LOTTERY INNOVATIONS – CASE LOTTOLAND

I participate in World Gaming Executive Summit event in July in Barcelona. I had opportunity to be one of the members in panel where we discussed about lottery innovations. One of the fellow panelists was Nigel Birrell, CEO of Lottoland. I was surprised how much we agreed on current situation and also about the further development in lottery business. My company Veikkaus, the national monopoly operator, and Lottoland, the market “hooligan”, look lottery/gambling business from very different perspectives but finally we are trying to reach about same goals. I’ll now tell what I personally think about companies like Lottoland and also what are main changes needed in lottery business.

I was asked to give my “confession” about Lottoland in ICE Vox seminar in February 2018. Although as a protest I’m not used to give any confessions, I made presentation about that and here are 7 points I made 1½ years ago. I think that they are still valid.

Lottery business has no competition
1. Lotteries have believed that competition is in casino and sports betting business but in lottery business.
1. Due to previous point lottery innovations haven’t been significant at all.
1. Lotteries have been and unfortunately still are in protection mode – we have believed in lobbying & EU Law.
The business idea of Lottoland is great
1. Betting on lottery results and the Lottoland business model is something like “Uber” of the lottery business.
1. What Lottoland has done would be possible for lotteries. Why lotteries haven’t done that by themselves?
1. There are excellent business solutions from Lottoland.
Scared & angry
1. I felt scared & angry when I noticed what Lottoland was doing -> protection mode again
1. I think that it was steal of our brands!
1. There wouldn’t be Lottoland without lotteries because they business was based on our products.
Wakeup call- thank you!
1. We should develop our own business.
1. The key issue is to understand motivations of our customers – huge jackpots is not the only reason to play lottery.
New surprise(s)
1. Lottoland moved to B-to-B business and that was new surprise.
1. What will be next surprise – maybe “Super Lottoland”?
Speed of development increases uncertainty
1. How much and quick gaming and gambling businesses will merge?
1. Blockchain or something else – there will be new technologies all the time.
We are going to fight!
1. Lotteries or at least some of us are ready for fair competition!

Lottoland is just one company and I use it only as an example to describe what would happen if companies don’t develop their businesses and don’t put effort on innovation. Then there will be someone else who is doing that and will win the battle. It’s extremely important that you understand and serve your customers as well as possible. In old days it was possible that company decided what they were selling but nowadays customer is decision maker and he/she has lots of alternatives where to select – also in lottery business despite of monopolies.

I realized at the latest in that panel in Barcelona that there are still lots of lotteries who are not trying to innovate anything. I knew that it was the case some years ago, but I was a little bit shocked that it still is. Due to that fact there is lots of empty space in lottery/gambling business where newcomers, companies like Lottoland, have excellent business opportunities. If lotteries believe that they will win the battle in courtrooms, they are totally wrong!

I know that it is not easy to keep monopoly and at the same time innovate new business solutions, but we should try to do that anyhow. I’m happy and proud that my company Veikkaus is going to host EL’s (European Lotteries) Innovation seminar here in Helsinki in November. We try to increase the level of knowhow, understanding and spirit of innovations among lotteries. I hope that after few years the reputation of lotteries is not anymore old-fashioned, and we could still run profitable and responsible business!

THE FINNISH GAMBLING MONOPOLY – TO HAVE OR NOT TO HAVE IT?

I’m still on my summer holiday and try to avoid to do too much work but now it’s almost impossible to avoid that. There is the most active discussion about the Finnish gambling system going on and I believe that I understand very well what it is about. I should mention once again that all opinions are my own ones and my company Veikkaus has nothing to do with this blog.

We got new government about two months ago and I gave my estimations what that will mean for the Finnish gambling policy and system. I believed that the importance of responsible gaming will increase, and the current monopoly-based system will stay until the end of 4 years period of the new government. I still believe on that but now the probability of system change has become a little bit higher. Our Prime Minister Antti Rinne has said that Finland should make deep analyze about other possibilities too.

There are two main areas which have caused lots of discussion. The first one has been those 18000 slot machines which Veikkaus has all over the country in shops, cafeterias and gasoline stations. The second item has been ads where Veikkaus has given too positive feeling of gambling. It’s quite obvious that there have been too big mistakes in those ads where for example “therapist” has encouraged “patient” to make some horse betting. But are those mistakes so serious ones that due to them we should discuss about the gambling system? Are those mistakes sign of something bigger problem which we have?

The new Veikkaus is in bad situation. The company is 100 % owned by the Finnish State. It’s obvious that management should follow the guidelines which owner will give but has it been clear what the owner is willing to have? The operational profit from Veikkaus to the state has been over 1 billion euros a year and gambling tax has been about 200 million a year. The Finnish State has got from Veikkaus totally about 1,2 B€ which is over 2 % of the state budget. So, we are talking about the huge financial issue. But as you know, the fiscal revenue can’t be the official reason for gambling monopoly. The only acceptable reason for monopoly system could be prevention of social problems like crime and problem gambling. The Finnish State has decided that monopoly is the best way to prevent those gambling problems. But would it be possible to maintain that revenue level and at the same time prevent problems?

The Finnish State should decide which is the primary goal of Veikkaus – money or responsible gaming. If they will select responsible gaming, it will mean that they should accept that the revenue level will go down quite a lot. I think that it would be quite easy to increase responsibility if we don’t have to care about the profit at all. But Veikkaus doesn’t have monopoly anymore in real life and our regulators don’t have tools to regulate those offshore companies which have already quite big market share in online gambling business in Finland (their GGR from Finland is about 300 M€). If Veikkaus will increase the responsible level and regulator can’t control those unregulated companies the gambling revenue will go outside the Finnish borders and gambling problems won’t decrease. If the Finnish State will select profit as a main goal, it will mean the end of monopoly and we’ll do the same what has happened for example in Denmark and Sweden.

I would say that the current situation is strange where Veikkaus is in the middle and ”shots” are coming from socially responsible bodies which are looking for much more responsible gaming actions and require Veikkaus to stop business development and marketing. At the same time ”shots” are also coming from total other side from more business-oriented bodies who would like to break monopoly-based system and promote offshore gambling companies. It is almost fun to follow that kind of discussion where those two totally opposite bodies have found the common enemy. I would say that it would be similar case when in politics extreme right and extreme left will find common enemy.

