MITEN RAHAPELIYHTIÖIDEN FUUSIO ON ONNISTUNUT?

Sorry but this time I’ll write in Finnish. If you are interested in my views on how well Finland has managed to reach the goals which were set for the new gambling company, feel free to use Google translator or who knows I might write the same story in English later…

Suomen valtio päätti noin 3,5 vuotta sitten aloittaa kolmen rahapelitoimintaa hoitaneen yhtiön Fintoton, RAY:n ja Veikkauksen yhdistämisen yhdeksi peliyhtiöksi. Uusi yhtiö, Veikkaus, saatiin toimintaan vuoden 2017 alusta alkaen. Sain itse olla vahvasti mukana valmistelemassa yhtiöiden integrointia ja uskon sen vuoksi tietäväni erittäin hyvin, mitä tavoitteita tuolle jättifuusiolle asetettiin. Eilen julkaistu THL:n peliongelmatutkimus herätti pohtimaan uuden mallin onnistumista hieman laajemmin. Tässä blogissa esittämäni tulkinnat ovat täysin omiani ja Veikkauksella ei ole mielipiteideni kanssa mitään tekemistä, vaikka olenkin muodostanut näkemykseni työni kautta.

Kolmen rahapeliyhtiön yhdistämiselle asetettiin kolme päätavoitetta, jotka olivat:

Rahapelien yksinoikeuden turvaaminen
Edunsaajien tuottotason säilyttäminen
Rahapeleihin liittyvien ongelmien minimointi

Reilun kahden vuoden toiminta voi olla liian lyhyt aika vetää lopullisia johtopäätöksiä, mutta katsotaan, miltä tilanne tällä hetkellä näyttää kyseisten tavoitteiden suhteen ja miltä erityisesti kokonaisuus vaikuttaa.

Kolme yksinoikeudella toiminutta rahapeliyhtiötä päätettiin yhdistää, koska niiden toiminta alkoi olla pelien digitalisoitumisen vuoksi niin lähellä toisiaan, ettei rajan vetäminen yhtiöiden välillä ollut enää todellisuudessa mahdollista. Yksinoikeus on mahdollista vain silloin, kun toimijoita yhdellä alueella on vain yksi – kahden yhtiön yksinoikeus samalla alueella ei ole yksinoikeus ja sellaisessa tilanteessa ei ole oikeutta rajoittaa muiden tulemista samalle alueelle. Yksi rahapeliyhtiö ei ollut ainoa vaihtoehto, koska Suomessa olisi voitu jatkaa edelleen kolmella yhtiöllä tai siirtymä olisi voitu tehdä kahteen yhtiöönkin. Näissä kahdessa jälkimmäisessä tapauksessa olisi yhtiöiden toiminnan välille pitänyt tehdä aiempaa selkeämpi raja, joka puolestaan olisi aiheuttanut pidemmällä tähtäimellä hankaluuksia edunsaajien tuottotason turvaamiselle. Rahapeleistä saatava kokonaistuotto olisi todennäköisesti laskenut tai ainakin edunsaajien väliset tuottomäärät olisivat muuttuneet. Yksi rahapeliyhtiö oli siis luonnollisin vaihtoehto toteuttamaan yhdistämiselle asetettuja päätavoitteita; se vastaisi rakenteellisesti yksinoikeuden edellytykseen, olisi tuotonjaon osalta mutkattomin malli ja näin yhtiö pystyisi myös hallinnoimaan kokonaispelaamista paremmin kuin useat yhtiöt.

Uudella Veikkauksella on periaatteessa yksinoikeus kaikkeen rahapelaamiseen Suomessa, vaikka PAF:lla on oikeus toimeenpanna rahapelejä Ahvenanmaalla ja laivaliikenteessä. Periaatteessa fuusion ensimmäinen tavoite on toteutunut hyvin, mutta todellisuudessa tilanne on itse asiassa mennyt huonompaan suuntaan. Yksinoikeustoiminnan markkinaosuus Suomen rahapelitoiminnasta on fuusion jälkeisenä reiluna kahtena vuotena pudonnut noin 4 prosenttiyksikköä, mikä tarkoittaa rahapeleihin hävityssä rahassa noin 60 miljoonaa euroa. Tuon verran enemmän rahaa valui viime vuonna Suomesta ulkomaisille peliyhtiöille verrattuna fuusiota edeltäneeseen vuoteen 2016. Ulkomaille pelaamisen kasvuvauhti on selvästi kiihtynyt aiempaan kehitykseen verrattuna. Yksinoikeus on siis onnistuttu turvaamaan lainsäädännön tasolla, muttei käytännön pelitoiminnassa.

Uuden Veikkauksen pelitoiminta on sekä ensimmäisenä että toisena toimintavuotena pienentynyt hieman edelliseen vuoteen verrattuna. Kustannussäästöjen ansiosta edunsaajille on kuitenkin pystytty tulouttamaan sen verran, kuin valtion budjetissa on ennustettu tuottoja tulevan. Edunsaajien tuottotaso on siis toistaiseksi onnistuttu säilyttämään, mutta muutos kokonaistuotoissa ei varmasti ole ollut suunnitellun mukainen, koska fuusioita edeltävinä vuosina yhtiöiden kokonaistuotto oli koko ajan kasvussa. Lisäksi odotuksissa oli, että uusi yhtiö pystyisi kehittämään uusia rahapelitoimintoja sellaisille alueille, jotka olivat olleet kolmen yhtiön mallissa ”ei kenenkään maata”. Tällaista kehitystä ei ole kuitenkaan juuri tapahtunut.

