut tehdä yli 28 vuotta töitä suomalaisissa rahapeliyhtiöissä isojen ja mielenkiintoisten haasteiden parissa. Noihin vuosiin mahtuu upeita osaavia ammattilaisia, jotka varmasti menestyisivät ja ovat itse asiassa menestyneet muillakin aloilla ja toisissa yhtiöissä. Mielestäni on täysin väärä käsitys, että monopoliyhtiössä ei tarvitse tehdä mitään ja rahaa tulee ”ovista ja ikkunoista” tekemättä mitään.

Minulla ei ole tarvetta puolustella tai arvostella Veikkausta yhtään mistään. Olen vain aidosti sitä mieltä, että pääsääntöisesti yhtiö on toiminut hienosti. Kaikille sattuu virheitä, vaikka ei pitäisi, mutta se on inhimillistä. Kaikista asioista en ole ollut, enkä ole, samaa mieltä, mutta ei kukaan voi aina saada tahtoansa läpi. Joskus tämän asian ymmärtäminen ja hyväksyminen on vaikeaa ja niin se ollut välillä ollut minullekin.

Uskon edelleen olevani yksi Suomen parhaista rahapelialan asiantuntijoista. Tunnen rahapelitoiminnan lisäksi myös rahapelijärjestelmät paitsi Suomessa niin myös monissa muissa maissa. Koen, ettei tälle osaamiselleni enää ole ollut Veikkauksessa todellista tarvetta. Olen ajautunut tilanteeseen, jossa arvostukseni yhtiön ulkopuolella on merkittävästi korkeampi kuin täällä kotikentällä. Ihminen yleensä kaipaa arvostusta ja sitä minun nyt pitää yrittää etsiä muualta.

En ole vielä toistaiseksi tehnyt lopullisia päätöksiä, mitä tapahtuu seuraavaksi. Todennäköistä on, että heittäydyn yrittäjän maailmaan, jossa pääsen toivottavasti tekemään asioita, joita oikeasti osaan ja joista nautin. Rahapeli- ja urheilumaailmat ovat minun kotikenttiäni ja niistä en luovu jatkossakaan.

Kiitos ja kumarrus kaikille nykyisille ja entisille työkavereilleni ja yhteistyökumppaneille. Rahapeliasioissa saa olla jatkossakin yhteydessä. Nähdään myös raveissa!

Terveisin

”rahapeliguru”-Jari

Bye-bye!

This blog will be quite different compared to my former ones. This is a personal one and if you would like to learn something about the gambling business, you should wait the next blog and skip this. If you would like to know me better, you should continue reading…

Over 28 years is a long time. Probably some of the readers haven’t even lived as long time. That’s anyhow the period which I have been honored to work with the Finnish gambling operators. I started in the Horse Betting company and spent most of my time with Lottery & Sports Betting operator and now have worked last 3 years in the new Gambling company (lottery, sports betting, horse betting & casino). I could call myself as a veteran of gambling business although I’m not ready to admit that I’m old – mentally I’m still a young guy!

As you could guess from the title of this blog, it’s time to say goodbye for Veikkaus. I have mixed feelings about that. At the same time, I’m excited but also sad. I called old Veikkaus as my own company and that was my honest feeling. It might sound strange when someone is calling state-owned monopoly company as his own company, but that was the feeling I had. The marriage with the new Veikkaus hasn’t gone so well and I have had big difficulties to get that same feeling. To be honest, it hasn’t been even close to that. I have tried, but nothing has helped, and I haven’t been able to give my best.

If I use comparison from my sport, football, I would say that I’m still one of the best players who could play in almost whatever position. But as you know, it’s not only about the personal skills of players but also about the team’s tactic. Sometimes it happens that skillful player doesn’t manage very well when the way of playing is not suitable for him/her. I think that this is the case now with me and the new Veikkaus. They don’t need my style of a player anymore. I have been used to have an important role in the team and lately I have been mainly on the bench. That’s why I have now asked for a transfer to somewhere else.

