Lottery license bidding

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

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

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

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

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

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

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

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

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

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

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

Development of Finnish gambling situation – August 2021

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

Market situation H1/2021

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

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

Drafted Lottery Act 2021

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

Political situation

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

The purpose and future of lottery organisations

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

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

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

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

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

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

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

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

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

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

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

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

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

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

One size doesn’t fit all

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

I’m sure you know the t-shirts sold in tourist stores, the size of which is stated as “one size fits all”? I’ve always wondered how stupid people are when they buy shirts that don’t look good on anyone. Similar examples of selling the same product can be seen in all industries. The selling company focuses on lowering the cost level and seeks large economies of scale by keeping production in one or a few products. However, such a business strategy can only produce bulk products that are not of great importance to customers.

I have written several times in my previous columns about how important it is to understand customer needs. With the data collected from customers, companies can offer even better products and services which, in turn, increase business profits. When successful, customized products are an actual win-win situation where the company receives more revenue, but at the same time, customer satisfaction increases.

Lotteries, especially in the field of lottery games, sell their products to such a large number of customers that, at least in theory, one product fits all thinking might even work. Such a product suitable for everyone should be developed with the average customer in mind. If the customer base is large enough, then the average product may be of interest to a sufficiently large customer group. A lotto game focusing on the jackpot could be such a product, for example. The smaller and more heterogeneous the customer base, the more difficult it is to develop a single product that suits everyone.

However, the actual topic of this column is not the products and services that lotteries offer to their customers. Instead, I would like to highlight the challenges of action between gaming technology suppliers and gambling operators. Based on my previous experience with lotteries and now through additional information obtained through consulting, I argue that some kind of “interpreters” would be needed between operators and technology companies to understand each other better. It may be that there should be similar “interpreters” within gambling companies between business and technology people.

I admit that I see the situation perhaps too much through the eyes of the lottery. In any case, it seems that a large percentage of gaming technology companies are looking to sell the same product and the same technology solutions to all gambling operators. Like in the B2C business, customers are different in the B2B business; clients are different and have specific businesses. The understanding seems to be enough for casino companies, betting companies, and lotteries to belong to different series. Instead, it seems surprisingly difficult to understand that lotteries are a completely heterogeneous group of companies. Sure, some lotteries resemble each other more than others, but a business-oriented, stock-listed lottery needs something other than a lottery like a state office.

I’ve talked a lot about the need for lotteries to develop their digital business and, on the other hand, the need to add new product verticals. As such, an excellent digital platform may be too complicated for a company starting a digital gambling business, while the same solution may be far too simple for a lottery that has been running digital operations for years. Technology companies should understand the levels at which different gambling operators are in different areas. Based on this understanding, it could be easier to tailor individual solutions to companies. The situation is thus quite similar to B2C, where the aim is to offer players personalized products and services. In reality, those products are not made individually for each customer, but the goal is to create a feeling for the customer that this is just for me.

Take, for example, the product area of betting. A technology supplier seeking to sell its betting solution to lotteries must understand at least the legal situation in that target country, the current state and strategic importance of sports games in the entire operation of the lottery, and the technology architecture of the gambling company. The legislation affects many issues and may impose specific requirements that make basic solutions impossible in that country. The needs of sports games are different for start-up companies than for a company operating in this product area for a long time. It is also possible that some lotteries just want to offer sports games to serve their customers, while other lotteries strive to make the maximum profit out of sports games as well.

For a lottery that wants to add betting to its product portfolio but still intends to focus on running lottery games, the full-service solution is perfect. The technology must meet the requirements of the country’s legislation, but it does not have to have any specific business specialties. The reliability of technology is a crucial element. In addition to the basic technology, there is also a need for ready-made odds, usually obtained from large companies focused on them through a revenue share agreement. Selling such a total ready-made package to large lottery companies running sports games, on the other hand, is entirely pointless. Many lotteries operate in sports games in the license-based market, where they compete openly against other operators. In a situation like this, you can only succeed by doing things differently, better than your competitors. That requires tailored services and also, at least in some sports, different odds from other companies.

Understanding IT architecture is an exciting area. Traditionally, lotteries have purchased their technology solutions from a single supplier. Lottery technology solutions have been based on a model where the central gaming system has been at the heart of it all. However, the situation has changed, at least for more advanced lotteries. The companies source the best solutions for different areas from different technology suppliers. Therefore, system integrability is of great importance to such companies. Instead, traditionally operating lotteries still want to buy all the technology from one supplier. It goes without saying that it is not worth trying to sell the same solutions to such lotteries.