Yksinoikeuden turvaamisen ja edunsaajien tuottotason säilyttämisen tavoittelussa näyttää olevan ristiriita. Suomen rahapelitoiminnan yksinoikeuden turvaaminen on erityisesti sisäministeriön (SM) ja sen hallinnonalalla toimivan Poliisihallituksen (rahapelitoiminnan valvoja) vastuulla. SM lähestyy asiaa juridisesta / lainopillisesta näkökulmasta, mikä virkavastuuta ajatellen on aivan ymmärrettävää. Sen tehtävänä on huolehtia, että Suomessa toimeenpantava rahapelitoiminta on juridisesti kestävällä pohjalla. SM ei kanna huolta rahapelitoiminnasta edunsaajille kertyvistä tuotoista, koska tuotot eivät ole yksinoikeusjärjestelmän oikeuttamisperuste, vaan ainoastaan sen suotuisa seurannaisvaikutus. Edunsaajien tuottokehitys puolestaan on erityisesti tuottoa jakavien ministeriöiden (OKM, MMM ja STM) agendalla, mutta niillä ei ole varsinaista roolia yksinoikeustoiminnan valvonnassa. Omistajan eli Suomen valtion kokonaisnäkemys rahapelitoiminnan käytännön tason kysymyksistä siis puuttuu.

Tällä hetkellä näyttää siltä, että yksinoikeusjärjestelmän turvaaminen on primääri tavoite, ja tuottotavoite on sille alisteinen. Peliyhtiön näkökulmasta omistajan tavoite on toteutunut nk. kanavointitehtävän myötä, jolloin yhtiö on pyrkinyt tarjoamaan asiakkailleen samantyyppisiä tuotteita ja palveluja, joita pelaajat ovat voineet saada internetin kautta muilta yhtiöiltä. Aiemmasta poiketen uuden yhden yhtiön mallin aikana valvova viranomainen ei kuitenkaan ole enää pitänyt kanavointitehtävää validina perusteena toiminnalle. Osin tästä syystä tiukentunut sääntely on aikaansaanut se, että yhtiön tuotekehitys ei ole pysynyt kansainvälisen kehityksen tahdissa ja markkinaosuus ja yhtiön tuotto ovat kääntyneet pienoiseen laskuun. Mikäli tämä kehitys jatkuu tai jopa vauhdittuu, vaarantuu koko yksinoikeusjärjestelmän legitimiteetti ja yksinoikeusjärjestelmän turvaaminen muodostuu entistä vaikeammaksi. Tilanne voi kärjistyä niinkin pahaksi laskevien tuottojen myötä, ettei yksinoikeusjärjestelmää enää halutakaan turvata, jolloin Suomi ajautuisi Tanskan ja Ruotsin polulle, vaikka alun perin juuri kukaan ei tätä tietä varsinaisesti halunnutkaan. Yksinoikeusjärjestelmän tehokkain suojelutapa on huolehtia järjestelmän legitimiteetistä, mikä puolestaan edellyttää asiakkaiden kannalta riittävän kilpailukykyistä tarjoaa.

THL:n tutkimuksen julkaisemisessa korostettiin eilen paljon rahapeleihin liittyvien ongelmien minimoinnin epäonnistumista. Olisi siis helppo todeta, että tämä tehtävä meni pieleen. En ole kuitenkaan aivan varma, onko epäonnistumista tapahtunut ja jos on, niin onko epäonnistuja Veikkaus vai Suomi. Peliongelmien taso on isossa mittakaavassa pysynyt jo vuosia hyvin samalla tasolla eli noin 3% Suomen aikuisväestöstä on kokenut rahapelaamisesta aiheutuvia ongelmia. Eri tavoin toteutetut tutkimukset antavat hieman eri tuloksia, mutta taso on ollut pitkään samaa luokkaa. Suomen rahapeliongelmat eivät ole kuitenkaan enää nykyisin yhä kansainvälistyvässä maailmassa sama asia kuin Veikkauksen tarjoamista rahapeleistä aiheutuvat ongelmat. Yhä suurempi osa suomalaisten rahapelaamisesta suuntautuu ulkomaisten pelitarjoajien palveluihin ja kohdistuu keskimääräistä enemmän peliongelmia aiheuttaviin tuotteisiin eli vedonlyöntiin ja erityisesti kasinopeleihin. On siis aivan mahdollista, että itse asiassa Veikkauksen peleistä aiheutuneet peliongelmat ovat pienentyneet, vaikka kokonaisongelmat olisivat lisääntyneet. Oli niin tai näin, niin tässä kolmannessakaan tavoitteessa ei ole onnistuttu täydellisesti, koska peliongelmia tulisi voida vähentää.

Kaikkien kolmen tavoitteen haasteet ja ainakin osittaiset epäonnistumiset liittyvät kokonaisuuden hallinnan ja ymmärtämisen puutteeseen. Yksinoikeutta puolustetaan vain juridisesta näkökulmasta, edunsaajien asemaa ajatellaan vain taloudellisesta näkökulmasta ja rahapelien haittoja tarkastellaan vain ongelmanäkökulmasta. Rahapelijärjestelmän tulevaisuuden kannalta tarvittaisiin näiden sijaan kokonaisvaltainen tarkastelu, jossa ymmärretään, mitä tavoitellaan ja miten se saadaan kokonaisuutta optimoiden aikaiseksi. Muussa tapauksessa päädytään osaoptimointiin, joka johtaa erittäin todennäköisesti virheratkaisuihin. Vaadin, että Suomen rahapelijärjestelmän kehittämisen ja mahdollisen muutoksen tulee perustua ammattimaiseen kokonaisuuden tarkasteluun ja ratkaisuun!

