Jari Vähänen: Responsibility must be genuine and appropriate

In his latest column for Lottery Daily, Jari Vähänen of Finnish Gambling Consultants explains how lotteries must adapt to changing times
Image: Jari Vähänen

I have written before about the importance of responsibility in lottery operations. I believe that the gambling company has the opportunity to turn responsibility into a competitive advantage over other companies, but you have to be careful in doing this. There now seem to be signs that the liability claims are going so far that even problem-free gambling is being restricted so much that the financial results of Lotteries are collapsing. How could such a situation be prevented?

As I have said many times, gambling is, in principle, a dangerous activity that can cause significant problems for consumers. As a result, governments have significantly restricted gambling, and this industry is not anywhere completely free business. The activity requires a license, it is a monopoly-based in some areas or a total banned. The primary purpose of all these arrangements is to protect consumers from gambling problems. Only as a secondary goal is to get revenue for the state treasury.

Consumer protection is important, but how far should it go? It is not my intention to downplay gambling problems, but I still say that, at least at the current level, gambling is not a problem for around 90-95% of people. So does society also have to restrict activities that are at least at a reasonable level? If so, is it sufficient to limit activities only to companies subject to direct regulation? Lotteries are always among these companies, and in some countries, such as Finland and Norway, they are the only companies subject to restrictions.

Around the mid-1990s, I attended an event on responsible gambling for the first time. Among the speakers was Thomas Nilsson, a Swedish researcher who, to my recollection, said that gambling companies could do little for people with severe gambling problems. These problem gamblers will always find something to play, no matter what the official companies do. Instead, gambling operators have a duty to work to prevent consumers at risk from slipping into serious trouble. I still consider this idea to be the right course of action, although I do not know whether Nilsson himself agrees with this anymore. Somehow that idea fits my own “common sense”.

Restrictions valid for all regulated gambling seem to be a problem. Several countries have introduced daily and monthly gaming limits that are the same for all customers. However, people’s wealth levels and how much they can spend on gambling have varied a lot. A loss of 100 euros is already too much for another person, while for another person, 1000 euros means nothing. Due to the standard loss limits, some of the problem-free gambling will also be transferred to companies outside the scope of the regulation. In addition to this, customers with serious gambling problems are also playing for black market operators.

In order for society to achieve its primary goal of effectively preventing and even reducing gambling problems, as much gambling as possible should be regulated. Therefore, the most critical measure of the performance of a gambling system is the channelization capability of the system. The research institute H2GC has published interesting data on the channeling levels of systems in different countries. A country with 20 percent of all gambling under official regulation has inevitably failed utterly to build its gambling system. I think that only those countries with a minimum channeling rate of around 80% can be satisfied with their system in some way. A high degree of channelization does not automatically help prevent gambling problems, but it is a prerequisite for problems even to be accessed.

It seems that in some countries, the state is now working to prevent gambling from reducing gambling problems. That could, in principle, be a workable way if there is no need to care about the financial profits of gambling. In practice, such a blocking strategy could only work properly if the aim is to stop gambling altogether. Strict criminalization of gambling and active enforcement of the law could lead to reasonable results. However, this would also put an end to entertaining and problem-free gambling. In fact, harmless gambling would probably be almost eliminated, but problem gambling would likely continue because the massively large global black market could not be closed.

The situation seems worrying for state-owned lotteries, at least in some countries. The regulator’s stricter liability requirements apply above all to the operations of lottery companies, which in principle are already more responsible than the operations of other gambling companies. Traditional lottery games cause fewer gambling problems than other gambling areas, and thus, the most dangerous gambling area is left with less regulation than safer operations. Tighter gambling limits will reduce lottery profits, so in the worst-case scenario, gambling problems will not be reduced, and government revenues will be reduced. 

Some of this will be passed on to private gambling companies out of reach of regulation.

Communicatively, customers must understand the nature and consequences of gambling and the associated restrictions. When this is the case, it is much easier for customers to accept the specifics of the business. In this case, the importance of corporate responsibility can influence consumer behavior. In such a situation, lotteries can gain a significant competitive advantage through genuine accountability over gambling operators that do not care about responsibility or take action at most ostensibly. Forced responsibility claims that have been launched without customer approval, which often target only a limited number of gambling companies, cannot achieve good results.

Jari has enjoyed a long and successful career in the gambling sector, having cut his teeth in the horse racing and betting business. He has spent the biggest part of that time with Veikkaus, the Finnish national lottery and gambling operator, where he was responsible for horse and sports betting business. While there he started digital sale channels, introduced the first customer-based strategy and took care of international relationships and businesses. Having resigned from the lottery in spring 2020, he established The Finnish Gambling Consultants Ltd and is now helping lotteries and other gambling operators and suppliers to further develop their businesses.