As more and more lottery companies have switched to a multi-vendor model, technology companies have also changed their operating methods. However, I believe that suppliers still have a lot of opportunities to improve their service if they better understand the situation and needs of their customers. As I said above, the result of such action is, at best, a win-win situation where the technology company gets more sales, and the lottery is even more satisfied. In fact, there is still a third win in this model, as lottery players are also likely to be happier than they are today with better products.

Social elements improve the customer experience

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

In my previous columns, I have repeatedly emphasized identifying and understanding customers’ gambling motives. If and when lotteries want to improve their operations, they need to understand their current and potential new customers. Why is someone already gambling, and how can it potentially affect the acquisition of new players? Customer understanding also helps to target the products and services that are best suited to players. Based on the same information, individually responsible gaming can also be made more efficient.

The motives for gambling can be summarized in three or four main themes. For lottery games, the most significant reason is dreaming. The other two major motives are entertainment and habit. The fourth motive is partly related to the previous ones, and it is linked to sport. Studies show that charity, for example, is the most significant reason to gamble with only a small number of customers.

The motives of an individual customer to gamble vary by time and place. The customer can dream of a Euro Millions jackpot on Friday. On Saturday, the same customer can leave his lottery ticket as he has done for 20 years. When there is an interesting football match on TV on Sunday, the customer bets a few euros to get a little extra excitement to watch the game.

Most lotteries have workable solutions to fulfil their dream motive. Lotteries continue to offer the biggest jackpots in the gambling world, allowing people to dream of a significant change in life, even if it is not very likely to happen. Lotteries also have enough to offer for smaller dreams. You can buy a scratch card for a few euros to win thousands or tens of thousands of euros.

A large number of lotteries have also started to offer sports games. On the other hand, entertainment-related qualities are not, at least not yet, the strength of lotteries.

A significant factor in entertainment is social interaction, which can happen through a physical meeting or in a digital environment. However, it is important to share experiences and do things together with other people. People need to enjoy the things they do. How have gambling companies and, above all, lotteries managed to take these things into account in their offerings? Undoubtedly not very well, but there are many opportunities.

There are many ways to support social communication related to gambling. Not all customers have switched from a retail channel to a digital channel, as you can still meet familiar salespersons and other players at the points of sale, with whom you can talk, eg, gaming-related matters.

Gambling is still a way for many customers at points of sale. The customers have been able to leave their lottery tickets at the same point of sale for decades. Lotteries generally still have an extensive sales network, the only purpose of which is not to make a profit but also to meet customers. For the same reason, acquiring new customers is easier in the retail channel than in the digital channel.

One workable solution to increasing social collaboration in gambling is syndicate gaming. Gambling companies offer opportunities to participate in gambling together with friends or family. There are also point-of-sale syndicates where customers can buy shares of big games. Selecting numbers and bets, thrilling results, and sharing experiences with other team members are elements that enhance the customer experience and make gambling more entertaining than playing alone.

It is also possible to add social elements to gambling in digital sales channels. In digital channels, it is also possible to offer syndicate portions generated by the gaming system. Customers can also create their own parties and play games together. Some lotteries have already created platforms where party members can discuss games and participate in gambling-related competitions. It is also essential for gambling companies to offer these services on a mobile channel, as increasing digital gambling occurs on mobile. On top of all that, people use mobile a lot for all other communication.

Gambling companies, including lotteries, are increasingly competing with each other, as are companies offering social and casual games. Gaming companies that provide entertainment games have always made their games entertaining, and those games often also contain social elements. Many casual gaming companies are consciously striving to approach the world of gambling. There are tons of sites where customers could play social/casual games with the possibility of winning real money. In most countries, direct cash winnings are not possible, but in any case, the trend is from casual games to gambling.

Similarly, many gambling companies are looking to develop new products that incorporate more and more social and casual gaming elements. For example, to survive the result of einstant games in the lottery product range, activities have been added to make the gaming experience entertaining. The gambling companies also have features that allow players to share their gambling experiences with their friends. It can be said that gambling companies are trying to approach the traditional plot of entertainment gaming companies. Both social gaming companies and gambling operators are looking for solutions to combine the best features of social games and gambling products. Competition is intensifying and expanding into new areas.

Lotteries may have even greater difficulty implementing entertainment elements in their games than casinos for example. This is especially true for traditional lottery games, where the low payback percentage and slow game rhythm make it difficult to entertain the games.

Adding social and entertainment elements to gambling improves the customer experience, which in turn improves business results. However, improving business results does not automatically mean an increase in problem gambling. Increasing customer understanding and thereby improving the customer experience also helps prevent gambling problems. It’s worth remembering that gambling is an entertaining and fun activity for about 90-95% of customers. However, we also need to take better care of the 5-10% group, for whom the situation is something completely different.