LOTTERIES IN SPORTS BETTING BUSINESS

I participated in Betting on Football (BOF) event in London earlier this week. I was there as an expert in two different panel discussions. The first one was about Sports Betting market stagnation and the other one was about lotteries role in Sports Betting business. I also chaired the European Lotteries Sports Betting working group meeting before that BOF event. So I have got lots of stimulation from Sports Betting business lately and I try to think about what that information might mean for lotteries.

The first question is what companies are lotteries? I’m not trying to write any official definition because I’m not able to do it anymore. Lottery used to be a company which offered Lotto games normally based on monopoly situation. The most of lotteries are used to have also some other games too. Nowadays it is more common that lotteries still have monopoly in Lotto games are but not so often in other gambling areas anymore. Some former lotteries have wide product portfolios and they are offering all kind of games. For example, my company Veikkaus has all possible gambling products like lottery, Sports Betting, Horse Betting, bingo, casino games, slot machines etc… Is Veikkaus lottery anymore? As in our panel discussion in London also here in this blog I mean by lotteries still the companies which are offering monopoly-based Lotto games and it doesn’t matter if they are offering other games either in monopoly or in license markets.

One of the questions in BOF panel was could lotteries offer Sports Betting? It was strange question to me because we have had sports games since 1940’s and introduced fixed odds Sports Betting already 25 years ago. I see sports games as natural part of our product portfolio. There are more than 70 lotteries as members in European Lottery Association and about 2/3 of them have sports games in their product portfolio. So, lottery could and should operate in Sports Betting business, but can they do that in same way than Sports Betting companies like William Hill, Ladbrokes, Unibet & co are doing? They should do that but in some cases legislation would set restrictions. If lottery has monopoly also in Sports Betting it can’t use exactly the same tools than “normal business companies”. The reason why states have gambling monopolies is to restrict and control that business. Normal it means limitation to the business which in open market cases don’t exist.

The French gambling business consultant Christian Kalb has made survey among European lotteries to analyze how those companies are offering their Sports Betting products. He found out that there seem to be three or actually four different kind of strategies in that area. There is small group of lotteries who have positioned themselves to real competition in that area and are running Sports Betting like business as usual. The second group is offering quite many sports games but with a little bit worse rules (payout etc.) than private companies. Surprisingly big third group has Sports Betting or Football Pools but are offering it mainly like lottery games. Fourth group is that 1/3 of companies who haven’t been willing or allowed to have Sports Betting at all. Companies from those different groups are totally different ones from customer point of view and I try to analyze the first and second group to find out the question what kind of possibilities lotteries might have in Sports Betting.

Some lotteries are among the biggest Sports Betting companies in the world. Someone might be surprised that Hong Kong Jockey Club is the member of World Lottery Association and it could be called as a lottery? There are two real big European lotteries in Sports Betting business too. Those companies are OPAP from Greece and FDJ from France. FDJ is operating in heavy competition in French digital market and manages very well. The other kind of example of competitive lottery in Sports Betting is from Denmark where the state changed the legal system from the beginning of 2012. Lottery Danske Spil was split to two separate companies Danske Lotteri Spil and Danske License Spil where both are still part of Danske Spil company. Danske License Spil is in heavy competition and have exact the same tools and rules than other Sports Betting companies have. The lottery monopoly Svenska Spel from Sweden has now faced the same kind of change than Danske Spil had 7 years earlier. I’m keen on seeing the first results from there and analyzing them after few weeks. I was surprised that Christian Kalb put also Veikkaus to that first group. I agree that we are trying to operate Sports Betting as business as usual but have many limitations compared to those private companies. Anyhow for those business-oriented lotteries Sports Betting is normal business and natural part of everything else and they seem to manage very well also in competition if they would have possibility and will to have same condition than the other ones.

Example of companies from the second group are German lotteries. They have had fixed odds Sports Betting already many years, but they don’t have competitive rules there at all. They had monopoly in Sports Betting in principle but in practice they have faced competition from the beginning. Those German lotteries have had right to cooperate with each other and they have managed to utilize their huge lottery customer potential a little bit also in Sports Betting, but they have lost the competition quite badly anyhow. Now there is new legal environment in Germany, but lotteries haven’t changed their Sports Betting offering. I’m now sure if the reason has been legal restriction or is the decision made by lotteries themselves? I think that lotteries should either offer real product or stay away that business totally. I understand some limitations like lower risk limits and a little bit lower payout percent but those shouldn’t be too far away from the market level. If lotteries are not willing to compete in fixed odds Sports Betting they could offer more “lottery style” sports games like Football Pools and pool-based sports betting products – for example Moniveto (correct scores in 3-4 football matches) here in Finland. It’s always better from customer point of view to get all products from one shop and that’s why all lotteries should have sports games in their portfolio.

Sports punters association

We’ll have historical moment on Friday here in Finland. Our active Sports Betting customers will have meeting where they are probably going to establish for the first time official association for themselves. I don’t know if that kind of association exist somewhere else? According to Google I could say that at least it’s not common at all. Maybe that Finnish association will be the first one in the world? It’s really strange if that’s the case because I advised our punters to do that already 25 years ago.

I think that it’s great that those active customers will club together! I would like to join in that association as an active punter but of course I can’t do that due to my job. I have no idea what that association will try to reach and how they are going to act. I’ll just try to guess what we might have ahead and write my thoughts about that.

There are Poker players associations in many countries, also here in Finland. Some of those poker players are also active Sports Betting customers and there might be some common members in that new association and in Poker players association. They should understand that the role of those two clubs can’t be exactly the same. Poker players are slightly like any other sportsmen. Some of them are members of teams and are getting part of their money there. So, Poker player association is more similar with Tennis or Golf players associations than Sports punters association will be. There are not only professional poker players in their association and that’s why it’s also partly some kind of customer’s association. As you know there are lots of different associations and organizations which take care of the rights of customers and try to work for better conditions of customers. I think that this should be the main purpose of that new Sports punters association too.