The new government decided just two months ago what kind of gambling policy they will follow. Despite of that our Prime Minister Antti Rinne said few days ago that they will consider that policy again, but it should be based on facts and deep understanding of gambling business. Quite many EU countries have moved from monopoly system to license-based system and we have lots of bench marking information from those changes. I think that we could utilize the experiences from France, Denmark and Sweden and could estimate what that kind of gambling systems would mean here in Finland from business and responsible gaming point of views. I have been surprised that there is not so much information about responsible gaming results from those other countries – it even seems that they haven’t care about that so much when they have changed their systems. As far as I know they didn’t make any problem gambling research in Denmark before they moved to the license system.

I’m not saying that it’s impossible to take care profit and responsible gaming at the same time but it’s very difficult to do. I’m saying that decision makers should know what they are looking for and what those changes might mean. As an economist I would say that monopoly as such will decrease the business activities. So, if Finland will follow the Swedish way, it would mean that at least that gambling activities will increase and we’ll have more marketing actions. But at the same time our regulators could control all those current unregulated offshore companies which are nowadays out of their scope and that would be positive thing. I don’t know what will happen here in Finland, but I know that we’ll interesting time ahead.

RAHAA VAI VASTUULLISUUTTA?

Mitäpä sitä kesälomallaan muutakaan tekisi kuin kirjoittaisi omaan työhönsä liittyvää blogia… Kuten olen jo blogeissani aiemminkin todennut, niin kirjoitukseni ovat täysin omaa käsialaani ja työantajallani Veikkauksella ei ole näiden tekstien kanssa mitään tekemistä. Ajatukseni ja mielipiteeni ovat siis täysin omiani, vaikka tietysti työtehtäväni ovat edesauttaneet tietojen saamista ja näkemyksien syntyä.

Kirjoitin pari kuukautta sitten arvioni Suomen uuden hallituksen mahdollisista vaikutuksista suomalaiseen rahapelipolitiikkaan ja -järjestelmään. Totesin silloin uskovani mm. siihen, että vastuullisuuden merkitys tulee korostumaan ja nykyinen yksinoikeuteen perustuva järjestelmä tulee säilymään ainakin tämän hallituskauden loppuun asti. Olen edelleen samaa mieltä, vaikka tuon jälkimmäisen asian todennäköisyydet ovat tämän viikon kommenttien perusteella muuttuneet.

Veikkauksen mainonta on saanut viime aikoina osakseen kovaa kritiikkiä. Virheitä on varmasti tehty, mutta kyseessä ovat toistaiseksi olleet yksittäiset ylilyönnit ja/tai virhearviot, joiden ei mielestäni pitäisi millään tavalla vaikuttaa siihen, minkälainen rahapelijärjestelmä Suomessa on. Vai pitäisikö kuitenkin? Onko mainoksista tunnistettava linja rahapelaamisen kannustamiseen sittenkin merkki jostakin isommasta rakenteellisesta ongelmasta?

Kansanedustaja Juhana Vartiaisen lausunto Veikkauksen tilanteesta oli kuin suoraan omasta suustani. Uusi Veikkaus on joutunut hankalaan tilanteeseen. Osakeyhtiön tulee kuunnella omistajansa mielipiteitä. Veikkaus on 100 % Suomen valtion omistama yhtiö, joten Suomen valtion ääni on omistajan ääni, mutta mitä tuo ääni kertoo yhtiölle? Veikkaus tuottaa edunsaajilleen vuositasolla yli miljardi euroa ja sen lisäksi valtio saa rahapelitoiminnasta noin 200 miljoonan euron verotulot. Fiskaalisen tuoton taso Suomen valtiolle on siis noin 1,2 miljardia euroa, joka on yli 2 % koko valtion tulobudjetista. Taloudellisesta näkökulmasta puhutaan omistajan kannalta valtavan suuresta asiasta. Toisaalta taloudellinen tuotto ei ole pätevä oikeudellinen peruste yksinoikeusjärjestelmän ylläpitämisen syyksi. Rahapelien järjestämisen yksinoikeus on mahdollista, jos järjestelmä ehkäisee pelaamiseen liittyviä ongelma, joita ovat mm. rikollisuus ja peliongelmat. Veikkauksen omistajan eli Suomen valtion tehtävänä on siis myös ohjata yhtiötä toimimaan mahdollisimman vastuullisesti. Nyt näyttää siltä, että omistajan kaksi eri näkökulmista syntyvää tahtotilaa iskevät toisiaan korville.

Toistan varmasti itseäni liikaa, mutta Suomen valtion tulisi päättää, kumpaa asiaa Veikkauksen tulee ensisijaisesti tavoitella. Vastuullisuuden priorisointi tarkoittaa väistämättä nykyisen tuottotason merkittävää putoamista. Vastuullisuustoimenpiteiden lisääminen lienee kohtuullisen helppoa, jos tuottojen alenemisesta ei tarvitse välittää. Toisaalta vain Veikkauksen tekemät erityisen kovat vastuullisuustoimenpiteet eivät välttämättä juuri poista ongelmapelaamista, mikäli viranomaisilla ei ole nykyistä enemmän keinoja puuttua Suomen reguloinnin ulkopuolella tapahtuvaan pelaamiseen (= offshore peliyhtiöt). Tällaisessa tilanteessa aktiivisten pelaajien rahat vain siirtyvät toisille peliyhtiöille, joiden vastuullisuustoimenpiteet ovat yleisesti ottaen selkeästi Veikkauksen nykytason alapuolella. Mikäli taas Suomen valtio päättää priorisoida tuottotasoa, niin yksinoikeusjärjestelmästä pitänee luopua ja siirtyä esim. Tanskan ja Ruotsin seuraksi lisenssijärjestelmään tai ainakin osittaiseen sellaiseen.

Veikkaus näyttää joutuneen ristituleen, jossa toisaalta ”ammuksia” tulee peliongelmia korostavilta tahoilta, jotka vaativat yhtiötä toimimaan nykyistä vastuullisemmin ja lopettamaan tai ainakin merkittävästi hidastamaan tuotekehityksen ja myynnin edistämisen. Toisaalta ”pommitusta” tulee aivan toisilta tahoilta, jotka pyrkivät edistämään yksinoikeuteen perustuvan rahapelijärjestelmän murtumista ja suuressa määrin myös yksityisten kansainvälisten rahapeliyhtiöiden liiketoimintamahdollisuuksien avautumista Suomessa. On ollut ”huvittavaa” seurata viime aikaista keskustelua, jossa nämä kaksi täysin eri asiaa ajavaa tahoa ovat yhdessä arvostelleet Veikkauksen toimintaa. Vertaisin tilanne politiikkaan, jossa äärioikeisto ja -vasemmisto hyökkäävät yhteisen keskellä olevan vallanpitäjän kimppuun.