I’m not 100 % sure what will happen next. Officially I’ll be Veikkaus employee still two months and after that there will be some restrictions where I could work. My “SBC Events friends” Rasmus and Andrew have offered me opportunity to act as their advisor until I could start real working again. It’s good to continue in the gambling business also during my “personal break”.

Of course I have already plans for the future. I’ll probably establish own gambling consulting company together with my partner. I’ll tell you more about that when it’s sure that we’ll do it. Anyhow I’m excited about possibilities to work with other gambling operators and suppliers and other companies related to our business. Although my operational level experiences are almost only from Finland, I’m sure that we could give profitable advices to all gambling companies globally. Let me know if you are keen on having cooperation with me/us. You could contact me via LinkedIn or send me email to: jarivahanen65@gmail.com !

THE FUTURE OF HORSE BETTING IN NORWAY

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.

CONSOLIDATION OF GAMBLING BUSINESS

I’m used to say that I’m working in lottery business and/or in sports betting business. After our big merger I have used gambling business which includes also casino business. I have noticed that quite many lottery experts use word “gaming” instead of “gambling” but to me gaming is mainly casual and social games – not real money games which we are offering. I know that the reputation of word “gaming” is much softer than “gambling” but that’s not the core issue.

In which business we are working? That’s still relevant question! But the reason for that is not those words gaming and gambling. It’s important question because we have to know what our core business is, and we should know who our competitors are. We are used to think that other gambling companies are those competitors and they still are, but nowadays there are many other companies too. I would say that we are part of the entertainment business! That has been obvious for physical casinos already long time, but I’m not sure about lotteries and sports & horse betting companies.

I have said this many time before but I say it again: the most important feature for success is to understand your customers and their needs! You could serve them much better if you know their real motivations for buying your games. That motivation is not always the same and could vary from time to time. I believe that the main motivations for gambling are dreaming, spending free time and following sports.

We have already noticed that some quite big companies which are used to operate in other businesses have entered to gambling business. The first change happened when gambling technology suppliers moved to operation side. Those companies were used to operate games on behalf of lottery operators for example in US market. Probably technology suppliers noticed that there were bigger profit opportunities available if they have gambling licenses by themselves. Anyhow they have managed to get gambling licenses from some countries, but at the same time they are still taking care of their core business and selling tech for gambling companies. So, those companies have moved to gambling business but haven’t left their original business. That has caused slightly difficult situation for gambling companies when their technology partner is their potential competitors.

As I already said, we are competing in the entertainment market and traditional entertainment companies have realized that too. I know that big media companies are considering how they should react on gambling business. Especially the opening of sports betting in US has put more speed on that kind of analyzes. I wonder if there is any media company which have TV-rights for sports which is not planning their strategy for sports betting? I’m not saying that those TV-companies should move to gambling operations, but they should understand how they could utilize their rights in sports betting business. The entrance of big media companies will affect on gambling business a lot because those companies have lots of customers and they understand their needs. It’s always easier from customer point of view if you could get all services from one place.

Third and the most important and interesting “newcomer” would be GAFA companies (Google, Amazon, Facebook & Apple). Those giant companies have based their business models on customer data and in principle they could run whatever business with that excellent capability. I don’t have any “inside information” how actively those GAFA companies are in gambling area, but I would be surprised if they haven’t made any survey around that business area. If they, or just one of them, would enter to gambling business, it would mean dramatical change. To be honest, I’m not sure how well current gambling companies would succeed against them. I would say that we should hope that they won’t come or at least won’t act as operators! Probably they are not willing to take the risk of losing their brand when the reputation of gambling business is not so high…

That consolidation would also mean something else than just new companies entering to our business. We have already noticed that some gambling companies have started other businesses than just gambling. We have example even from lotteries where some big companies have moved partly to technology direction. For example FDJ from France and Camelot from UK have invested quite a lot to technology development and are nowadays trying to sell their solution to other operators. Some other lotteries like SISAL (Italy) and SAZKA (Czech) have tried to utilize their gambling solutions in other business areas like selling different kind of tickets and give payment services. I know that many gambling companies are looking for solutions where they could link gambling and casual games and offer something totally new which wouldn’t be gambling as we have used to define it. I believe that we shall see consolidation even more in near future.