It’s natural that customers are willing to take care of their rights and try to get even better deals. It’s quite strange that this hasn’t been the case in gambling business at all. As I have mentioned many times in my previous blogs gambling business hasn’t been and shouldn’t be as any other businesses. Our business could cause big problems and that’s why almost all states have decided to control and limit gambling operations. Maybe that’s the main reason why customers haven’t actively required better conditions/rules for gambling. Of course, there has been often discussion about the needed of higher payout percent and some other issues too but in big picture the discussion hasn’t been so active. Due (or thanks) to digitalization gambling business has became more like common business and there are nowadays more opportunities for customers. In old days, not so many years ago, there were one or just few gambling companies and customers could just decide if there were willing to play or not. Nowadays there are hundreds or even thousands gambling companies offering their products and customers have much more options available. It’s sure that the role and power of customer has changed a lot. I know that there are still big differences between countries in that area depending on the local gambling legislation.

What Sports (& horse) punters association could do and how gambling companies should take that? It’s the fact that you won’t have any business without customers! Companies should serve their customers as well as possible. They should also listen to customers and have dialog with them. I believe that the best services will appear when you have developed them with your customers. Based on that it should be logical to have dialog with that new association too. It would make many things even easier from company’s point of view. But, would that kind of Sports punters association present the opinion of all Sports Betting customers? Very probably it won’t. They will talk by the voice of the most active and important Sports Betting customers and companies should understand that. I hope that Sports punters association will also understand that the goal should be dialog not fight with gambling industry. If both sides would have same view about that we might get excellent solutions. If it will be “we against you” no one will get good results.

If I think about the situation now here in Finland I would say that we have good base for dialog between company and customers. We have here just one company which take care of all gambling business. Of course there are many foreign companies offering their digital gambling products to the Finnish customers too, but those companies are physically outside the Finnish borders – except PAF. So, it should be easy to organize discussions between punters association and gambling company. But due to that monopoly based legal system there are many areas which the company can’t decided at all which means that customers should have possibility to talk with regulator and other authorities too and I’m not sure how that would happen.

As a summary I would say that we are living interesting times in gambling business and especially in Sports Betting business. I believe that based on the example of Finland you will get that kind of Sports punters clubs to other countries too and it will be good for our business in long term!

How to fail in the strategy work?

I just read stories from Harvard Business Review and got idea to write about strategy. It has been interesting to notice how so many companies have made same kind of mistakes in doing strategy and implementing that to real life. I have been involved in strategy work many times in slightly different positions and circumstances but I’m not willing to act as a strategy consultant. I try to write my learnings in unusual way. I would like to tell you how you could easily fail in strategy work.

In old days companies used to make new strategy for next 5 years and some of them is still doing that. I don’t understand how that could be possible nowadays when the speed of change and development is so quick? You should analyze longer trends and possible changes and make scenarios about the future. Those scenarios could be for next 10 – 20 years but you should realize that they are just scenarios which hopefully help you to notice how fast and to what direction the world is changing. The company should have view what it’s willing to reach and how that would happen in big picture – there should be mission and vision for the company. There are at least already two mistakes which you could make at this level. The first one is to make long term strategy and business plan instead of scenarios. The other mistake is to write unrealistic and not so inspiring mission & vision.

The next way to fail in strategy work is decide exact strategy for next x years. If management and Board have idea that now strategy is ready and company will follow that plan forever they won’t have so nice future ahead. It’s nowadays ”must” to have adaptive strategy which could/should be checked many times a year because the speed of change is so fast. You will fail even more if you don’t change annual planning and budgeting processes.

For some reason the top management quite (= too) often thinks that they have ”all wisdom” in the company. I don’t understand why so many companies are preparing their strategy in small group where are only directors as members. That kind of model would make the strategy process quicker and easier but will cause for sure big problems when the strategy will communicate to employees. I think that Board of Directors should be decision making body and of course Management Team has also important role, but it shouldn’t mean that they are doing that alone. That kind of process guarantee “nice” failure.

I guess that management might think that they are involved in experts to the strategy process when there have been some subgroups preparing special parts of the strategy. In practice that work normally concentrate on finding out support/explanation to already made decisions and it won’t create any commitment to new strategy. Board and management should describe ”the big picture” – main challenges and possibilities and then ask experts to find out solutions and new ideas to make it happen. It should be two-way process. It’s possible to involve in all employees to strategy process! Someone could participate in planning and preparations. The most of staff could give their ideas and opinions via surveys which should be organized during the strategy process. If you would like to fail in your strategy process forget your staff and let them just know what you have decided on behalf of them.

The next step is the content of strategy. Quite many companies seem to have full packed strategy where are everything what company is doing. That kind of companies haven’t been brave or/and wise enough to decide what are the most important elements in their business. In that kind of case all directors will be happy in short term because they could keep their roles but in long term they will face “some” problems when business won’t develop so well. Strategy should describe what are the most important assets and capabilities for company. You should know where you could get competitive edge compared to your competitors and put lots of efforts on those things. If you would like to fail put efforts on everything and keep it as it has always been! It would also help if you won’t analyze the competition in your market at all – great failure ahead!

The last stage is implementation. Strategy should give guidelines to annual planning and budgeting. Annual planning should describe how company is trying to reach goals described in the strategy. Separate units should understand what their role is in “big picture”. When units know what they should do also single employees would know what they should do to help the company to reach the goals. In the ideal world all employees would know what the main goals of their company are and how they should work to make it happen. If you would like fail won’t strategy to guide the practical work at all. It would also help if you don’t communicate the “big picture” to your staff at all.