Olen pääministeri Rinteen kanssa samaa mieltä siitä, että suomalaisen rahapelijärjestelmän perusteita tulee jälleen kerran tarkastella, vaikka Suomen uusi hallitus vain pari kuukautta sitten teki hallitusohjelmassaan asiasta selkeitä linjauksia. Uskon vahvasti faktaperusteiseen päätöksentekoon ja toivon, että tätä periaatetta noudatetaan myös rahapeliasiassa. EU:ssa on viimeisen kymmenen vuoden aikana tapahtunut monessa maassa muutos rahapelien yksinoikeudesta lisenssijärjestelmään. Näistä muutoksista, mm. Italiassa, Ranskassa, Tanskassa ja viimeisimpänä Ruotsissa, on saatavissa paljon faktatietoa. Taloudelliset vaikutukset on helppo analysoida, mutta yllättävää on se, ettei kaikissa maissa ole kiinnitetty huomiota peliongelmissa tapahtuneisiin muutoksiin. Esimerkiksi edistyksellisessä Tanskassa ei tehty ennen muutosta ongelmapelaamisen määrän arviointia lainkaan, joten vertailukohtaa muutoksen vaikutuksille ei ole olemassa. Vaikuttaakin siltä, että monen maan päätöksentekoa on ohjannut taloudelliset tavoitteet.

Olen todennut aiemmissa blogeissani, että vastustan lähtökohtaisesti monopoleja. Olen kuitenkin saanut työskennellä rahapelejä yksinoikeudella hoitavissa yhtiöissä kohta 28 vuoden ajan ja ymmärrän sen vuoksi hyvin, että joissakin tapauksissa yksinoikeudella päästään parempiin tuloksiin kuin vapaalla kilpailulla. Uskon näin olevan aloilla, joilla on todellinen tarve säädellä asiakkaiden kulutusta. Suomessa tällaisen kuluttajia koskevan erityisen suojelun aloiksi on katsottu mm. alkoholi ja rahapelaaminen. Vaatiiko kuluttajien erityinen suojelu yksinoikeusjärjestelmää vai ei?

Ruotsin lisenssimallissa viranomaiset ovat saaneet säätelyn piiriin aiemman parin yhtiön sijaan yli sata yhtiötä. Viranomaisen mahdollisuus puuttua asioihin on siis tässä mielessä lisääntynyt merkittävästi. Toisaalta aiemman parin virallisen toimijan (ATG & Svenska Spel) mallista siirtyminen yli sadan rahapelibrändin malliin on aiheuttanut mainonnassa räjähdysmäisen kasvun, joka taas väistämättä lisää peliongelmia. Järjestelmäratkaisuun ei siis ole itsestään selvää ratkaisua. Elämme kiinnostavia aikoja…

PREDICTIONS ABOUT SPORTS BETTING

It’s already 1½ months when I last time wrote my blog. I should be more active but there have been so many other things to do…

I participated in World Gaming Executive Summit few weeks ago in Barcelona. That was good event where I got some ideas for my blog. I had excellent panel discussion about the future of lotteries with CEO of Lottoland and I’ll write about that after my summer vacation but now I’ll concentrate on Sports Betting – again.

Sergey Portnov, CEO of Parimatch, gave interesting predictions about the future of Sports Betting. I’ll summarize what Sergey told and make my own predictions too. Let’s see how well we could see the future of Sports Betting.

Portnov presented 10 points and gave odds all of them. Here is short version about his predictions without those odds:

there will be 100+ new betting sites targeting 18 – 25 years old segment
marketing massacre is imminent, budgets doubling and LTV also growing
bookmakers will run their own sports competitions to ensure always on live betting propositions
majority of companies will transform management teams
ICE event will be overfilled with payments solutions, bookmakers will finally start building USPs around payments
sport streaming in its current form will become obsolete
individual product offerings will overtake generic offerings
all major players in the market will rebrand
offshore market will grow faster than regulates market
esports will account for 10 % revenue for betting operators

It’s very logic that I look Sports Betting from different perspective than Sergey does. Finland versus Ukraine/Cyprus and state-owned monopoly versus private owned offshore company are totally different worlds. Anyhow we both know Sports Betting business well and that’s why I could agree with Sergey about many of his points.

My 10 predictions about the future (5 years) of Sports Betting are:

GAFA companies will enter to gambling/Sports Betting business
big media companies will utilize their sports media rights also in Sports Betting business
companies will have separate Sports Betting brands & offering for active customers and average customers
individual products & services will increase their popularity
esports will be the second biggest sport in Sports Betting (includes new esports formats)
marketing of Sports Betting will be banned – at least in EU
bonuses won’t be allowed
regulated companies will have at least 80 % market share in Europe and North America
there will be new popular Sports Betting products which are different ones compared to current fixed odds Sports Betting
the importance of responsible gaming will increase dramatically

WHERE THE FINNISH GAMBLING POLICY WILL MOVE?

We’ll finally get the new government here in Finland 7½ weeks after the Parliament election. It has taken more time than normally to establish that government than we are used to have. I believe that there are two main reasons for that. The first one was EU Parliament election. Parties weren’t willing to announce the new government program before EU election. The other reason has been quite strange result of Parliament election. The biggest party got just a little more than 17 % of votes (for the first time under 20 % ever) and there was no clear winner at all.

Anyhow now it seems to be sure that the new government will be there soon. We shall face strong movement from the “right side” to the “left side”. There will be four former opposition parties in the government and just one party will continue in that new government too. That will mean that many things will probably change in next four years. I’m keen on seeing what it will mean for gambling business.

As you know we have monopoly system in whole gambling business here in Finland. My company Veikkaus is taking care of all possible gambling businesses. As far as I know all big parties have supported that system at the principle level. So, new parliament and government won’t necessarily mean anything from gambling system point of view. But there is more and more discussion about our system anyhow and I’ll now give just my personal estimation/guess what might happen in next few years.