Lotteries can’t improve the reputation of the gambling industry alone

I have written this blog for www.lotterydaily.com and it is partly modified by Conor Porter.

The collapse of the gambling industry’s reputation threatens the future of the industry as a whole. In principle, gambling is a dangerous activity, which is why states have always regulated it. The societal debate on gambling problems and other dangerous gambling-related activities has clearly intensified, at least in Europe and especially in its western parts. Gambling has ended up in the same category as alcohol and tobacco. It can be said that gambling is not producing anything positive for people and society.

The deterioration of the industry’s reputation has not yet directly affected gambling’s numbers in games offered and customers. People still want to play as much, or even more, people want to play than before, and the supply of gambling is increasing all the time. There are hundreds if not thousands of gambling operators on digital channels that offer new gambling and better gaming conditions than traditional operators. On the other hand, states have paid more attention to gambling regulation than before, and as a result, there have been more restrictions on licensed gambling companies. Prohibitions on gambling marketing, restrictions on money transfers, mandatory customer identification, and maximum gambling limits are examples of new restrictions in recent years.

In principle, the above restrictions are a good thing for gambling as a whole. They are designed to control the negative things about gambling, of which gambling problems are the biggest. At this stage, it is still too early to assess whether or not the restrictions have been able to prevent gambling problems. At least so far, no clear evidence has been obtained. The big problem for the industry is that the restrictions only apply to part of the gambling activity. Regulators have the possibility to restrict only legal gambling operators licensed in that country. The restrictions do not apply to gambling companies that operate without a legal right to operate in those countries. It is quite easy for companies to stay ahead of regulators in digital channels and continue to operate despite restrictive attempts.

It should be in the common interest of the authorities and the gambling companies legally operating in the country to make a clear distinction between legal and illegal gambling activities. This delineation is certainly different in individual countries, but it does not matter for the big picture. Citizens of each country should easily understand which gambling operators operate legally in that country and which do not. That is not the case at the moment, which is why the whole industry’s reputation is suffering from unethical gambling operators.

Lottery companies have had a strange habit of seeing themselves as better operators than other gambling companies. Over the years, there has been a general perception in the lottery world that lotteries operate ethically and that their gaming (they do not call them gambling) activities do not cause problems. Criminal activities related to gambling problems and other forms of gambling have been blamed mainly on private betting companies and casino operators. Casino games certainly cause more gambling problems than traditional lottery games and criminal activity, e.g., money laundering and match-fixing, related to betting and not lottery games. Today, however, a large proportion of lotteries already run sports betting operations, and some lotteries have also included casino games in their product portfolios. Defining lotteries is much more difficult today than it was in the early 2000s. It seems that in the eyes of customers, all gambling is a big whole. As a result, lotteries can no longer improve the reputation of their gambling activities on their own, even though too many of them still seem to think so.

Legal gambling companies should urgently start working together to improve the industry’s reputation. The old-fashioned division between lotteries, betting operators, and casino companies should be forgotten immediately. All of these groups have their own organizations that need to immediately begin joint planning and action to improve the reputation of the entire gambling industry. Illegal and unethical activities in the gambling industry must be banned. Customers need to understand better which companies are trusted operators and which are not. That would also be in the interest of the countries. The most effective solution could be the cooperation of all gambling industry organizations and national gambling regulators to establish operating norms and standards for the industry. It is in the common interest of regulators, licensed gambling companies, and customers to get illegal and unethical operators out of the industry.

It is clear that gambling causes problems that must be prevented. The extent of the problems varies from country to country and from gambling vertical to gambling vertical. Still, in general, it can be said that gambling causes some degree of problems for about 2-5% of customers—fortunately, serious problems for an even smaller group. Gambling is, therefore, generally a harmless activity for the majority of players. However, care must be taken to identify and control the risks associated with gambling, but there should be no need to ban all activities. In this sense, gambling is easy to compare to the sale and consumption of alcohol. Alcohol causes big problems for some people, but most consume it in moderation and without significant problems.

So not all gambling is bad. Together, the industry needs to find a solution to how we can continue to enable people to gamble entertaining to minimize the problems. I don’t think there is any way lotteries can solve this challenge alone or even together with regulators. At the least, we must abandon old-fashioned thinking and start cooperating with the various actors in the gambling industry. Improving the reputation of the entire gambling industry is in all operators’ interests and their customers. I suggest that organizations such as the European Lotteries, the European Casino Association, and the World Tote Association sit at the same table and immediately launch plans to improve the functioning of the whole sector. Reputation cannot be achieved through information and marketing measures alone but requires real operational reforms.