I think that consolidation of different businesses would happen and succeed if there are possibilities to utilize your current competences somewhere else than you are used to do. If you have lots of information and understanding about your customers, you could use that almost in all possible business areas and that’s the main reason why those GAFA companies have managed so well. It’s much more difficult to enter in totally new area where you don’t have any expertise, capability or assets. That might be possible for start-ups, but for big existing companies it would be stupid risk. You should understand where your strengths are and try to find out new ideas where you could utilize them!

THE CHINESE GAMBLING MARKET

It’s well known fact that Macau and Hong Kong are the leading areas when we are talking about physical casino business (Macau) or horse betting business (Hong Kong). But how much we know about the Chinese gambling market? I have now visited some times in Beijing and tried to understand more what is situated in there and what might happen in next few years.

It’s obvious that when the country has about 1,4 billion inhabitants, there is huge business possibilities in all business areas and that’ the case of course in gambling business. But the State of China has prohibited gambling actions and is also controlling that quite closely. Anyhow it has said that the illegal market in sports betting and casino business is huge in Asia but it’s that the case also in China? According to estimates the illegal interactive gambling business in China is just about 1,5 B€ (GGR) which is not so much compared to the size of the country.

There is a general level prohibition on gambling activities in China, but there are few exceptions to that. There are two state-owned lotteries which have licenses to operate lottery games and limited numbers of VLT machines (video lottery terminals). They are only allowed to run lottery business in retail channel, so digital online business is not allowed – at least yet. As I already said, the Chinese state is actively fighting against illegal gambling activities and especially against cross-border operations. There are quite heavy punishments in they legislation for illegal gambling and I’m sure that they will use those tools if they manage to catch illegal operators.

Ministry of Finance has approved two licenses for lottery operations – the other one is for China Sports Lottery (CSL) and the other one for China Welfare Lottery (CWL). In fact, there seems to be a little bit strange duopoly situation in that market. As far as I know, those two licenses are almost the same. If the other lottery would get permission to introduce something new, the other one would probably get the same kind of permission. The only difference is now in sports games area where Sports Lottery has license to have some lottery style sports games.

It’s not big surprise that CSL and CWL are the two biggest lotteries in the world. Now CSL is slightly bigger than CWL but they are about the same size. The sale of both lotteries seems to be at the level of 30 billion euros a year – the total sale is about 60 B €/year. The development of sales in last ten years has been huge but now both lotteries have faced big challenges. Their businesses have suffered a lot this year and decrease has been so big that the Chinese state should consider some changes to help that business.

What kind of big changes there might be? I’m 100 % sure that China will continue with monopoly (duopoly) based system, so there won’t be any other licenses although the local governments have had and still have quite big role to decide practical level issues. Based on my knowledge the role of local governments won’t become bigger in gambling area but rather will decrease. I believe that the Chinese state will try to control even more the gambling business than they have done until now. It might mean two changes – either huge merger of CSL and CWL or tighter integration of those two companies and their local organizations. I don’t believe that this huge merger will happen very soon. That’s why I think that both CSL and CWL will have new organizational structure where central company will have bigger and more important role than they have at the moment.

The other big change which I expect to see soon is online lottery business. Online purchase of some lottery products was allowed for a while in 2015 but lotteries had to close that operation quite soon. The Chinese state released online lottery directive already in 2016 when they suggested that online lottery sales would be allowed, but nothing has happened in practical level after that. I guess that now when both lotteries have faced problems in their businesses, the government will give them license to have limited offering in online channel. I believe that the legislation will change next year and CSL and CWL could start online business in 2021. Chinese people are using mobile payment more than I have seen anywhere else and that’s why I believe that mobile lottery might be big success in China.

The third potential big change might be sports betting. CSL is running some football and basketball sports games but there is no real official sports betting in China. There would be huge business potential available in sports betting, but the Chinese politicians might consider sports betting as “too heavy gambling” and that’s why I don’t believe that fixed odds sports betting would be allowed very soon. CSL and CWL might have chance to get more wider license for lottery style sports games (pool-based games) in next few years.