The Ministry of Interior Affairs is responsible for the gambling legislation and regulation. Civil servants of that ministry have made study about what kind of needs our gambling legislation would need. The published a memo about that last week and you could find it here: http://julkaisut.valtioneuvosto.fi/handle/10024/161645 (only in Finnish). That memo describes well how our regulator sees gambling business. Civil servants are not the final decision makers, but they will have lots of influence towards politicians.

The Finnish Lotteries Act (= gambling law) is a little bit strange. Veikkaus has monopoly in all gambling verticals (lottery, casino, sports & horse betting) and it’s the only company which has right to market it’s gambling product but not all of them. From customer point of view it’s anyhow legal to use services of other gambling operators and the Finns are doing that more than ever. Those offshore companies are not allowed to have any marketing & sales actions in Finland, but regulator can’t control that in online channels. Finland is not using any kind of blocking to prevent gambling abroad. Now discussion about need of blocking is increasing and something might happen in that area.

The Ministry of Interior Affairs has now analyzed if blocking could restrict gambling abroad and at the same time reduce gambling harms caused by those operators. They have found out that blocking could reduce total gambling and gambling problems. They also say that if there would be blocking then Veikkaus doesn’t need to market its gambling products and doesn’t have to develop games that attract players to gamble. I believe that it might be the case in short term but in long term that would mean big problems. The Finnish customers would be forced to use worse products than the other ones could have, and they would know that. What that would mean for the reputation and acceptance of gambling monopoly and Veikkaus as the best lottery company in the world? What would happen then when the monopoly system will anyhow change to licensed system – how Veikkaus could be ready in that situation?

The main purpose of monopoly system is to reduce gambling problems and whole gambling. The regulator doesn’t think about the gambling profits at all but politicians do. It would be easy to reduce gambling – make it illegal and stop it totally. That would mean “some” financial challenges – the total amount of money to the Finnish State from gambling business is over 1,2 B per year. It has been quite interesting situation where the state has at the same time required Veikkaus to slow down its operations and make at least the same amount of profit as before. Veikkaus must take responsible gaming really seriously and there will be more and more changes in that area. Maybe the biggest change will be mandatory identification in slot machine gambling from the beginning of 2022. I’m not expert in that business but I would say that it will mean 100 – 200 M€ less profit.

Veikkaus has nowadays international business co-operation in lottery and horse betting businesses. Eurojackpot and Vikinglotto are popular products in Finland! Common horse betting pools with the Swedish ATG have big share of the whole horse betting in Finland. There has been discussion could we continue that kind of co-operation. According to the study it seems to be possible to continue that kind of existing co-operation, but civil servants are skeptic to let Veikkaus to have more than kind of operation. Veikkaus would like to have more international B2B businesses but would it be possible?

I try to guess what the new government might decide about those four main themes in that study of the Ministry of Interior Affairs.

Blocking – it would be easy to decide that we should have blocking system also in Finland if I think about that from the principle ideology of government parties. But I don’t believe that there would be any kind of blocking due (or thanks) to RKP (small Swedish speaking party). Blocking would have serious effect on PAF and RKP won’t let that happen.
Responsible gambling – every parties is willing to take that even more serious and I guess that balance will move to that direction. I won’t be surprised if we’ll have mandatory identification in whole gambling business in next four years or at least the decision about that.
Money – the government program sees to be maybe too positive about financial future and I’m afraid that they will realize that quite soon. So, there will be need for that 1,2 B€ also in the future. The challenge will be the balance between responsible gaming and gambling profits. I guess that the new government will accept some hundred million decline of gambling profits and take responsible gaming more seriously.
International business co-operation – Veikkaus could continue the current international co-operation and could get permission for some other new areas if the will be channeling reasons for that. I believe that due to previous point – there should be some ways to get more gambling revenues from “not so dangerous” business verticals (lottery and other pool-based games).

As a joker I would like to guess what the new government will decide about the gambling system. As you probably have already noticed from my previous blogs I have though that we should ask “when Finland will move to licensed system?” instead of asking “is Finland going to move to licensed system?”. I still believe on that but now I would say that the gambling system won’t change during the next four years. The new government will try to make Veikkaus monopoly even stronger!

ABOUT ESPORTS AGAIN

I already wrote about esports three months ago when I admit that I’m fan of esports. In that blog I try to describe that “rising star” in general level and I’ll do that again. There are two reasons why I’m going to continue with the same theme – it’s so important one and I’ve visited two esports seminars in last few weeks (New York & Helsinki).

The total revenue from esports was over 900 M$ in 2018 and growth was almost 40 %. It seems that the same kind of development will continue also this year and it would mean that revenue will be 1,2 – 1,3 B€ this year. It’s not anymore just hobby of nerds at garages…

Sponsors have already found out esports and money from those pockets is increasing rapidly – last year the sponsorship growth was over 50 % and there are nowadays big companies like Coca Cola, Intel and Audi among those sponsors. The area which is increasing even faster than sponsorship is media rights. One challenge in esports is that fans are not used to pay about picture and media companies should find out new innovative ways to get money from customers. But there are huge opportunities ahead because there were 380 million people who were keen on following esports.

The most important bodies in esports ecosystem at this moment are game publishers (f.ex. Riot, Valve, Blizzard), platforms (YouTube, Twitch), competitions, teams, players, sponsors and of course fans. From my point of view one important and interesting body is missing from that list and it is of course Sports Betting companies. I’m sure that the importance of those bodies in esports ecosystem will change but I don’t know how but I would like to speculate a little bit.

At this moment the money to esports is coming mainly from sponsors, advertisers, media rights buyers and of course players/fans. As I already said the revenue from the three first bodies seem to increase all the time and I don’t see any reason why that development would stop – the speed of increase will reduce after some years. The more interesting question is what will happen to money coming from the big audience and what other income resources there will be?

Esports is so young phenomenon that real big audience hasn’t found it yet and despite of that there are already now that 380 M people who are interested in that sports and approximately 165 M real active fans. The number of active fans is by the way about 50 million more than ice hockey has. I believe that most of those fans have used to play esports (or video) games before and there is huge possibility that other kinds of fans might find out esports also in next few years. I’m sure that it will happen thanks to media companies who are going to show more and more esports in their channels. There are over 100 M ice hockey fans in the world and I guess that just minor part of them are former ice hockey players. Why the case wouldn’t be the same in esports?

