Veikkaus Responsibility Measures for 2020

Veikkaus, the gambling monopoly in Finland, has announced its plans to improve its responsible gambling measures in the coming year. The operator has warned that these changes to its operating strategy may affect revenue, potentially leading to a loss of €50m in earnings in 2020.

A row of slot machines in a casino.

Veikkaus has recently announced its plans to reduce the number of slot machines it owns across Finland by about a fifth, resulting in a drop in the number of machines in the country of around 3,500 units by the end of 2020. ©stokpic/Pixabay

At the start of December, Veikkaus announced that it would be cutting the number of slot machines it owns across Finland. This change is due to start in January 2020 and around a fifth of the machines installed by the operator are expected to be taken out of service by the end of the year. This would work out to an estimated fall in the number of gambling machines of 3,500 units.

In the new year, Veikkaus will also begin to push more heavily for compulsory identification when a customer looks to play on a slot machine, or when playing other games. The operator also plans to amend its marketing strategy to be more focused on the promotion of responsible gambling.

“Responsible gaming measures have been planned and will continue to be numerous in the coming year” Veikkaus’ director of responsibility Pekka Ilmivalta said. “We will be involved in the planning of this work, for example, with those dealing with gambling problems, as well as with addiction experts.”

Veikkaus will also be altering how it reports financial results. As such, the profits it generates from gambling will be presented with the winnings paid out to players subtracted from it.

Such a change has been suggested to ensure that Veikkaus’ financial reports will be in line with the International Financial Reporting Standard. This model is similar in many ways to the system employed by Svenska Spel in Sweden and by Danske Spil in Denmark.

The financial reporting system will not be used by Veikkaus until the operator’s 2019 Annual and Sustainability Report. This will not be published until February or March of 2020 so there is still some time to wait for the first implementation of the new system.

Veikkaus has announced that it believes the impact of the new responsible gambling measures will be an important aspect of deciding performance-based bonuses for its management. In 2020, evaluations of the effectiveness of operations will be given a weight of 40% and will be measured by operating expenses as a percentage of gross margin.

In this recent announcement from the operator, it has been clarified that if the liability indicator’s threshold for gambling harm is exceeded, the 40% efficiency measure will be entirely removed from the bonus. There are other criteria set out for the payment of bonuses. These include the number of customers, which is given a weight of 35% and the development of staff experience, which is given a weight of 25%.

These changes are expected to have a significant effect on the revenue taken by Veikkaus in the coming year. The operator expects its earnings to drop by around €50m in 2020.

Earlier in December, the losses in revenue from the changes were projected to be around €30m, €20m less than the updated figure. From current estimations, it doesn’t appear that there will be an upturn in this figure by the end of the coming year either.

This month, Veikkaus also appointed a chairperson of its new ethics advisory board. Saija Kivenen was placed as the chair, and five other members will be part of the board. Kinenven has previously been a legal counsel for the telecommunications company Telia Finland and started there in 2009. Prior to this, she was part of the company’s deputy legal counsel.

Other members of this board are Lassi Rajamäki, who is the director of community organization Sosped; Millo Meriläinen, a game researcher at the University of Tampere, Terhi-Anna Wilska, a professor of sociology at the University of Jyväskylä, as well as the creative director of the marketing and communications company Toinen PHD.

The board was established in August, and these members were appointed in December. It is part of the operators’ plan to boost player protection controls and is designed to give an external view of the organization’s responsible gambling efforts and the social impact of gaming.

“The establishment of an Ethics Board complements the company’s new, broad-based corporate responsibility measures. We are investing in developing a safer and more responsible gaming environment, and the Ethics Council outside the company’s operations is an important part of that” Pekka Ilmivalta, executive vice president for legal and responsibility at Veikkaus, said.

The board is able to make proposals for new responsible gambling strategies. It is also able to issue statements, as well as provide ethical arguments on the issues related to practical problems associated with gambling.

Veikkaus’ Monopoly

All of these changes being made by the gambling monopoly appear to be being made in response to calls to scrap Veikkaus of its monopoly in Finland, as well as increasing questions about the future of the operator.

It would appear that despite the operator allocating some 72% of its profits to social causes in the country, many people are still unhappy with the negative social impact of gambling.

A journalist in Finland, Senja Larsen, wrote in an article for the business newspaper Kauppalehti that she was in strong support of an end to the monopolistic status of Veikkaus in Finland. In this article, she argued that the company was, in essence, a “reverse Robin Hood”, which takes money from the poorest in society just to line the pockets of the very richest. She argued that the player controls in place at the time at Veikkaus were sub-standard and were in all actuality not protecting those at risk of gambling-related problems.

Others have argued against this take. The executive vice-president of Veikkaus, Velipekka Nummikoski, defended the company against these allegations back in August of this year. Nummikoski pointed to Denmark, and their relatively recently regulated gambling market, which was opened in 2012.

She argued that the return of profits to society by the gambling industry in Denmark dropped to 44% from 62% after the market was opened.

She also argued that a switch to a regulated market may lead to an increase of gambling in the country, saying: “In Denmark, after the regime change, according to reports from the local authorities the volume of gaming has increased dramatically, especially in the most harmful, fast-paced online casino and sports betting products. Only Veikkaus requires a Finnish player to set daily and monthly gambling limits for fast-paced games. So Veikkaus isn’t chasing players’ last euro at all costs.”

In spite of these arguments, it does appear that Veikkaus is attempting to improve their image as a responsible gambling provider, and these changes to its responsibility measures, bonus structure, and ethics board may help the company to cling on to its monopoly in Finland in the years to come.

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