When a state knows what it wants - and takes it. On the monopolization of the Norwegian slot machine market

Anita Borch

When a state knows what it wants—and takes it.

On the monopolization of the Norwegian slot machine market

Presentation at Gambling, Politics and Social Issues—

International Research Conferencein Helsinki, 22. September 2015

Anita Borch National institute for consumer research (SIFO), Oslo

Part of the project «Gambling Policy in European Welfare Regimes», funded by Academy of Finland, headed by Prof. Pekka Sulkunen, University of Helsinki

Anita Borch

Presentation Plan

-Background-Theoretical and methodological approach-Research questions-Some results-Conclusions and lessons learned

Anita Borch

3 Western views on gambling

MARKET VIEW WELFARE VIEW MEDICAL VIEW

Any other entertaining product in the market

A «wild» product that can be «tamed»

A dangerous source of «addiction»

Unproblematic gambling Unproblematic and problematic

Problematic gambling

A source of privat and social economic revenue

A source of economic revenue and social costs

A source of economic and social cost

Liberalization Balance Restriction

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Background:- The monopolization of the Norwegian

slot machine market (from the late 1990s) make an interesting counter-example of «the second wave of liberalization» in the 1990s (Orford, 2011)

Research questions:- How could the monopolization happen?- How did it influence the distribution of

gambling revenue and the problems related to gambling?

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A qualitative study of the monopolization from a system (network) and stakeholder perspective

My sample:1 (previous) minister1 bureaucrat1 gambling authority1 gambling business2 sports association (10H)1 humanitarian org. (10H)2 private operators1 therapist/special int gr1 self-help gr/special int gr1 reseacher1 journalist

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Questions raised to the sample:

When did you first hear about the monopolization, and how was it justified?

What role did you and your institution have in the process, and how did you experience it?

What consequences did the process have for society and for your institution?

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The «official» story- 1995: Organization of public utility can offer slots- 1998: MJ tries to restrict – fails- 2001: Responsibility of slot machines moves from MJ to MCCA- 2002: MCCA tries to restrict – but meet resistance - 2002: The 10H agree on the monopolization- 2003: The monopolization passes in the Parliament- 2004+: The monopolization is brought to Oslo Town Court, Court of

Appeal, EFTA, Court of Supreme- 2006: Bank note acceptor ban is passed in the Parliament and the

numbers of problem gamblers decreases significantly- 2007: EFTA and the Court of Supreme accept the monoplization- 2007-2010: Old slots replaced by Norsk Tipping’s «Multix» and the

number of problem gamblers decreases significantly

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Different roles

- The Minister got support from the 10H and conducted the case in the court system

- Norsk Tipping initiated the monopoly in 1998 and replaced the old slots with new machines

- The 10H accepted the monopoly- Reserchers confirmed that problem gambling was a social health

problem- Therapists, self-help groups, special interests goups, journalists

and problem gamblers increased the public awareness of problem gambling in the press

- The private operators resisted regualtion – and as such facilitated the monopolization

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Lack of awareness

- The monopolization was initiated by Norsk Tipping around 1998. - The Gambling Authority heard about the monopolization in 2002 – from Norsk Tipping, not from their owner, MCCA- Therapists, self-help groups, journalists and others symphatis- ing with the problem gamblers’ cause worked for a total ban and did not seem to have heard about the monopolization until 2006.

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The use of «shared enemies»- Before the 10H accepted the monopolization, the enemies were

the licence owner and the private operators- After the 10H had accepted the monopolization, the enemies were the private operators.- After the monoplization was implemented, the enemies were unlicenced businesses offering their gambling services from abroad- In general, the possible increase of illegal gambling services is

used to legitimate launcing of new gambling services

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Consensus

Most actors are positive to the monopolization.

«Indeed, there are things that could be improved, but if we have to have slots, we think that a monopoly is the best solution.» (Head of Spilleavhengighet Norge)

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Yet, people worry…

- The double role of the state: owner and regulator- Norsk Tipping launched new online gambling services in 2014 of which some are similar to those which were banned in 2007.- The state makes free with the gambling market by replacing private games with their own or by making stronger rules for private operators than for themselves (bingo).- Work to protect problem gamblers (treatment, self-help groups,

research) is funded by Norsk Tipping’s surplus via the Norwegian Gaming Authority

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Overall,“this is a story about a state and a company that know what they want—and take what they want, first of all by making use of the power that has been given to them through formal political channels, but also by making alliances with special interests groups working to combat a ‘shared enemy’: the private operators and the online businesses offering their games from abroad.” (Borch, 2015).

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Conclusion 1: How could the monopolization happen?

“There were many good forces working for a monopolization.”

Lessons learned:

-An understanding of gambling policy needs a system approach-It is not indifferent what kind of ministry which is regulating gambling markets

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Conclusions 2: How did the monopolization influence the distribution of gambling revenue and the problems related to gambling?

- The private operators lost their income, the organisations kept it. - The organizations who had profited most on the old slot machine market got

most. - The numbers of problem gamblers decreased after the old slot machines

were banned in 2007; however, the decrease had started with the bank acceptor ban in 2006.

Lessons to consider:- The is not «one» monopolization model, but many- A monopolization does not garantee a low prevalence rate of problem gamblers