Does the proposed Finnish gambling legislation make sense or not?

I have written this column for http://www.lotterydaily.com (published February, 1st), and Conor Porter has partly modified the text.

The Ministry of the Interior Affairs has published a proposal for Finland’s new gambling legislation early in January.

The preparatory work done by the officials lasted for almost one year. I think that they did a great job, as Covid-19 certainly made the process significantly more complicated and, nevertheless, the work was done on schedule. The outcome of the work was also excellent given the assignment of the task. Officials are not responsible for the fact that the political mandate of the work was anything but sensible.

The aim of Finland’s current Government Program is to secure Veikkaus’ monopoly and operating conditions. In addition to this, the objective is to combat gambling problems and to channel gambling to Veikkaus’ responsible and controlled offering.

The Government Program also states that other gambling companies’ marketing will be addressed, and ways will be sought to restrict gambling to other gambling operators’ sites.

Based on the gambling policy guidelines mentioned above set out in the Government Program, the Ministry of the Interior Affairs set up a working group in early 2020 to prepare the guidelines for Finland’s new gambling legislation. The starting point for the legal reform was that the Finnish gambling system would continue to be based on a monopoly system.

Therefore, the working group did not have the opportunity to carry out such proper preparatory work as analyzed and sought the best possible solution as a basis for the Finnish gambling system. The mandate stated unequivocally that the preparation should be based on a monopoly model. Therefore, well-functioning licence-based models in other countries were not even studied.

I have stated on many occasions that I am always, in principle, objected to monopolies. On the other hand, during my Veikkaus-years, I’ve understood that there are business areas where competition should be limited. Gambling is definitely an activity that states must regulate because of potential problems.

However, this does not mean that a monopoly is automatically the best solution for restricting operations. It is lousy preparation if not all possible sensible alternatives are analyzed, but one of the essential things is decided without examining them. On what grounds can the Finnish Government claim that, in preparing the matter, it has promoted the interests of its citizens in the best possible way by prohibiting the examination of possible better alternatives?

As a whole, the proposal for new gambling legislation is a huge disappointment. Maybe I expected too much when I hoped to see things change. Now I feel that just a few changes are promised, and they are taking some things in the wrong direction. Hopefully, even concerning the gambling problems, there are developments in the right direction. But I am not sure about it.

The number of gambling problems in Finland has changed incomprehensibly little during the 21st century compared to the fact that gambling has increased significantly. The share of Finns suffering from gambling problems has been at the level of about 3% from year to year.

Instead, the number of people suffering from serious gambling problems has increased somewhat, and I hope that the new legislation will help this unfortunate development. I will return to this topic shortly after commenting on the policies made on physical slot machines.

The Finnish gambling policy’s core problem has been the discrepancy between business profit expectations and the responsibility requirements set at the same time. The Finnish state has not been able to decide which issue it considers more important. Therefore Veikkaus, the monopoly operator, has had challenges in understanding what the owner wants from it.

Revenue expectations have been high, but at the same time, instruments to respond to competition have not been allowed to be used. It now seems evident that responsibility has gained and is gaining more weight. On the positive side, the choice has finally been made, but I think it is far too late and no longer enough to save the situation. Now there is a significant risk that the gambling problems will not develop in the desired direction. At the same time, gambling profits will collapse, and above all, Veikkaus will permanently lose its future competitiveness.

Mandatory identification for gambling is coming, which is now introduced a few weeks ago in physical slot machines. The requirement to register for other gambling products will take effect over a few years. It is a good reform in terms of responsible gambling, but it is also a reform that will significantly impact the decrease in gambling revenue. The potential positive impact of identified gambling on business is based on the utilization of customer data.

However, it seems that Veikkaus’ ability to use data as a modern business company will be restricted or even denied. This shows that decision-makers have no understanding of what can be done with customer data. Using it is not automatically the same thing as adding gambling problems. It seems that the Finnish state no longer even wants Veikkaus to operate a profitable business anymore, but at most just put its products on offer, as was the case in the 1980s. I’m sorry on behalf of Veikkaus’ knowledgeable and skillful employees because they do not get to do the job properly.

There have been significant changes in slot machine operations over the past year. Veikkaus voluntarily decided to reduce the number of those machines a lot. However, the number of slot machine locations did not decrease in almost the same proportion. The change that has now come into force, making slot machine play only possible for registered customers, is a good thing. The explanatory memorandum to the new law states that slot machines’ placement should aim for solutions that minimize the gambling problems.