As a short summary I would say that there will be some big changes in the Chinese gambling market, but it won’t open big business opportunities for foreign companies at least in short term. The State of China will keep tight control on that and will help their own companies to develop their businesses. Some good gambling technology suppliers might have business possibilities if they managed to establish joint venture companies together with Chinese operators.

ABOUT US SPORTS BETTING MARKET AGAIN

I wrote blog about US Sports Betting 7 months ago. I’m probably too short-tempered when I’m going to write about the same issue so short again, but I’ll do it. If you remember the previous US blog well, I would say that not so much has changed yet, but I have got some new information and ideas after that.

I start with the regulatory situation of US Sports Betting market. Now, or actually few weeks ago, there are 13 states which have already started Sports Betting. That’s some more than it was in spring 2019. There are also 6 states which have passed the legal process and where Sports Betting would be legal but where no one has started it yet. If I have understood it correctly, there are also something like 5 states where the legalization process is actively going on and where Sports Betting will probably be legal at the latest next year. So, it seems that Sports Betting will be legal in half of states quite soon. There are still some big states like California missing from that list.

How big is the unregulated US Sports Betting market now? I’m afraid that no one really knows, but I trust on H2GC research company. H2GC estimates that the handle of unregulated Sports Betting market is 196 billion $ and gross gaming revenue (GGR) of that is about 10 B$. So, we are talking about huge market and market potential for newly regulated companies. I don’t know how big share of that the regulated companies are supposed to get from that unregulated market, but I believe that it will be big share anyhow.

H2GC has also given estimates for the growth of regulated US Sports Betting. They are expecting it to reach the size of 9 B$ in next 10 years. That would mean almost 1 billion dollars growth every year because it’s now a little bit less than 1 B$. It seems that there will be 24 states which have legalized Sports Betting in 2020 and there will be more states which will do that later. According to estimates there will be 38 states where Sports Betting will be legal until 2024.

It’s obvious that US market is not working in the same way than European or Asian Sports Betting market. We have noticed that at least now when some big Europe based companies have entered to US market. US Sports Betting is based really much on US Sports and different bet types than we used to have here in Europe. The three main sports in US Sports Betting markets are basketball (about 29 %), baseball (26 %) and American football (18 %). The most popular bet types are “Las Vegas style” bets. As I already wrote in my previous US Sports Betting blog, I think that it will be hard and almost impossible to beat Las Vegas bookmakers in those sports and bet types. The new companies should introduce something else.

The share of digital channel(s) has been quite small, but I’m sure that it will increase a lot in the future. H2GC has estimated that after ten years from now the size (GGR) of online Sports Betting will be about 6 B$ and landbased about 3 B$. As you know it’s easier to utilize skills in data and customer areas in digital channels than in landbased business. At least until now the Las Vegas based Sports Betting operators have concentrated on business which they have used to run. That might be “weakness” where the new legal operators should try to hit?

I don’t have much new information about the Sports Betting plans of big media and technology companies. They actions might change the whole Sports Betting market, not only in US but also globally. It’s not sure at all that they are going to act as Sports Betting operators, but I believe that at least those media (TV) companies who have Sports TV-rights will utilize those rights somehow in Sports Betting business too. There is already one interesting example. Score is offering maybe the most popular live results service of sports events to tens millions of customers. They introduced own Sports Betting offering in New Jersey some months ago and business results of that seem to be good ones. I’m keen on seeing what will happen if even bigger media companies will do the same…

It’s not sure what the State Lotteries will do. There are just four lotteries (Delaware, Oregon, Rhode Island and West Virginia) which have started their own Sports Betting operations. Last week I heard from Patricia McQueen from NASPL that there are few more states where lotteries have already license to start Sports Betting, but which haven’t yet done that. As far as I understood right, Montana will be the fifth one quite soon and probably New Hampshire and District of Columbia will follow later. Tennessee will also start Sports Betting quite soon, but there lottery will act as a regulator which sounds to me really strange…

