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.