I’D LIKE TO BE A COCK BUT I’M AFRAID THAT I’M A CHICKEN

This time I write as a punter. I have played Horse and Sports Betting already more than 40 years. When I started it in 1970’s there was no discussion about responsible gaming issued so I was allowed to make my own bets with few marks (the Finnish currency those days). At the age of 16 – 17 I realized that I was much better Horse punter than an average customer and could make some money from betting. Finally there was period when I just made bets and lived with that. So, I have been serious, almost professional, punter but that was many years ago before I joined in Horse Betting company. I have understood already many years ago than I’m not able to spend enough time to analyze horses and other sports to make big money in Sports Betting. Despite of that I’m still spending lots of time, too much according to my wife, following sports and thinking about Sports Betting.

I was following some football matches yesterday evening and one of those matches was Ligue 1 game Reims – Amiens. Actually I’m not expert of the French football at all but based on my knowledge I noticed that home team Reims was better team and they were unlucky in the first period. The match was 0-2 after the first period and I just thought that there was quite high possibility that it would change during the second half. Based on my analyze and “feeling” I made bet on behalf of draw with odds 8,50 which I thought to be too high odds. I admit that it happens too seldom that I could beat the market and normally market is right and I’m wrong.

Anyhow what happened after that is the reason for this blog. The match went exactly in the way how I was expecting about that. Reims scored 1-2 in 70 mins and finally again in 84 mins. So match was 2-2 and there was about 8-9 minutes time to play. I was getting my money back with odds 8,50 – quite good win for me. I was happy but then for some reason I became a little bit worried and got “an idea” that Reims has so good spirit that they could score one more goal and then I could say goodbye to my potential winnings. As you know there is nice feature in Sports Betting called “cash out”. I think that it’s one of the best innovations in Sports Betting but I’m not normally using it because I think that I should trust on my analyzes and use cash out only in cases where I think that my live analyze is better than the market has – in practice that’s not a case almost ever. But yesterday I was too nervous and thought too much about short term money and made cash out. I won good money anyhow but of course match ended 2-2 and by waiting 7-8 more minutes I would get much more…

The gambler’s way of thinking is strange! I probably made good bet and won not only expected value but also real money, but I wasn’t so happy than I should be. Why? I think that I made stupid move when I used cash out and didn’t trust on my knowledge. I would like to be “cool guy” who knows what he is doing in Horse and Sports Betting and is ready to take risks when they are based on good analytics and will bring results in long term. Yesterday I wasn’t that kind of “cool guy” – a cock and that caused me almost sleepless night. My cash out wasn’t based on any analyze, it was made due to wrong reasons. I’m afraid that I’m rather chicken than cock and that disturbs me a lot!

Sports Betting gives at its best excellent excitement to customers. I have already earlier tried to describe how different customer groups there are in that business. I’m mentally used to be among those “sharks” but in practice I’m already far away from that group. I should admit that I’m not so talent anymore or if I think that in a little bit more positive way, I don’t have enough time to make analyzes. So, I could be better one IF I would have time… That IF causes always too many problems. You could explain many things with that and at the same time refuse to admit the realistic situation. When you are doing that you will probably make more mistakes and finally you will be totally out of business. It doesn’t mean that you couldn’t enjoy in Sports Betting, of course you can. You should know how capable you are and balance your stakes to that level not to the “wannabe-level” or in my case to the level where I used to be 20 – 30 years ago.

I would like to be young talent cock and I’m afraid of being a chicken. Instead of that I now trying to think about new way – maybe I’m old cock who was in old way really capable and now I have became older and not so capable anymore. At least I know what it is needed to be a cock!

Do it in different way

We are used to different kinds of things and habits and don’t necessarily see that there are other ways to think about same issues. That’s the case also when we are talking about Sports Betting. If you ask the definition of Sports Betting from professionals, you might get surprisingly many different answers. I’m used to visit in many gambling related seminars and events and keen on talking with my foreign colleagues. There are many reasons for that, but one is to learn something new and new ways of thinking. I know that I have strong opinions about things where I believe that I know a lot. That feature could cause big problems because I’ll do everything in a way which I’m used to. Luckily, I know that I have that kind of “problem” and I try to fight against it. When I have recognized that from myself I have noticed the same problem from many other experts too. I claim that most people have the same problem.

If you listen to the British experts in Sports Betting seminars you will soon notice that they are talking only about fixed odds betting – nowadays both pre-game and live. Asian experts will probably speak about different kinds of bet types than their European or American colleagues. Nordic Sports Betting professionals will probably have wider definition of Sports Games. They will add to fixed odds betting also parimutuel bets and Football Pools, but less different fixed odds bet types. If you think always in same way I won’t be able to innovate anything new and in long term you will lose the competition against other Sports Betting companies.

As I have mentioned in my previous blogs the competition in gambling business has became tougher and tougher. Companies should have new content all the time or at least new ways to offer & sell those products. It’s unfortunately easy to copy what the other ones have done but you won’t win the game by doing just that and that’s good! But is it worth of spending lots of money and resources for innovation and development when other companies could copy that and offer the same quite soon? Yes and no! If you don’t even try you will be at most average operator without any specialties. If you put too much effort on that it would cause you problems with cost efficiency. I believe that there are still lots of “empty base” in Sports Betting business. It seems to me that most companies are trying to offer exactly the same products and services with same conditions. The result is that Sports Betting business is nowadays more and more just “sale competition” where the company which have the best sale and marketing capability will win. I’m sure that there is better way to win that battle!