The business model of existing Sports Betting lotteries seems to be mainly based on casino model where they are offering Sports betting in casinos and/or at the racinos (race track casinos). Just Oregon lottery has introduced mobile based model and probably New Hampshire lottery will do the same. I’m not sure how well that casino-based business model could serve the potential customers? I’m afraid that lotteries won’t succeed in Sports Betting competition if they won’t develop more modern business models. They should concentrate on utilizing their wide customer base. It’s of course easy to say but I would be keen on doing that also in practice if there would be need for help…

WHY WE NEED INNOVATIONS?

That question was asked from me two days ago. I’m not 100% sure what I answered to that, but I’ll tell you what I would answer now.

European Lotteries (EL) organized Innovation seminar here in Helsinki this week. My company Veikkaus acted as a hosting company and I believe that our team managed very well. The Innovation working group of EL did also excellent work when they planned the seminar program. We managed to get well-known keynote speakers like Dietmar Dahmen and Dave Caygill to our seminar. I’m not sure if I learnt anything specific from their presentations/shows, but at least I’m even more sure that we really need innovations! I had great opportunity to open that event and suddenly I was also asked to say the closing words and there my colleague Suvi asked the question in the heading of this blog.

The world is changing all the time. Consumers, and our customers, have more opportunities available. The competition has become tougher than it has ever before been and I’m sure that it won’t be easier anymore. I think that lottery companies have trusted that monopoly situation will secure them from the competition – I’m afraid that there still are many lotteries which are thinking that way… I’m sure that consumers don’t think that there is separate business area called lottery business or not even gambling business. Consumers just decide how they are going to use their money and lotteries and other gambling companies are in the middle of that “battle”.

If company would like to succeed in the competition, it should offer something special and different which customers would like to buy or pay for. If you are offering just an average product you could compete only with price which should be lower than the other companies have. It’s obvious that lotteries don’t have the lowest prices or the highest payout percent. If you can’t compete with the price, you should have something different compared to other companies. That’s why we need innovations!

I think that it’s already clear from my previous blogs that in my mind the customer is the King (or Queen)! We must always think about what the best solution for our customers is. It won’t help us, if we manage to develop excellent technical solution but consumers are not interested in that at all. Consumers are used to use service from great companies like Google, Facebook or Amazon and we should be at the same level than those giants are. How we can do that when we don’t have as much resources than they have? Cooperation might be the way to do that. Companies should utilize start-ups and their innovation capabilities. We should also find out good business partners, because we can’t do everything by ourselves. Companies should concentrate on areas where they are good and have strengths and let the partners take care of other issues.

The difficulty in innovation is that you don’t know what you are going to get there, or will you get anything. The scope of innovation work should be 2 – 5 years. If you are looking for something quicker innovation is probably not the solution. By improvement and development you could get something new quicker, but then the result won’t be so radical. Companies should allocate resources to all those three areas (improvement, development & innovation), because we can’t wait years to get something totally new.

Dietmar Dahmen spoke lots about customers and trust. That sounded very familiar to me. It’s extremely important that your customers would trust on you! It would be great to innovate products, services and above all business model which would responsible but at the same time profitable. I’m not sure how to make it, but I’m so keen on trying to do it. The result should customer oriented, personalized, easy, fun, modern and profitable solution for gambling business. Let’s innovate and try to make it happen!

The best Sports Betting company

I’m honored to be one the judges of SBC Awards. SBC Awards is big event where gambling world will select the best operators, affiliates and suppliers in many different categories. Big gala event will be in early December in London where we’ll know which companies have made the best work this year. I don’t know yet in which categories I’ll act as a judge, but I’m now going to describe what kind of operator would be the best one in Sports Betting business. I’m not going to mention any companies by name, because I’m not willing to cause them any good or bad reputation.