However, many would like to see slot machines removed from public open spaces, but that is not the case. I have never understood why slot machines can be kept in entirely open spaces in Finland. Slot machines are an integral part of gambling, but I think the machines’ correct location would be mainly in arcades and other age-restricted areas, following the Danish model. However, this is not the case in Finland, even after the new gambling legislation.

One of the most positive reforms of the proposed legislation is the clarification of the marketing of gambling. The premise is that marketing should be moderate and channel gambling to games that don’t cause so many problems. The weakness of the current legislation in force has been the definition of marketing and product information provision.

Several years ago, I was among those who planned the current gambling marketing policies, and I am ready to raise my hand and admit a mistake (as in basketball). I am glad that from the new legislation, the possibility to share product information is removed. Appropriate legislation should contain as few interpretations as possible, and the situation now seems to be improving.

The introduction of payment blocking will cause my blood pressure to rise. It could be the best solution for everyone, that I advise you to read a blog written by Aki Pyysing on the subject (https://www.sijoitustieto.fi/sijoitusartikkelit/viisikko-blokkaa-pelkasta-rajoittamisen-ilosta – unfortunately only in Finnish). However, it is enough to say that this reform makes no sense.

The reform’s economic impact is entirely non-existent, and this will not reduce gambling problems, so why is such nonsense done? In light of Norway’s experience, the blockings may restrict banks and major payment companies’ activities. Still, they will be replaced very soon by new service providers beyond the control.

Personally, the most exciting reform proposal is the opportunity for Veikkaus, or its subsidiary, to start a new type of business. I was the CEO of that kind of subsidiary, Veikkaus Solutions Ltd, and most recently, my job in Veikkaus was to prepare for re-starting a new business. Now it seems that Veikkaus would again have the opportunity to establish a subsidiary for non-gambling activities. The intention is for the subsidiary to provide gambling products and services to other operators and not engage in consumer gambling activities.

This is an excellent thing in the long run. Sales contracts for gambling products and services today are based almost exclusively on the revenue share model. The compensation received by the selling company is based on how much the customers of the buying company end up buying those products.

Hopefully, the Finnish authorities will not interpret such sales for gambling purposes. A massive opportunity for Veikkaus, which is still one of the best lotteries globally, would be to start international B2C gambling operations. Selling gambling products directly to customers in other countries would generate significantly more revenue than trading among gambling companies. However, B2C operations are not possible under the Finnish monopoly system. It would have been one additional primary reason for moving to a license-based system.

In conclusion, the answer to my question in the title is NOT. This reform, as a whole, makes no sense. I consider it a much better option to omit this proposed change altogether and move on to the licence-based system’s preparation. The rationale for the licence-based model would be worth its own separate column.

HOW MUCH IS ENOUGH?

I have written this text for www.LotteryDaily.com  and it is partly modified by Conor Porter.

The biggest competitive edge for lotteries in the gambling business has always been the ability to offer the highest jackpot in the market. This is still the case despite consolidation of the gambling business.

Former casino and sports betting operators have developed new products with high jackpots and have even entered the lottery business with the so-called “lottery betting” product.

Throughout history, lotteries have tried to increase the size of their lottery jackpots. As I have already mentioned in my previous columns, companies must know their customers and understand the motivations for gambling also among potential customers. The motivations for gambling and playing lottery games could vary a lot. It is partly up to customers’ socioeconomic background, but there are also many other reasons.

It is easy to notice from data that huge lottery jackpots increase sales a lot: the bigger jackpot, the bigger sales numbers, and profits for the lottery. Lotteries have done surveys among their customers and have found out the same result – the biggest motivation for buying a lottery ticket is to dream about something big. Although €1m would be enough for most customers, €100m would be even better for them.

We already have huge jackpots!

It is not clear what a big jackpot is. A million euros is a huge amount of money for someone, but someone else might think it should be 10 or even 100 times more. It is often irrational thinking. A person with thousands of euros may think that Lotto is not worth playing when the grand prize is only a few million euros, even if it could change his whole life.

European and US lotteries offer the biggest lottery jackpots. We have two separate coalitions in Europe, which are organizing the biggest lottery games; the EuroMillions and the Eurojackpot. Both of those groups have decided to limit the maximum size of lottery jackpots. The maximum jackpot in EuroMillions is €190m, and in Eurojackpot, it is €90m. Those amounts are also the top prizes ever paid out from those games, and they’ve been paid out quite often.

US lotteries have also established two separate groups which are organizing the high prize lottery game, Mega Millions and Powerball, which offer the highest jackpot in global gambling. US lotteries are using the so-called annuity amount in their marketing, which describes the jackpot’s potential size if the winner doesn’t take the prize immediately but rather for many years.

