Finland’s Veikkaus to critics: slot machine turnover isn’t revenue


finland-veikkaus-slot-machine-turnover-revenueFinland’s Veikkaus gambling monopoly has been forced to publicly explain the difference between turnover and revenue as calls mount to reduce its slots activity.

On Monday, Finland’s Minister of Local Government and Ownership Steering Sirpa Paatero appeared on local broadcaster YLE to defend the state-run Veikkaus from critics who want the government to get out of the gambling business. Critics were quick to find fault with Paatero’s defense of Veikkaus’ activities and her apparent minimization of problem gambling concerns.

By Wednesday, the chatter on both traditional and social media had grown loud enough that Veikkaus CFO Regina Sippel felt compelled to issue a public statement. Sippel said the chatter revealed “how important and emotionally exciting gambling is for citizens” but that it was equally important to “clarify a few things.”

Sippel dismissed claims that Veikkaus’ annual slot revenue was around €11b, noting that the company’s most recent annual report put slots revenue at around €840m. Sippel further noted that Veikkaus slots have an average rate of return to players of 95%, so the €11b figure represented the total amount wagered, while the €840 represented total player losses. Going forward, Sippel said Veikkaus would be “developing our external reporting to be more readable.”

Slots (both land-based and online) account for nearly half of Veikkaus’ sales, but the company has been taking steps to reduce its land-based slots reliance, including a cull on the number of machines in operation and new mandatory customer identification requirements before slot play is permitted.

On Monday, Kirsi Leivo, director-general of Finland’s Competition and Consumer Authority, suggested that Veikkaus’ plan to remove 3k slots from shops and kiosks wasn’t good enough, saying the monopoly should “seriously consider moving them to casinos” where they won’t be so “freely displayed.”

This has definitely been a challenging year for Veikkaus, starting with the company’s January announcement to scrap its restaurant gaming table business, with the resulting loss of around 400 staff. In April, a survey found nearly one-third of respondents were in favor of ending Veikkaus’ monopoly and switching to a more competitive open licensing model.

Veikkaus has resisted calls to end its monopoly by arguing that a competitive market would result in less state revenue and more problem gambling activity. But Veikkaus’ protestations rang hollow, particularly given the radio ads it ran this summer urging people who felt an impulse to gamble to scratch that itch by placing a wager at a local racetrack or through the Veikkaus website.

Veikkaus’ PR problems haven’t been helped by the fact that the Paf gambling monopoly in Finland’s autonomous Swedish-language Åland islands region has been aggressively implementing programs to reduce its reliance on high-volume customers, despite the obvious impact this stance is having on Paf’s bottom line.