You should be brave enough to try new kind of products and services although all of them won’t work very well in your market. Don’t take stupid risk but you shouldn’t be afraid of failures! If you just try to minimize risks you will again be just an average “grey” company. What gambling companies should do? Be innovative and use also external resources in that area. Make bench marking from your own business area in other countries and continents and from some other businesses. Identify your current strengths and try to utilize them also in new businesses. Find out good partners – everything shouldn’t be done just by yourself. There are many Sports Betting products where cooperation between companies could help you to offer better products. When it’s almost impossible to prevent “copy paste” in gambling products, you should try to innovate something new which you could get patent or at least lighter protection.

What that could be in real life? Let’s take Germany as a potential example. There seems to be heavy competition in Sport Betting business in Germany although legislation is not totally clear. In principle State Lotteries (17) should have strong position there but they haven’t been able to develop their Sports Betting offering due to many reasons. I’m not sure how big market share they now have in German Sports Betting business, but I guess it to be about 10 %? If those lotteries could now introduce something new in Sports Betting business what they should and could do? They could buy services from Sports Betting odds suppliers like Betradar or Kambi but with that offering they could raise to an average level and it would be difficult to get at least active Sports Betting customers back. State Lotteries have had and still have strong position in lottery business. How they could use that strength also in Sports Betting business? They have lots of customers who are used to play lucky games with big jackpots. Would it be possible to introduce lottery type of Sports Betting products? Or would it be possible to introduce new Sports Games which would have some lottery features like for example jackpots? One practical solution for them would be introduce pool based (parimutuel) Sports Betting – something like we have here in the Nordics. The easiest way to do it might be cooperation with already existing pools. With an average fixed odds Sports Betting and special parimutuel games where they would have possibility for big jackpots it would be still possible to get quite big market share from the German Sports Betting markets.

To be honest I’m not sure if for example parimutuel Sports Betting would be huge success in all countries because customers have their own habits too. But if you won’t try you will never win!

I’m fan of eSports

There have been lots of news and stories about eSports in past few years. There seem to be lots of hype around eSports but not only hype but also serious new business opportunities. I have tried to be active in that area and have visited in many seminars and some events to learn and understand more about that “rising star”. It was great to notice last week in ICE event in London how big part of expo and seminar was about eSports.

I think that it’s fun story how eSports became to my life. I was going to participate in one gambling seminar about 5 years ago. I studied the agenda of that event and noticed that there was one session about eSports. That was totally new item to me and for some reason I decided to find out information about that from internet. I read about Counter Strike, Dota 2 and League of Legends. I also was interested in understanding how big that sport was in Finland and found out the ranking list of Finnish players. There was one very familiar name on that list – the same name than my son has. I told that to my son and mentioned that I didn’t know that there is another person in Finland who has the same name (my family name is not common) than he has. The even stranger thing was exact the same nickname. My son looked at me and said “You can’t be serious! It’s me!” It’s obvious that I’m not so good dad when I didn’t know that my son was among the best players in Finland. I didn’t even know that he was playing at all because he hasn’t been active PlayStation-player as a kid.

After that incident I have learnt a lot about eSports. I have got lots of information from stories, events but also from my son. He is not playing eSports actively anymore, but his good friends Jesse and Lasse are doing that at world-class level. Thanks to good sources I have understood how tough sport it’s at the top level. Those players are real professionals who are practicing hours and hours every day. It’s not at all just geeks with energy drinks!

Is eSports sport or not? That has been the theme of public discussion here in Finland. To me it’s sport for sure but I think that it’s totally irrelevant question. I believe that active eSports players don’t care about that at all. That discussion started in big newspapers more than one year ago when the organizer of the Finnish Sport Gala published the candidates for the best athlete in Finland. One of those candidates was MATUMBAMAN who won with his team The International tournament in Dota 2 (World Championship). Almost at the same time the Finnish Olympic Committee took eSports under their umbrella. Last year the same kind of discussion started again when JERAX and TOPSON won the same The International tournament and got invitation to the President Palace and SERRAL won the World Championship in Star Craft II game. It’s obvious that we have lots of top level eSports players here in Finland!

What is the relationship between eSports and Sports Betting? Some years ago, gambling companies were thinking about to introduce some gambling features inside eSports games, but it didn’t finally happen because that kind of action would change those games and that should be purpose. Instead of that companies decided to offer eSports in Sports Betting as any other sports. It has worked well at least here in Finland. It depends a little bit how you analyze the popularity of different sports in Sports Betting, but I could say that eSports in nowadays among the 4 – 6 most popular sports in Veikkaus offering. It’s at the same level or even higher than for example basketball. I believe that there would be lots of new ideas and options left. We tested one new thing, probably as the first company in the world, this week. We introduced eSports “Football Pools”-game. You know the game where you should select “home win”, “draw” or “away win” from 12 – 14 matches. This time those matches were eSports matches.

What gambling companies could reach by offering eSports and what are the biggest risks? Customers who are making bets in eSports are younger (not too young!) than average Sports Betting customers. They are not using a lot of money but are quite active to do it from weekly basis. That new potential target group is also reason why some gambling companies are nowadays sponsoring eSports events – it will give good reputation among younger customers. I visited in Counter Strike Major tournament in London and were surprised about the structure of audience. There were lots of young people but not so young than I expected them to be. There were quite few who were under 18 years old. I was probably the oldest one at the Wembley Arena but that’s another story… Of course, there is also few quite big risks due to those quite young players. The first on is the risk of match fixing. eSports players don’t understand those risks because they are not aware about that. That’s why gambling companies and eSports organizations should concentrate on education. The other risk is more related to Sports Betting. Companies shouldn’t make any marketing campaigns in the events where are underage audience than that’s very difficult to control.