Esports industry should concentrate more on two separate customer groups. The first one is “hobby players” who are keen on those games and things/features related to that sports. The business model for them could be extra elements to those games – they would be ready to pay for new kind of weapons or whatever is need in games which they are playing. That’s what game publishers are doing nowadays. The other more interesting group is fans of esports. Nowadays those two groups seem to be same group but quite soon there should be totally different business and service model for fans. Many of them are now former esports hobby players who have became too old to be active players anymore. But as I already mentioned there will be big group of fans who are not or haven’t been players by themselves at all.

Would the same business model which big teams are using in other sports work in esports too? I have heard that NBA fan is using about 20 times more money than fan of esports. There seems to be huge business potential but how to monetize that? Merchandise and tickets might be one traditional way? The other possibility is to develop extra services related to live feed like for example Formula 1 has done. Sports Betting and other type of gambling might be one solution. I’m sure that all those things will raise already this year but for some reason I have feeling that we’ll see something totally new in next few years…

I know that almost everyone in current esports ecosystem is thinking and planning about “something totally new”. We are also doing that because we believe on esports and would like to play bigger part in that “raising star” of sports. That’s the reason why my company is going to organize “Innovation Challenge Week” where the theme is esports next week. I’m sure that we’ll get interesting ideas from there and I’m afraid that I’m not willing to share those ideas with you – yet…!

WHO ARE INTERESTED IN THE US SPORTS BETTING MARKET?

It’s too long time when I wrote my blog last time. I spent last week in New York/New Jersey in the excellent Betting on Sports America event. I learnt there quite a lot about US Sports Betting opportunities and among other things had chance to give my advices to US lotteries.

I got also some feedback about my blog. I heard that quite many is reading my stories via mobile phone and it has been difficult to read it when I’m writing too long paragraphs. I now try to change my style a little bit and hopefully it will help.

It’s not 100 % sure what will finally happen there in USA. The PASPA decision seemed to chance everything and in fact made Sports Betting legal or at least made it “non-illegal”. But after that there was another court decision which changed almost everything… At this moment there are less than 10 States where Sports Betting is already allowed. There are also 10 – 15 States which are planning to make it possible quite soon. It’s possible that about half of US States will have legal Sports Betting in next few years.

About 90 % or even more of participants of the European Sports Betting seminars are already somehow involved in that business. That’s why I was surprised there in New Jersey when I noticed that at least half of audience didn’t have so much knowledge about our business. That was strange but at the same time fascinating. The whole business might change due/thanks to those newcomers and I’m keen on seeing what will really happen!

I try to make short analyzes about different interest groups who are involved in Sports Betting in USA. The first group is of course customers. There has been huge unregulated/illegal Sports Betting market in USA. Customers are already used to make a bet and that would help a lot but at the same time it means that customers are more critical and enlightened. If US companies won’t succeed very well it would be possible that the unregulated market will stay quite big.

There are lack of information and knowledge about gambling and Sports Betting among politicians and regulators. They should make big decisions but how they could take care of that if they don’t understand enough about consequences? The whole gambling industry should deliver as much valid information as possible, but we should understand that politicians won’t so much for our issues.

All top sports leagues are interested in Sports Betting. Their attitudes vary quite a lot but all of them are now thinking about their role in that new business in USA. The biggest ones NFL, MLB, NBA and NHL have already extremely big business by themselves, but they would like to control and get some more revenue also from gambling side. I don’t believe that any leagues would start their own Sports Betting business.

Las Vegas has been the only place in USA where Sports Betting has had legal role already many years. There are lots of gambling companies operating Sports Betting. Those companies might have good position if they could utilize scalability but I’m not sure if they can do that. The most popular sports in USA are different ones compared to Europe. Vegas bookmakers have razor-sharp analyzes about American football, baseball and basketball and it will be very difficult to beat them in those areas.

Some big European Sports Betting companies like William Hill have already established their operations to USA. Those companies are used to offer same products all over the world and scalability is one key word for their success. They have of course chance to manage in US market too, but it would be more difficult than they have expected it to be because they have to make it in slightly different way in all States. I have heard that they haven’t got so good revenues for example in New Jersey as they have expected.

How about US lotteries? They are used to outsourced they business operations to technology suppliers and probably they will do the same if they will decide to move to Sports Betting business. If they would like to manage in the heavy competition, they should control their customer database and operate at least in some areas in different way than the other operators are doing. I gave them two potential business ideas: they could offer “the most responsible” Sports Betting in US or/and they could offer “more lottery style” pool-based sports games too.

Big technology companies are used to operate some gambling products on the behalf of license holders and of course they would like to do the same also in Sports Betting. I won’t be surprised if some of those tech companies would like to own operating license by themselves too.

The big new player in gambling business might be media companies. The message from BOSA seminar was clear – all big US media companies are considering the business possibilities in Sports Betting market. The main scope is to make Sports Betting more entertaining than it has used to be. Media companies’ core customer group is sports fans not heavy punters. I have had that same idea already 15 years… Those big companies like ESPN or NBC have lots of money and if they decide to be big player in Sports Betting business I wouldn’t be surprised if we talk about 9 or even 10 digits investments! I guess that they won’t try to get operating licenses for themselves but some important roles they will have for sure.

There are also lots of investors who are looking for new business opportunities from gambling business. I’m not expert on that area but I have understood that there would be some billions of dollars available investments. Normally private investors are just looking for profits and that would make Sports Betting business even heavier than it’s used to be…

There are many critical things still open in US Sports Betting business. What would happen if interstate gambling would be allowed? It’s obvious that in that case different companies would manage. What kind of limitation there will be – for example now mobile gaming in allowed just in five US States? What will happen if Silicon Valley will concentrate on the gambling technology development? That might chance the whole industry and who will manage then in our business. I’m extremely keen on seeing what will happen and hopefully I could play some role there!

HOW WELL DENMARK HAS SUCCEEDED IN GAMBLING POLICY?

I’m sorry that I made stupid mistake by accident in my previous blog! I wrote that regulated companies had ¾ of gambling marketing in Sweden. That’s not true at all. I was supposed to write that offshore companies had ¾ of that marketing! According to statistics offshore companies had 79 % of gambling marketing and that describes very well that there hasn’t been monopoly in Sweden in practical level. I also forgot to write about the reasons why the former monopoly companies ATG and Svenska Spel have managed so well. I believe that they have done good work but of course their existing brand and customer base have helped a lot. I’m keen on seeing what kind of changes there will happen later this year.