How to compare different companies? What are the most relevant features which we should think about? How to analyze and compare actions in different legal and business environments? How to compare business results and for example responsible gaming features? There are much more very relevant questions. So, to act as a judge it is not so easy job but at the same time very interesting duty. I’m sure that all those companies which are now there as candidates in different categories are good companies but how to find out the best ones?

I have three main principles which I’ll analyze. The first one is: is company acting by law? That will be “yes or no” question. If company is not following laws and rules, it doesn’t matter how well it’s managing in other ways. I won’t appreciate that kind of company at all. It should be the industry standard in all businesses that everybody is acting by law. The companies which are operating without licenses can’t be the best ones, because they try to get advantages compared to the honest ones and that’s not fair.

The second question is: how good business results operator has reached and what kind of other results they have achieved? I would like to know what kind of goals they have had and how well they have reached them. I’m sure that all candidates of SBC Awards have tried to get as good business results as possible. There is no monopoly company among those candidates and it’s obvious that all those operators have more or less business driven culture. It’s not relevant to just look at the final profit, because there are huge and smaller companies in same categories. I would like to understand how well they have managed to run their businesses in different markets and competitive environments.

As you hopefully have noticed from my previous blogs, I believe that “customer is the king (or queen)” and companies should serve their customers as well as possible. So, the third question is the most important to me and it’s: which operators have attended to their customers in the best ways? I know that it is almost impossible to know that, but I’ll try to analyze that anyhow. To do that I should first understand what the most important features from customers point of view are. There are different kinds of customers in Sports Betting business, but I believe that most of important features are same for all customers.

I could think about that question from Sports Betting operator’s point of view, because my company is offering Sports Betting and due to that I should know answers to my question. But I think that the better way is to ask customers’ opinions about those important features. I have been active Sports punter already more than 35 years and I have my own strong views about that. In “old days” I used to be big punter but nowadays I’m not using so big stakes anymore so I could think myself as a normal Sports Betting customer. Although I might be good customer to analyze what is important in Sports Betting, I have now utilized my friends who are active punters.

What are the most important things for active big punters when they think about excellent customer experience? I was surprised how similar lists I got from different guys. I could almost use the list which I first got from my friend Vesa N. – maybe I have too similar friends…? It’s obvious that operator should be trustable – that’s “must have” feature but luckily not anymore very relevant because customers could trust on the most of operators. But it seems to be important that everything will work in smoothly way. Money transfers should work quickly in both directions. It’s normal that you could move money to your betting account very quickly, but it’s not so common that you will get your money back easily from gambling operators. It’s big difference if you have to ask many times to get your money and if it will take many days to get them. Easiness to use betting site seems to be also important. Customers would like to find out matches and specific betting objects easily. It really matters how many clicks you have to do – as less as possible would be optimal.

Customers are also willing to have clear rules which should be similar for everybody. They would like to know for example how much they can bet in different matches and betting objects. They seem to be a little bit frustrated in cases where they are trying to make 100 € bet and company is accepting 5 euros. I believe that they understand the risk limits of operators, but they wonder why those rules are not clear for the customers.

As a summary I would say that I’ll try to analyze how easy it’s to use the betting sites of different operators and will give most points based on that fact. I’ll also try to find out information about money transferring processes of different betting operators. I think that operator which is not willing to move money back to customers can’t be among the best operators. So finally, it won’t be anything like rocket science to find out the best Sports Betting operators. I’m ready to do that! After five weeks we’ll know who the winners are and probably I’ll write about that then.

RESPONSIBLE GAMING HAS IMPACT ON THE REPUTATION OF GAMBLING INDUSTRY

I have worked almost 30 years in gambling business and most of that time in lottery world where I was told to use word “gaming” instead of “gambling” when I was talking about our business. I’m not native English-speaking person so I don’t recognize all details in that language, but I believe that it wasn’t only about detail issue but rather about reputation of business. Lottery people have always thought that lottery is much softer and not so dangerous business than casino business is. Sports and Horse Betting are somewhere between those two areas. To me they all are gambling business and it doesn’t matter how soft or hard versions they are. I use gaming when I’m talking about casual and social games like for example Candy Crush Saga.