I believe that the popularity of eSports will increase and there is also huge potential from Sports Betting business point of view too. But we should seriously take care of the integrity of eSports at the same time!

Sports Betting – bulk product?

I’m on my way from the biggest gambling event in the world, ICE, back to home. I had there lots of interesting meetings and would have so many ideas for my blog. This time I chose the item which stimulated me most: the future of Sports Betting. I would like to thank three of my good friends Jens Nielsen, Stein Onsrud and Sami Kauhanen about fruitful discussions about that!

As you know I love Sports Betting! It has somehow been my ”baby” and I would like to see it to have bright future. Unfortunately, I don’t have so positive view about that, but we haven’t lost the game yet. In the ”old days” when we started fixed odds Sports Betting in Finland it was battle between odds compilers and punters. It was a little bit unfair competition due 20% margin which the company had. Anyhow the core of Sports Betting was to make as good statistical estimation as possible and that was enough to run successful Sports Betting business.

The other important feature was marketing. There could be some other companies who could make as good analyzes than your company and you should be more attractive from customers point of view than those other ones were. Marketing was the key tool for that competition. It was quite simple to run successful Sports Betting business in 1990’s. You just needed excellent odds compilers and marketing people.

Everything seemed to change when Betfair and some other betting exchanges appeared to the market. Their business model was totally different – margins where about 5% or even less. I believed that it was all over from traditional Sports Betting companies’ point of view. But I was wrong! Companies raised payout percent up to 92-93 % and that was enough for the customers. Of course, betting exchanges have taken quite big part of the business but not so much than I expected.

The next and probably even more crucial change in Sports Betting business has been and will be the raise of companies like Betradar, Betgenius, Kambi etc… Those suppliers are selling their statistical analyzes to Sports Betting companies. Odds suppliers have hundreds of odds compilers and analytics and they are using IT-experts too to make perfect analyzes. They can also utilize scalability more than Sports Betting companies can. Due to those reasons nowadays almost all Sports Betting companies have outsourced odds making to those suppliers. Companies are buying services from same few big suppliers and that’s why there are not differences in odds anymore between Sports Betting companies. That has made Sports Betting quite boring!

Sports Betting is not anymore bookmaking like it still was 15-25 years ago. I could even say that there are not anymore real fixed odds! They are rather running fixed odds because companies are changing odds all the time based on money coming in. Computers could take care of that and there is no need for skillful odds compilers anymore or isn’t it?

It seems that Sports Betting has become as a bulk product. All companies have the same product with the same odds. Marketing has still big role but something else is needed if you want to make business in that gambling area. I think that there are at least two possibilities left. The first one is understanding of your customers. You should be able to sell Sports Betting in separate ways to different customer groups. I already wrote about that in one of my previous blogs. There are customers who are not so interested in odds but are still ready to make a bet. You should offer Sports Betting to them in totally another way than to active punters.

As an old Head of Sports Betting business, I’m probably too much married with old times but I would say that the second possibility is to make better odds than the other ones. Would that be possible? I’m sure that it is but just in limited areas. You could concentrate on one or two sports and be there better than those odds suppliers are. Pinnacle is good example of that. They are now the leading company in eSports and very good in some other sports too. You could also concentrate on one country and try to be the best analytic of sports there. The Nordic lottery-based companies are good example of that strategy. I believe that my company Veikkaus is the best Sports Betting company in Finnish ice hockey and football and some other local sports like ”pesäpallo” (our own baseball style sport) too.

There is big risk that Sports Betting will be bulk product which all companies just have but no one really concentrate on it. But I believe that at least some companies will try to fight back and try to do some part of Sports Betting in different way than the other ones. As a Sports Betting enthusiastic I really hope that there will be need of bookmaking also in the future!

RESPONSIBILITY – OPPORTUNITY OR THREAT?

Responsibility is ”the theme of the day” in gambling business. My colleague Sami Siltanen wrote about that in his blog www.patakuningas.com (in Finnish) last week. I decided to continue with the same theme but from slightly different perspective. You might think that everything has been said about responsible gaming and it’s impossible to find out any new views. That’s probably the case but it’s so important issue that I should try!

Gambling is so dangerous that states have decided to control that business heavily. Some of customers have big problems to control their own gambling. It’s very similar case than in alcohol consumption. If player can’t control his/her gambling the result could be extremely fatal. Society and gambling companies should do their best to prevent those cases.

EC Court of Justice has stated that the member states have possibility in gambling business to limit the free movement of products and services which is against the main principles of EC. That limitation would be possible if that would help member state to prevent problems related to gambling. That kind of problems could be criminal actions and also gambling problems.

What society could do to prevent gambling problems? Countries like Finland who have monopoly system in gambling business have an idea that monopoly at itself will reduce gambling and that would further reduce gambling problems. There are own gambling laws and rules in all countries and those laws will help states to control also gambling problems in principle level. Authorities have also some tools and they try to do their best to control gambling operations in practical level too. One big challenge is that digitalization has already break the state lines in practical level and it is more difficult to control all gambling.

I would say that there are two kind of problem gamblers. According to surveys there seem to be about 1 % of adults who have serious gambling problem – it’s like disease and their really need treatment for that. That 1 % level is surprisingly same in different countries although gambling legislations are quite different ones. According to surveys there are about 40 000 people who have serious gambling problems in Finland. Totally there are approximately 3 % of adults who suffer somehow from gambling issues. Those serious gambling addicts are included in that 3 %. So, there are totally about 130 000 Finns who have some kind of gambling problems and 1/3 of them have big problems. These numbers have been at the same level already years. There has been surprisingly less change in those numbers although the volume of gambling has increased.