This time I’ll concentrate on Denmark. They started with new kind of gambling legislation from the beginning of 2012, so they have now 7 years’ experience about that. There is still monopoly in lottery business but nowadays the most of gambling business is based on license system. I don’t know what official goals the Danish State set for the new system, but I could guess what they were. Probably there were at least three goals? 1. To get as much gambling as possible to regulated side instead of being illegal one. 2. Maintain or even increase the gambling revenues to the Danish State. 3. Reduce or at least minimize the number of gambling problems. My analysis might be stupid one if those weren’t the goals for that big chance they made there but I’ll take that risk…

The size of offshore gambling business in Denmark increased very much before they decided to change their legislation. The regulator, Spillemyndigheten, didn’t have tools to control actions made by offshore companies and that caused problems to monopoly operator Danske Spil which started to lobby for license system. The basic idea was to get same rules and conditions to all gambling operators in Denmark and to get all companies under control of regulator. There is still illegal gambling market in Denmark but it’s relatively small compared to situation in 2011 (before the change). By the way Spillemyndigheten calls all gambling without the Danish license illegal gambling. So, I would say that Denmark has reached the first goal.

The sale of gambling products has increased over 50 % after the change in 2012. There are big differences between different gambling verticals. Some games, mainly monopoly area, have went slightly down and some areas, online casino and sports betting, have increased a lot. So, the change has been from lower payout games to high payout games. That’s why sale number don’t give the best picture if we think about the profit to the state. The total revenue to the Danish State has been surprisingly stable all the time. State gets revenue from two different sources. There is 20 % gambling tax from GGR and they also get the profit from Danske Lotteri Spil (monopoly business). We could speculate what would happen in Denmark without the big change in gambling legislation? I believe that the revenue to the Danish State would drop and that’s why in big picture Denmark has managed to reach the second goal quite well.

Sports Betting business has changed much more. There are about twenty companies operating Sports Betting in Denmark. That number has been about at the same level from 2012, just slight decrease. During that time sale of sports betting has increased by 250 % and even GGR has raised by 215 % (2018 versus 2012). There have been also big changes in payout percent and distribution channels. Seven years ago the actual payout was about 85 % and last year it was almost 90 %. Theoretical payout is of course much higher, but customers are still using longer combinations and that’s why the actual payout is lower. Sports Betting has moved to internet and mobile channels. Last year about 1/3 of sports betting (GGR) came from land-based channel and almost 50 % from mobile channel and the rest from internet. Actually here in Finland the share of retail channel is even lower than they have there in Denmark. The biggest difference is that Live betting is quite popular in Danske Spil’s retail network.

There seems to be lack of information in the third goal area. For some reason they didn’t make problem gambling survey before they changed the legislation in 2012. The previous data is from 2005 and I think that it doesn’t give the best picture of results. Because I don’t have anything else from that area I should use those old numbers… They made large problem gambling research in 2016 which showed that there has been slight increase in the number of gambling problems compared to 2005. They have dealt problem gamblers to two different groups. There are less than 0,5 % of adults who have serious problems and they call those customers as gambling addicted or problem gamblers. The size of that group has increased a little bit. The other much bigger group is called risk players who are not “sick” yet but might have big risk to get sick. Total number of those two separate group is at the level of 3 % of adults and there has been also slight increase in that amount too. So, I would say that Denmark hasn’t managed very well in that third goal but the result has been surprisingly good if I compare that to the increase of sale and GGR.

As far as I know there are some changes planned in the Danish gambling market. They have already moved some former monopoly game areas, for example horse betting and bingo, to license part. Now there is going on quite heavy discussion about marketing limitations which seems to be the trend in many other countries too. I believe that there would be quite soon more limitations to the marketing of gambling products. One rumor is that it won’t be allowed to have sports betting marketing related to live sports events. There has been also discussions about the ownership of Danske Licens Spil which is still owned mainly by the Danish State but which is competing against other license holders.

I’m keen on seeing which system, the Danish or the Swedish, will finally get better results from all those three goal areas.

WHAT IS GOING ON IN SWEDEN?

Finland has always been some kind of “little brother or sister” of Sweden. We have so called “hate & love” relationship towards Swedish. We try to do things better than they do but unfortunately often we finally decide to copy what they have done. That’s why I’m keen on seeing what results Sweden will get from their new gambling legislation. EU-states could decide about their own gambling legislation as long as they follow EU’s main principles. Countries are observing what is happening in other countries and Finland is used to follow Sweden very closely. So, the Swedish experiences will somehow have impact on the Finnish gambling environment for sure.

Sweden has had monopoly-based gambling system until the end of last year. That was the case in principle level, but real situation has been totally different. Monopoly companies Svenska Spel (lottery, sports betting, casino) and ATG (horse betting) have been the biggest companies, but offshore operators have gained bigger and bigger market share in Sweden. The Swedish gambling regulator, Lotteriinspektionen, hadn’t enough tools and maybe brave to react against those operators. EU Court of Justice was following the Swedish legislation very closely and probably regulator wasn’t sure what they can do. That development caused challenges to ATG and Svenska Spel when they weren’t allowed to compete against offshore operators with same tools. ATG started to talk against monopoly and threatened to move to Malta. Finally also Svenska Spel decided that it would be better to have license-based legislation. Then it was quite easy solution for politicians to decide about new gambling law.

I give some numbers from 2017 which describe the market situation before the new system. The net gaming revenue of whole Swedish gambling business was 22,6 billion SEK (2,2 B€) from which regulated companies had 17,1 B and offshore companies 5,5 B. That meant that offshore companies had 25 % market share and they didn’t have license to operate in Sweden. Svenska Spel had 40 %, ATG 18 % and other regulated companies 17 % market shares. Those offshore companies didn’t have any retail business in Sweden, so all competition was in internet and mobile channels and over 50 % of total gambling happened there. In that online channel regulated companies didn’t manage very well. They had together just 45 % market share which means that offshore operators had already 55 % of that market. In practice there hadn’t been any monopoly in the Swedish gambling market in long time! Gambling companies spent 7,4 B SEK for marketing in Sweden in 2019 and regulated companies had over ¾ of that.