It is true that lottery games have caused much less, or almost at all, gambling problems than other gambling verticals. That’s one of the main reasons why lottery has had much better brand in the society than other games groups have had. The other reason has been “benefits for the society and good causes” ideology which has been the model all over the lottery world. It’s still very common that states have monopoly for lottery games and profit from those games is going to good causes. In other games groups that hasn’t been the case or if it has it’s not anymore. The gambling world has changed and is going to change.

Responsible gaming has always been important part of gambling business, but its role has increased rapidly during last few years. Especially in Europe responsible gaming has big role in political level discussion and I’m sure that other continents will follow soon or later. It’s important to understand what responsible gaming is about. To be honest I’m not expert on that area, but I have my own view about responsible gaming and I’ll try to explain how it should work.

Problem gambling and responsible gaming are not exactly the same issue but of course those two things are linked together. There are about 3 % of adults who have had gambling problems here in Finland. About 40 % of that group are serious problem gamblers which means that there are 50 – 60 000 people who really suffer. At least in Finland the most of gambling problems are caused by casino games and especially by slot machines. That’s why the former lottery company and horse betting company haven’t thought so much about gambling problems. Of course Horse and Sports Betting are reasons for some of those gambling problems but not at all at the same level than casino games. All game verticals have become quicker and harder and they are not anymore so different than they used to be before. Responsible gaming should be in the agenda of all gambling companies.

Gambling professionals seem to be worried what will happen to the reputation of our industry. There is more and more public discussion about that and unfortunately that discussion sounded to be rather negative one. It looks like gambling will follow the way which has happened in tobacco industry already many years ago. Smoking was very common when I was young adult, but nowadays it’s not acceptable at all. I think that gambling and smoking are not the same. Smoking is unhealthy for everybody, but gambling is not so dangerous for 80 – 95 % of people. Gambling is more like alcohol than tobacco when I think about problems caused by those things. It’s sure that gambling companies should do more in responsible gaming area, but there is no reason to ban whole gambling, because it causes problems for some of customers. We should concentrate on finding effective solutions to prevent those problems!

The problems won’t be solved if just some companies would change their rules, business models or whatever is needed to change. I think that whole industry should take responsible gaming really seriously, because it will affect on the reputation of industry. If there are companies which don’t care about the welfare of their customer, we can’t solve these problems, because problem gamblers would have companies where to move from the responsible companies. How we could solve that?

States, regulators and social welfare bodies, should decide and describe guidelines and the most important features for gambling companies which should operate according to those rules. I would describe that like “box” where companies should stay inside, but there they could run their business quite freely. If there would be any company which is not following those rules, that company should be punished very heavily and finally prevent whole operations of that kind of company. That model would work if whole industry would agree on that and there would be good cooperation between the industry and regulators.

What would be the best way to prevent gambling problems? I believe in personalization where gambling companies could utilize also other data sources than their own customer data. Unfortunately, it’s not legal to combine for example company’s customer data and data of the customers who have got help for gambling problems. In principle GDPR is good thing, but in gambling problem area it prevents to solve even bigger problems than customer’s privacy. One solution could be state level data center which could have “black box” where regulator could combine information about gambling problems, income/tax level and gambling data. The result of that kind of information would be personal level gambling limits and/or bans for gambling which should be mandatory for all license companies.

I believe more in personal limits than general level limits. I’m not sure if customers could really make right decisions by themselves when it’s about gambling limits. Regulators and social authorities & experts together with gambling companies should help customers to set them the best possible limits. Those limits could be separate in different gambling verticals (lottery, casino etc.). Gambling companies have and will have tools like AI and machine learning which could help them to make better work in responsible gaming area. I hope that gambling industry could find out the way to prevent gambling problems in more effective way than it’s the case now and at the same time we could continue to run our business without causing any useless disruption for those customers who could play our games without any problems!

THERE IS NEED FOR CHANGE IN HORSE BETTING AND RACING INDUSTRY

I had possibility to participate in excellent Betting on Sports event in London two weeks ago. Among many other things I listened to panel discussion about the future of UK horse racing and betting. Although horse racing and betting in UK is not at all the same than it’s here in Scandinavia, the challenges sounded very familiar to me. I’m sure that horse racing and betting won’t succeed if they are not ready for big changes, but how big risk they are ready to take?