The highest US jackpot has been in Powerball, where three winners shared a $1586m jackpot. That’s bigger than the largest jackpot awarded in Mega Millions where one customer won $1537m, the highest amount of money a single customer has ever won anywhere.

All of those four games have increased the sale of lottery games, and it seems that huge jackpots have helped lotteries to do better business. However, those mega jackpots have also caused some problems.

When customers have noticed that it is possible to win €90m in the Eurojackpot, the jackpot size of the local Lotto game is not so attractive anymore, even though €10m would be a huge amount of money to win. This has caused quite a big cannibalization from local Lotto games to those multi-state jackpot lotteries.

The other challenge which especially US lotteries have noticed is the inflation of jackpot size. There have been about 50 times when someone has already won over $300m either in Mega Millions or Powerball games. According to the US lottery experts I have listened to in lottery seminars, the sale will increase remarkably only when the jackpot is over $250m. For example, a $200m jackpot doesn’t have any serious effect on lottery sales. That sounds crazy to me!

Is it still possible to have even higher jackpots?

None of the lotteries could, in practice, offer those huge jackpots alone. Collaboration is the tool for that. It would be possible to offer even higher jackpots in those European games, but they have decided by themselves that there are maximum top prizes in both EuroMillions and Eurojackpot. They could decide by themselves if they would like to change that and remove the maximum limit. Of course, regulators might have opinions about that.

Removement of the maximum prize limit could help a little bit in Europe, but it won’t raise those games to the next level. If European lotteries would like to do that, the best solution would be the collaboration between EuroMillions and Eurojackpot groups. Together, they could go to the next level, as it might be possible to offer lottery products where the jackpot could be €300m-€500m or even higher.

US lotteries have similar opportunities in their markets. The next step after the mergers of those European and US coalitions could be the collaboration between Europe and the US. That kind of partnership could raise the theoretical jackpots to billions of euros/dollars. The next step after that could be ‘World Lotto’…

I’m not sure if I would like to see that kind of development or not. I’m not sure what is enough for the customers and what that kind of development would be for lotteries in the long term. Lotteries shouldn’t voluntarily give their biggest competitive edge away. Lotteries have traditionally been able to offer much higher jackpots than other gambling companies.

However, the market has changed quite a lot in recent years as Lottoland and other similar companies have entered the market. Those Lotto betting operators can offer the same jackpots as the original lotteries. On top of all that, those companies can take advantage of the lotteries’ game brands and offer all different huge jackpot products in one place.

Lotteries still have pole position in that competition because customers are used to getting the highest potential main prizes from lottery games. Lotteries shouldn’t give that position away!

WHAT CAN WE LEARN FROM NORWAY’S GAMBLING MONOPOLY?

I have written this blog for LotteryDaily.com and they published it last week. This text is partly modified by Chris Murphy.

The Nordic countries of Denmark, Finland, Norway, and Sweden have quite similar systems and legislation in many areas. That has been the case also in gambling business until the beginning of 2010’s when Denmark decided to move from a monopoly to a license-based system in 2011. 

Sweden decided to follow that from the beginning of 2019. Finland and Norway still have gambling monopolies in all gambling areas, and they are by the way the only European countries that still have that kind of legislative situation. 

It begs the question; why are those well-developed, innovative countries still trying to keep a monopoly-based system? Furthermore, is there anything we could learn from them? 

For the purposes of this particular column I’ll concentrate solely on Norway and return to covering developments in my home country after some months. As you know, in practice all European countries have a monopoly-based system in lottery games but not in sports betting. And most countries have never even had a monopoly in the casino business. But Norway has a monopoly in all gambling areas and physical casinos are totally forbidden. 

The question is, has that kind of model worked well? The size of gambling business in Norway is big. There are about 5.4 million inhabitants in the country and the total GGR of gambling business in 2019 was M€1.244. Almost half of GGR came from digital channels. 

Gambling acceptable among Norwegians

Although there is a monopoly, the share of offshore operators is big – according to H2GC it is 27%. Gambling is common and acceptable among Norwegians. According to surveys almost 2/3 of adults used to play some gambling products at least once a year.

The previous government was keen on liberalization and it seriously investigated a number of other possible legislative models for the Norwegian gambling business. In 2015 it opened up the lottery business by a fraction by issuing supplementary lottery licenses for five small operators. Those licenses are still valid, but the operational possibilities are extremely limited. 