Sweden decided to move to license system in all gambling sectors except in lottery (Lotto, Keno and Instant tickets). There are now about 70 gambling companies which have official license to operate games in Sweden. There are quite many tight rules about what operators can do in Sweden. The former offshore operators are used to use for example bonuses much more than it’s possible to do in Sweden now. The Swedish State has set a goal to raise regulated gambling to 90 % level of total gambling. That sounds to be high level when the Swedish new regulator, Spelinspektionen, is not using blocking tools. I understand when some companies have already announced that it would be better to make business without license. I still believe that regulator will tighten their control to prevent that grey/black market. The Swedish tax level, 18 % of GGR, is lower than they have for example in Denmark and that level should be ok from operators’ point of view although they are complaining about that – they will do that whatever the tax level would be…

There seem to be lots of discussion about enormously increased gambling marketing. Companies are trying to raise their brand and get new customers. They are used to give bonuses to new customers but now they are not allowed to do that and a little bit old fashioned mass media marketing has replaced bonuses. Heavy marketing has already affected negatively on the reputation of gambling business and something must be done soon to prevent that development. It’s too early to analyze financial results and I should do that later – maybe after the H1/2019 results have been published. Anyhow I could analyze the change based on the numbers after two first months. Although there are about 70 license holders the big companies have managed even better than I expected. The net sales in January and February was totally about 3,3 B SEK (320 M€) and ten biggest companies had 85 % market share from that. The winners have been former monopoly companies Svenska Spel and ATG and that should be big disappointment for former offshore operators. Svenska Spel has still monopoly in lottery business and now their three companies have totally 44 % of total gambling business. The monopoly part was in the first two months a little bit over 900 M SEK and that was 28 % of total market. If I drop that monopoly part away and just analyze license market Svenska Spel still has 22 % market share of that area and that is surprisingly high. ATG has lost its’ monopoly in principle but in practice it still has it in horse betting (over 95 % market share?). ATG has managed very well – it has 20 % market share of total gambling business and 28 % share of license market. So totally those two former monopoly companies have almost 2/3 of whole gambling business and from license market they have 42 %. The Swedish based Kindred Group has been the best one among former offshore operators.

It would be important to make analyze from the state point of view, but I don’t have enough information to do it yet. There should be financial results (taxes and profit from monopoly business) but also information from responsible gaming side. The analyze how well the new system is working should be based on those two sides. If financial results have improved but there are more gambling problems then there are still something wrong in that system and probably vice versa too.

Suomen ravialan nykytila

Olen malttanut olla kirjoittamatta raviasioista, jotka kuitenkin ovat minulle läheisempiä kuin rahapeliasiat. Nyt ärsytyskynnys kuitenkin ylittyi ja päätin kertoa mielipiteeni. Katselin TotoTV-lähetystä Forssan raveista. En juuri noteerannut, mitä lähtöjen välissä puhuttiin, mutta sitten yksi lause särähti korvaan. Joku mies totesi, että raviurheilun suurin virhe ”peleihin keskittyminen” on syytä korjata. Mitä ihmettä, kuulinko oikein, ei voi olla totta! Haastateltavana oli minulle täysin tuntematon Markku Saastamoinen. Aika nopeasti selvisi, että kyseinen herra on kirjoittanut ”Suomen ravialan nykytila”-selvityksen Suomen Hippoksen toimeksiannosta. Sain vihdoin eilen raportin käsiini ja lukemisen jälkeen toivon todella, että tämä raportti ei ole Suomen ravialan kehityksen pohjana!

Tarkoituksenani ei ole vain arvostella Saastamoisen raporttia vaan kertoa samalla omia ex tempore-mielipiteitäni. Raviurheilun sisällä on ollut vuosia harhaluulo lajin suosiosta. Olemme pitkään kertoneet, että ravit ovat Suomen toiseksi suosituin urheilulaji. Tilastojen avulla voidaan osoittaa melkein mitä tahansa ja tuo edellä oleva asia on yksi hyvä esimerkki siitä. Ravit ovat todellakin olleet urheilulajien listalla kakkosena, kun lasketaan maksullisiin tapahtumiin osallistunutta katsojamäärää. Tämä ei tee silti raveista toiseksi suosituinta lajia. Ravien yksi ongelma on raviratojen sijainti. Valtaosa raviradoista sijaitsee melko kaukana kaupunkien keskustasta ja satunnaisten katsojien saaminen paikalle on sen vuoksi haastavaa.

Ravien näkyvyyden heikkenemisestä on viime aikoina puhuttu paljon. On helppo syyttää ongelmista vapaasti katsottavissa olevien TV-lähetysten poistumista. Ravilähetyksiä pystyy katsomaan ilmaiseksi noin 20 kertaa enemmän kuin parikymmentä vuotta sitten. Lähetystapa vain on toinen ja itse asiassa sama kehitys on tapahtunut mm. jalkapallossa ja jääkiekossa, jotka edelleen ovat suosituimpia urheilulajeja. Kysymys on laajemmasta ongelmasta kuin lajin näkyvyydestä massakanavilla. Väitän, ettei ravien näkyminen YLE:n tai Maikkarin kanavalla lisää lajin suosiota, jos lajin sisäiset asiat eivät ole kunnossa. Saastamoinen on oikeassa siinä, että raviurheilun tulee ymmärtää ja reagoida selvästi aiempaa paremmin yleisiin kuluttajatrendeihin ja muutoksiin niissä. Ei riitä, että tehdään niin kuin aina ennenkin.

Raviurheilun imagon kannalta on tärkeää pitää huolta hevosten hyvästä käsittelystä. Kekkonen totesi aikoinaan, että ”niin on, jos siltä näyttää”. Me ravien aktiiviharrastajat olemme sokeita esimerkiksi piiskan ja ohjien loppusuoran käytölle. Näyttäkää video melkein mistä tahansa tiukasta loppusuoran kamppailusta ei raveja harrastavalle ihmiselle ja kysykää, mitä tunteita se herättää. Todennäköinen vastaus ei ole toivomamme ”upea taistelu” vaan ”hevosten hakkaaminen”. Vaikka tiedämme, että tuomaristo ja eläinlääkärit valvovat toimintaa ja hevonen ei kärsi merkinannosta, niin hevosten käskeminen näyttää pahalta.

