“At risk” players and the risk of competition By Andrew Tottenham, Managing Director, Tottenham & Co May 8, 2019 at 2:49 am Recent weeks have seen GVC, Svenska Spel, and number of other online gambling operators all calling for a total ban on broadcast advertising. Svenska Spel, the former gambling monopoly in Sweden (lottery and casino games), is owned by the state of Sweden and is being forced to compete now that Sweden has opened up its online gambling market to private operators. Sweden’s former monopoly operator went further and has announced it is stopping all advertising of its online casino games for the whole of 2019. Concern is rising over the increase in “at risk” players, with television advertising believed to behind this trend. No doubt, these actions to protect players are altruistic, but perhaps there are other motivations behind these declarations too. Not surprisingly, despite the opening of the market to private operators Svenska Spel still owns the Swedish market with an approximate 50% market share of all regulated online gambling revenues. ATG, the Swedish monopoly sports betting operator, has a similar market share but is not having to share the betting market with new licensees. The seventy or so companies that have obtained a license to operate online casino games have either yet to start operations or are trying to make a dent. It’s hard to fight an incumbent that already has a large database of Swedish customers and the dent is still small. GVC is not a small company either. It owns twelve betting and thirteen online casino and bingo brands. Most of its brands (Ladbrokes, Gala, Corals, etc) are extremely well known in the markets where they operate, especially the UK. Total revenues in 2018 were almost £3 billion. Broadcast advertising is very expensive and consumes vast swathes of these companies’ advertising budgets. It is very good for increasing and reinforcing brand recognition, but as a targeted call-to-action to get customers to play it is not as efficient. Once a brand is known in the market, targeted online advertising is much more efficient and the outcome easily measurable. Future campaigns can be refined based on previous outcomes. Television advertising is much more of a blanket approach and ideal only for name awareness. When markets open up, incumbents do not like the smaller and probably nimbler new market entrants snapping at their heels, eroding margins, and taking market share. The best thing for the online gambling giants to do is to starve these interlopers of oxygen, to not allow them to have air time. A ban on television advertising will lock out the newer and smaller operators that need to gain brand recognition. That’s why their proposals may not be entirely altruistic. Norsk Tipping, the State owned gambling monopoly in Norway, was also one of the companies calling for a similar ban, but in Norway. The case for an ulterior motive here is much weaker. Although the company has a monopoly on gambling in Norway, many online operators continue to target the country using television stations that are located outside Norway but that are available to Norwegian citizens. According to Norsk Tipping, Norway has seen an increase in the number of at risk players from 6,000 to 10,000, and it calculates that 55% of all the company’s profits come from “at risk” players, a staggering admission. Last year the country’s regulator, Lottstift, held a consultation on plans to stop all broadcasters whose signal is available in Norway from carrying advertisements for online gambling. I find it difficult to see how Norway could enforce this extraterritorial demand. Unfortunately, radio waves recognise no geographical borders, and an advertising ban legally could only apply to broadcasters based in Norway. This will play into the hands of the unregulated operators who will continue to target the country from the outside. Whilst we are on the subject: regulators have tried to block overseas operators from targeting citizens in their countries with limited success. Hardly a week goes by without announcements from one country or another stating that more operators have been added to the list of banned operators, with ISPs expected to block access to these sites. It strikes me that this is the wrong way round. Far better would be to maintain a white list and use smart technology to scan the web and determine whether a site it finds is a gambling site. If it is and is not on the white list, the technology sitting in the ISPs could act as a firewall, disallowing access or at the very least warning the customer that they are heading for an unlicensed operator. This technology exists and I believe it could easily be repurposed for this use; perhaps that is only a matter of time.