It seemed that Norway would move to a license-based system at the same time as Sweden, but in summer 2017 the government decided to continue the monopoly system. The system is not as the monopoly we have in Finland because there are two operators, Norsk Tipping and Rikstoto, and small lotteries plus bingo halls, but in principle it is still a monopoly.

Norway has run and controlled monopoly-based gambling seriously. The prevention of gambling problems has been the main purpose, relegating profit to just a secondary element. The country has enough money anyhow and there has been no need to maximize gambling revenues at all. 

There are lots of restrictions for gambling in Norway. Mandatory identification in order to gamble has been in existence for many years and there are tight gambling/loss limits in the gambling business run by the state-owned Norsk Tipping. Norway had also tried to restrict gambling offshore with blocks in place for 10 years. 

Gambling offshore is still legal in Norway, but operators don’t have licenses to offer their services in the country and are prevented from marketing their products. To compound matters, it has become difficult to move money to those companies and get winnings back from them. 

However, preventing Norwegian players from gambling offshore has been difficult to achieve because they have become accustomed to playing with those operators. According to customer surveys many Norwegians are unaware that companies like Unibet and Betsson don’t have licenses to operate in Norway. That might explain why 27 % of gambling is still going abroad despite the official monopoly system.

I think, though, that Norway is the best example of how a country should organize its gambling business should it be monopoly-based. Its system is not an ideal one, because there is no reason to have those minor lotteries and probably they should consider merging Norsk Tipping and horse betting operator Rikstoto. 

But there are lots of good things. The state has allowed Norsk Tipping to develop its own business, enabling the state-owned lottery company to offer good products and service to its customers. It is important, however, to have the right channels in place, otherwise the legitimacy of the monopoly system will disappear. 

Norway has now introduced even lower loss limits for gambling. That has and will continue to affect the profitability of Norsk Tipping for sure. The same kind of limits are expected to be applied to horse betting too from the beginning of 2022 and that will greatly impact the GGR of Rikstoto. 

More laws proposed

Consequently, if Norway can’t better control offshore gambling there will be an inevitable migration of players in that direction. The current government knows that and has proposed more laws, for example a restriction of gambling ads on satellite channels which will limit the business of offshore companies. At the moment it seems that tighter payment blocks have managed to reduce offshore gambling a little, but according to estimates it is just a temporary remedy.

To reiterate, the main purpose of the monopoly system is to prevent gambling problems. Norway has tried to do that for a long time. Among other measures, they prohibited the huge slot machines business that was operating 15 to 20 years ago, because most gambling problems were caused by those machines. 

It is strange that although Norway has put lots of effort into the reduction of problem gambling, the results are not so good. The University of Bergen has undertaken significant new research on Norway’s gambling problems. It found that the incidence of problem gambling has increased compared to the situation in 2015. There are 3.1 % of people suffering from gambling problems (2.3 % in 2015) and 1.4% are experiencing serious problems (0.9 % in 2015). 

The number of gambling problems is now at the same level as it was before the ban on the slot machine business. The structure of gambling problems has also changed. Now almost half of the problems are coming from digital casino games. Nowadays younger customers are suffering from gambling problems than before. There are different measurement methods of gambling problems in different countries, but despite that it is obvious that the number of gambling problems is at a higher level than it is in Denmark and Sweden where they no longer have a monopoly.

Norway has strongly and consistently tried to control the social and economic disadvantages of gambling with a monopoly. It is even prepared to decrease profit levels if that would help to reduce the number of problem gamblers. I would like to award them “10 points” for that. 

Unfortunately, results show that it has still not succeeded very well. There will be more restrictions for offshore operations, but it is unclear if they will work or not. I believe that state control and regulation will always be behind business development and that’s why there is no way to totally prevent offshore gambling anymore. 

Might it be possible that the monopoly system is no longer the best tool to prevent gambling problems in the current digitalized world?

Given that a monopoly has not succeeded in combating Norway’s gambling problems, it is unlikely these measures will work in any other European country. In Norway and also here in Finland we will have a discussion sooner or later about gambling monopolies. The states must find the best balance to prevent gambling problems and offer customers the best products possible. That leaves one final question; does the monopoly system still offer the best way to achieve that?

MORE GAMES PLEASE!

I wrote this column for http://www.lotterydaily.com and they published it few days ago. This text is partly modified by Chris Murphy.

The world is changing, and cycles of change are constantly accelerating in all areas of living. This is also the case in gambling business and the change will continue. The digitalization of gambling has been talked about to the point of fatigue, but despite this, for example, many lotteries do not seem to be able to move around in a large scale. Somehow it seems that traditional state-owned lottery companies prefer to focus on the fight against change rather than seeing it as an opportunity. But change can’t be stopped and coping with change requires the ability to adapt to it.