Raviurheilun vertaaminen ratsastukseen ei mielestäni ole mielekästä. Kyseessä on kaksi täysin eri lajia. Yhteinen nimittäjä on hevonen, mutta siihen ne yhtäläisyydet jäävätkin. Hevosista pitäviä ihmisiä voidaan kyllä saada raveihin, jos eläinsuojeluasiat ovat kunnossa. Sen sijaan en usko, että ravien kannattaa yrittää houkutella ratsastusharrastajia vaihtamaan lajia. Kahden eri lajin harrastaminen puolestaan vie paljon aikaa ja rahaa. Uskon, että hevostalouden kokonaisedun kannalta on viisainta antaa ratsastusurheilun ja raviurheilun elää omia elämiään.

Ravien markkinoinnissa pitää hyödyntää myös hevosta, mutta sen tulee tapahtua lajinomaisesti. Ravit kuten muutkin lajit kaipaavat urheilutähtiä. Alan sisällä tuntuu olevan erimielisyyttä siitä, ovatko tähtiä hevoset vai ohjastajat. Tällä ei ole lajin suosion kannalta mitään merkitystä. Ohjastajat ovat monessa mielessä parempi valinta, koska huipputason nimiä on vain parikymmentä ja he pysyvät huipulla vuosia tai jopa kymmeniä vuosia. Huipulla olevia hevosia on sen sijaan paljon enemmän ja kaiken lisäksi hevosten vaihtuvuus on paljon nopeampaa kuin huippuohjastajien. Huippuhevosta voi tietysti korostaa, jos meille sattuisi taas tulemaan Charme Asserdalin tai Houston Laukon tapainen kansainvälinen tähtiravuri. Uutisoinnissa ja muussa mediajulkisuudessa pitäisi tietoisesti keskittyä tähtikulttuurin luomiseen ja unohtaa arjen sankarit, joita voidaan nostaa esille alan sisäisessä viestinnässä.

Raviurheilu tarvitsee mahdollisimman laajan harrastajapohjan. Laji tarvitsee hyviä hevosia, joita varten tarvitaan kasvattajia, jotka ovat valmiita panostamaan laadukkaisiin tammoihin ja orivalintoihin. Lisäksi tarvitaan laaja omistajakunta, joilla pitää olla mahdollisuus harrastaa lajia inhimillisillä kustannuksilla. Kasvattajien ja omistajien lisäksi iso rooli on myös valmentajilla, joilla tulee olla mahdollisuus harjoittaa järkevää liiketoimintaa. Tätä koko ketjua varten tarvitaan mahdollisimman paljon palkintorahaa. Palkintojen maksamisessa tulee ottaa huomioon kaksi asiaa – peruspalkintotaso ja mahdollisuus suurvoittoihin. Vaikka vain harva raviharrastaja pääsee koskaan käsiksi suurvoittoihin, niin ne pitävät silti yllä unelmaa ja ovat koko lajille tärkeä asia.

Saastamoinen toteaa raportissaan, että raviurheilua on kehitetty liikaa pelaamisen ehdoilla. Lisäksi hän tulkitsee yleisötutkimuksia niin, että iso osa ihmisistä pitää ravipelaamista pahana asiana. Saastamoinen esittää, että pelituloja pitäisi korvata sponsori- ja TV-tuloilla. Olisi mielenkiintoista kuulla, mihin perustuu arvio siitä, että TV-yhtiöt olisivat yhtä äkkiä valmiita maksamaan ravien lähetysoikeuksista. Tällä hetkellä kanaville pitää maksaa paljon siitä, että ne yleensä näyttävät raviurheilua. Ravien yhteistyökumppaneiden hankkiminen on Kuninkuusraveja ja muutamaa suurtapahtumaa lukuun ottamatta haastavaa ja sopimussummat ovat todella kaukana siitä tasosta, jolla voitaisiin korvata pelituottoja. Mielestäni ravipelitoiminnan kritisoiminen osoittaa, ettei raportin kirjoittaja ymmärrä talouden suuruusluokkia. Pienillä asioilla on vaikea korvata suuria asioita. Pelituottojen vähenemiseen on tietysti syytä varautua, mutta keinot siihen ovat aika vähissä. Mielestäni ravituotetta on edelleen kehitettävä pelitoiminta huomioon ottaen.

Sen sijaan itse ravitapahtumien kehittäminen viihteellisempään suuntaan on nyt enemmän mahdollista kuin aiemmin, jolloin raviurheilun tulovirta riippui suoraan hevospelaaminen tuotoista. Uusien harrastajien saaminen ravien piiriin tapahtuu helpoiten urheilun kautta. Raviradoista tulee kehittää viihtymispaikkoja, joihin paitsi meidän aktiivien niin myös uusien asiakkaiden on miellyttävä tulla. Raviradat ovat päässee valitettavan huonoon kuntoon ja ovat monelta osin 1980-luvun ”museoita”. Halukkuus panostaa investointeihin on ollut aika pientä, koska ravien katsominen on siirtynyt radoilta kotisohville, vaikka samanaikaisesti puhutaan medianäkyvyyden vähenemisestä. Raviradat ovat ajautuneet negatiiviseen lumipalloilmiöön. Katsojamäärä vähenee, joten investointeja katsomoinfraan ei haluta tehdä, jolloin yleisön kiinnostus vähenee entisestään… Saman ongelman kanssa painitaan muissakin kehittyneissä raviurheilunmaissa, joten kyseessä on globaali ilmiö, jota vastaan on vaikea taistella.

Ravien näkyvyys internetin ja mobiilin kautta on mielestäni hyvä. Palvelun taso nykyaikaisissa kanavissa on vähintään riittävällä tasolla, joten tämä ei ole perusongelma. Kuluttajilta vain puuttuu peruskiinnostus raviurheilua kohtaan. Erikoisin Saastamoisen ehdotus lajin suosion nostamiseen on kasvattajan aseman korostaminen. Myönnän suoraan tyhmyyteni, kun en ymmärrä kasvattajan vertaamista muiden lajien ”oman kylän poikiin”. Väitän, että kasvattajien esiintuominen ei lisää raviurheilun suosiota promillen vertaa! Kasvattajan rooli on tärkeä koko raviurheilun ketjussa, mutta sillä ei ole mitään tekemistä ravien suosion kanssa.

Pelkään, että Saastamoisen suositukset veisivät raviurheilun kohti ”koiranäyttely”-maailmaa ja se ei ole ainakaan minulle hevosten omistajana ja pelaajana mielekäs tulevaisuus!