What gambling company could or should do? I listened to the Swedish gambling problem researcher Thomas Nilsson already 25 years ago and I still remember what he said. According to Nilsson there are not so much what gambling company could do to prevent problems of those addicted players. They will find out new way to gamble anyhow and the society should take care of treatment of those people. Gambling companies should concentrate on the group of customers who have some problems and try to prevent them to move to more serious group. There are some tools like gambling limits and marketing pans which companies could use. Companies have nowadays more tools than they had before because there are more data available and that help companies to analyze their customers. From prevention point of view, it would be good to combine information from health care and gambling because then companies could even blog out all gambling addicted consumers. I understand why this is illegal from privacy and information security point of view and won’t happen…

Quite many gambling companies have started to talk about how responsible firms they are. Almost all companies have limits for gambling and they justify those limits with problem gambling reasons. In many cases that’s not the real reason at all! According to researches there seem to be just light correlation between gambling volume (euros) and problem gambling. If company would real like to reduce gambling problems responsibility should set up guidelines for whole business operations. Companies shouldn’t ask are we willing to select our business goals or responsibility! Gambling companies should decide frames for their business operations based on responsible values. Company should operate inside those frames. It should be clear to all employees what company could do and what not. There are for example product development tools which help to analyze how dangerous new game would be and it shouldn’t be allowed to introduce too addicted games. In short term it would be tough to notice that company will lose some customers to more irresponsible operators but in long term more responsible companies will finally win. I believe that responsibility will be one of the most important competitive edge in gambling business. The reason for that is that customers will trust on responsible companies more than the other ones!

SHARKS – DANGEROUS ANIMALS?

I wrote about different customers in my previous blog. I’ll now continue with the same theme and will concentrate on Sports and Horse Betting.

I divide Sports and Horse Betting customers to four groups: “sport fans”, “habit players”, “wannabe experts” and “heavy punters”. The motivations of those different types of customers vary very much and Sports Betting companies should understand that, or they won’t manage well.

“Sport fans” are really interested in different kind of sports. The size of that group is big – in Finland about 50 % of adults are watching when our team is playing in World Championship final in ice hockey. Those “sport fans” are probably playing some money games but they are not so familiar with Sports Betting products. “Habit players” is smaller group but from Sports Betting customers it’s the biggest group. They are gambling every week and know Sports Betting products well but are not using lots of money. “Wannabe experts” is active group who could say that Sports or Horse Betting is their main hobby. They are trying to win money from gambling but won’t manage to do that in long term. “Heavy punters” is real small group of experts who are in practice professional gamblers and Sports or Horse Betting is their job. There are all the time movement from lower group to upper group and sometimes also to another direction.

Let’s assume that there are only three main business goals for betting company. The most common goal is to get profit. The other one is to achieve sale and market share. The third quite common goal is to increase the number of customers. If you are not running giant size company with lots of resources, you can’t do everything and can’t concentrate on all customer groups seriously. Normally we are in the situation where we must select which business goal will be our primary one. Of course that goal could be different in short term and long term – big market share will help you to earn more money in long term etc…

If I should try to get as much profit as possible in next quarter I would target my offering and marketing to “wannabe experts” and partly to “habit players”. Those groups are losing more money than the other two groups. Of course that would be irresponsible way to act but don’t care about that here. If my goal would be to achieve more sale I would concentrate on “heavy punters” and also “wannabe experts”. Heavy gambler could use about 1000 times more money to gambling than an average normal customer. So, it’s the easiest way to increase your sale with them. You should understand that if you are concentrated on that professional group you will potentially face serious problem with your profit because those customers will win in long term. If my goal is to increase the number of customers, I’ll have just option left and it’s “sports fans”.

I think that all sports betting companies are willing to get “wannabe experts”, “habit players” and “sport fans” but not “heavy punters”. Why that is the case? Sports Betting companies seem to be afraid of those professional customers and call them “sharks”. I’m not sure that is the wisest way do business although in short term it might look like that.

When you are willing to make a bet, you should find out another person who is also willing to do that and who is ready to accept odds you are offering. So, we always need two parties to make a bet and both should agree with the conditions of that bet. The interesting question is why I should accept bet from one customer with fixed odds but don’t accept bets from another customer with same odds or even don’t accept any bets from that customer? That’s how most of sports betting companies are doing nowadays. They make their decision based on data of those different customers – bets are ok from customers who are losing in long term and not ok from winning customer = SHARKS. According to rules there is nothing wrong with that but why those companies are so afraid of sharks? The responsible gaming reason is not at all valid when we are talking about those professional punters. They are spending huge amount of money but that won’t cause problem gambling when they are winning in long term. The real reason is of that companies are willing to make money / profit and they won’t do that with those customers or will they?

I agree that those sharks are dangerous “animals”, but would it be possible to act towards them in different way and even utilize them in your business? Yes, I think so! I have three ideas about that. The first one is to make your odds better. When your odds compliers know that there are talent customers against them they will do their work even better than would do against normal customers. When you have better analyzes your fixed odds sports betting will be better business. The other benefit would be better reputation. At least here in Finland those “sharks” are quite famous among “wannabe experts” and when your company accepts bets from them they will speak on behalf of your company and “wannabe experts” would value your company much more. The third thing is the profit which will come from another products. If you are offering pari mutuel sports or horse betting products you will get bets to those games too from “sharks” and that will utilize you in two different ways. You will get higher turnover to your game which will be even more attractive game after that. There is no business risk from company point of view in pari mutuel games, so you will get also profit from those “sharks”. Finally they might be even profitable customers as such or at least via the other customers.

It depends on your business goals how much you should be afraid of sharks. Sometimes they are not dangerous animals at all!