I have owned racing horses already 44 years (since young kid), been active horse punter almost as long time and worked many years in horse betting business. So, I believe that I have enough knowledge to make analysis about that industry. BUT there is big risk that I’m too insider and can’t see all problems we have. It would be interesting to get deep analysis from someone who is familiar with gambling and/or entertainment business but not horse betting/racing.

It seems to be global trend that people are not anymore keen on going to normal average horse racing events. The number of spectators on “Monday evening” races has reduced all over the world. Nowadays it’s so easy to watch races from TV or mainly internet and there is no reason to go to racetracks anymore. That will cause big problems in long term, because racetracks have been the best channel/place to attract new customers. Where we could reach them if they are not going to visit tracks in the future?

The situation is not so bad yet. Big horse racing events are still popular ones. There were over 70000 spectators in one day in Cheltenham Gold Day Cup (in average over 60000 per day) and we had 55000 people in Kuninkuusravit, the biggest Finnish horse racing event, in two days. So, it’s still possible to get audience to the racetracks but you should offer them something special which big events are doing. But I’m worried about would that continue and what would be enough for audience. I have examples from Sweden. I have visited in their most popular horse racing event Elitloppet already since 1978 and I think that there less audience this year than ever before. I also visited in the classical Trav Kriterium last weekend in Stockholm and there were less than 3000 spectators and Kriterium is one the main events. If that kind of high-level racing event doesn’t attract people, what we should offer? It seems to be obvious that racing is not anymore enough and you should offer more entertainment.

Horse betting is extremely big business and has managed surprisingly well although there are more and more new gambling opportunities available. According to surveys the size of global legal horse betting is about 27 billion euros (illegal market is also extremely big one) and it’s estimated to grow by 1 – 2 % in next few years. The growth rate is lower than in other gambling areas but it’s not catastrophic and that might be reason for the future problems… It is always difficult to make big changes when your business is still going rather well. You are not willing to take big risks because you are afraid of losing what you have although those changes would help you to maintain or even increase your profit level. That seems to be case now in horse racing and betting industry. Almost everybody agrees that we need structural changes, but we are not ready to change things which have worked well.

Horse betting industry has managed to move towards digital channels. Nowadays horse betting from digital channels is almost as big as betting on tracks and betting shops. In next two years digital horse betting will be bigger than retail and track betting. Here in Finland about 75 % of horse betting is already coming from digital channels. In that area horse betting is acting in modern way. Someone might say that even too modern way, because punters get better service in digital channels than they get on racetracks and there is no reason to go there anymore. Anyhow I think that the problems in horse betting are unwillingness to change racing formats and bet types. We have had same bet types (win, place, exacta…) tens of years and we are not ready to test something totally new. I’m not sure if Live betting would work in horse betting, but we should at least test it and/or try to find out another solution to offer customers more interactive betting options. There is huge amount of data available from horse racing and betting, but are we really using that to develop our product better? Do we know what kind of races are the most interesting ones from customers point of view? Do we know when punters are willing to make horse bets – when the races should start, where races should be etc.?

The core question is to whom we are developing horse racing and betting. Are we doing that for horse trainers and owners or for active horse punters or for “big audience”? The needs of those groups are very different ones and we can’t fulfill the needs of all of them. I think that horse racing and betting industry should understand where the money is coming from and try to maximize or at least optimize that revenue. Everyone in horse business would gain from higher profit. I have told that already many times in previous blogs, but I say it again: customer is the king or queen! I know that now some of readers might say that I’m too much horse betting guy and I don’t understand and appreciate horse racing and horse people. I do, but in my world we need customers and horse punters who will bring money to our business. I’m keen on hearing and understand if there are examples where the level of horse racing price money is not linked to the level of horse betting. I know that the Arab Emirates and Al Maktoum family is an exception but is there any other examples?