Instead of the relentless talk of digitalization, I would like to bring another topic to the debate where I’d expect a much more active approach from the lotteries. Fighting against change has meant that lotteries’ own game portfolios haven’t been developed as much as they should be. 

A typical portfolio has been just a few draw-based games and some scratch cards. Product renewal has meant a new lotto game or instant ticket. No more radical changes have traditionally been seen from the lotteries.

The gambling market has been constantly evolving and new business areas have followed each other. People use a wide range of gambling products and have started to become customers for several different gambling companies. 

A modern and agile gambling company focused on the digital business often builds its strategy for a goal that aims to get customers to use products from as many different product groups as possible. The idea is based on the fact that a customer playing several different products in the same company is more likely to remain the company’s customer than those who play only one or two products.

Gambling companies will get another benefit if they manage to expand customer product usage. Customers, who increase the number of games they play, will also increase their total consumption on average.  Of course, the growth is not as big as the money invested in a new game, because most of the money spent on the new game is out of some other games they used to play before.

However, the actual jackpot for the company is available. If the money that customer uses for playing your new game is at the expense of the games of another gambling company, then the entire profit of this new game is new money for your company. If lottery expands its offering to completely new game types, it is possible that its loyal customer will discover games which he used to play with another company. In this situation, there is a chance that the customer will transfer all his gambling to the lottery and even in the case where his total gambling does not increase, the lottery’s profits can and will increase.

How does the traditional lottery product development with a “new lottery game” fit into that pattern, which is hoped to produce customers who are going to use just lottery’s own products? Not so good. With a new lottery game or scratch card it is extremely difficult to get any customer to transfer his gambling from another company to your lottery. 

A successful launch of the lottery game can certainly bring new money from old customers, but the turnover that has been accumulated mainly for the new product is a shift from your other products. You won’t earn a lot when you just move money from your right pocket to the left one.

Of course, I’m aware that in many countries lottery owners have curbed product development and instead been satisfied with the profits from the traditional lottery business. The most important thing has been to secure the established monopoly position and try to prevent that from being jeopardized. Business growth may not even be a key consideration. But what will the future look like if the static offering starts to lose interest against other gambling offerings? Not good at all.

The monopoly status of the lotteries is beginning to be more and more nominal.  Lottery betting has come to rob the same market and other gambling verticals have otherwise stuck right next to customers on their skin. Modern gambling is often fast and entertaining compared to lottery products. 

Nowadays it is much more difficult to get younger customers to become regular customers for lottery products. Should lotteries expand their offering to other gambling verticals? They definitely should if it is legally possible. And if it is not, at least a reasonable effort should be made to change the legislation to a form in which other gambling verticals could also be offered to the lottery customers.

Why has this not been done to a significant extent? The owner’s will and legislation are, of course, valid reasons but they can be influenced if necessary. The big ideological problem seems to be that many lottery operators are cautious about using smaller prize games to compete internally against traditionally higher payout lottery products. 

If only the same bet moves to a lower payout product, the revenue will of course be lower. You shouldn’t worry about that at all. In modern gambling products, the rhythm of gaming and the circulation of money enable the same kind of profits thanks to increased turnover. 

The crucial factor for the overall development of revenue is whether the customer is ready to increase the total amount of money he used to play or not. It is difficult to see that adding a new product group to the company’s portfolio would reduce the total amount of money spent on gambling in any significant customer segments.

In today’s gambling world where responsibility is the key word, the offering of lottery has traditionally been the product vertical that causes the least gambling problems. Will lotteries risk their reputation if they start offering more harmful gambling products? 

This is a scenario that needs to be taken into account. An extremely aggressive offering of casino games could lead to such a thing. To offer much softer sports and horse betting is hardly not. And casino games can also be offered to customers in a responsible way. The market situation and the potential of the different new product verticals should determine which product groups give the best balance between possible risks and profits. But responsibility shouldn’t be a barrier to expanding the range of gambling verticals for lotteries.

As we go further in the 2020s, it is clear that the competition in gambling businesses will become even harder. Even in countries where traditional betting shops have managed to maintain a strong position in the face of internet competition, the situation is not everlasting. 

Even in those cases, lotteries can’t fail to try to maintain their position as the sole gambling operator of large customer groups in their own country. However, this won’t be possible in the future unless lotteries are starting to expand their offerings to other gambling verticals. In the future a modern, successful, and competitive gambling company will offer a wide range of different gambling products from different gambling verticals. I would like to see lotteries to be among those modern gambling companies!