Gambling harms caused by electronic gambling machines should be prevented with state control

Abstract

Unlike in other Nordic countries, most of the electronic gambling machines (EGMs) are placed outside the Casino Helsinki and the gambling arcades in Finland. The placement of EGMs in non-casino locations, such as supermarkets, kiosks, and petrol stations, is matter of serious concern. We argue that availability and accessibility of EGMs has led to normalisation and banalisation of gambling in Finland. Exposure to EGMs also put at risk vulnerable populations and problem gamblers, who already suffer from the negative consequences of gambling harms. Gambling companies’ self-regulation initiatives and corporate social responsibility programmes are not enough to prevent and limit EGM related gambling harms. We suggest that Finland should follow Norway’s example and limit the availability of EGMs and transfer them from non-casino locations to gambling arcades. Finnish EGM policy should be a question of public policy guided by public health concerns.

In April 2020, the German grocery store chain Lidl (owned by the Schwarz Group) announced that it would remove all 250 electronic gambling machines (EGMs) from its supermarkets in Finland. Veikkaus expressed its disappointment for ending the partnership with Lidl Finland, but the decision of the grocery store chain was applauded across social media. The number of EGMs in Lidl Finland’s premises may not be high, but their removal is a strong symbolic gesture in Finland where, in early 2019, the number of all non-casino EGMs was 18,500, and where the age limit of EGM games was changed to 18 years only in 2011. Lidl justified its decision to remove the EGMs from its resale network in terms of the (mostly negative) public discussion on non-casino EGMs, customer feedback, and positive experiences of EGM shutdowns during the COVID-19 pandemic.

Finland is characterised by a wide availability of EGMs in non-casino locations, such as supermarkets, kiosks, petrol stations, bars, and restaurants. EGMs are operated by the national monopoly holder Veikkaus, but business owners can become resellers of Veikkaus EGM games and other gambling products (such as lottery games, sports and horse betting, and scratch cards), and thereby profit from the gambling industry. The decision taken by Lidl is the first time in Finnish gambling history that a business has been ready to renounce the commissions and compensation paid by Veikkaus for renting space for its EGMs. Although EGM proceeds vary, one machine can produce on average 30,000 Euros a year, of which the share of the distribution location is 17 per cent minus gambling tax, or approximately 4,500 Euros a year (cf. Marionneau et al., forthcoming).

The announcement of Lidl Finland was not taken in isolation, but formed part of a longer development of criticism towards the Finnish EGM policy. The availability of EGMs has been a topic of public discussion particularly since March 2019 when a citizens’ initiative called “Pelikoneet kauPOISta” (“remove EGMs from stores”) was launched by Finnish “experts by experience” involved with the Sosped Foundation. The Sosped Foundation is a Finnish non-governmental organisation (funded by the Funding Centre for Social Welfare and Health Organisations, STEA with money that emanates from the Finnish gambling monopoly based on the Lotteries Act) which trains former problem gamblers and their concerned significant others to become experts by experience. The aim of the citizens’ initiative was to collect 50,000 signatures from Finnish citizens to engage the Finnish Parliament to discuss the proposition to remove all non-casino EGMs from business premises. While the initiative failed, public discussion on the Finnish EGM policy remained intensive. The hashtag “pelikoneetkaupoista” also lived on and was even used by Lidl in its announcement on Twitter (on April 15, 2021).

Following a stir related to Veikkaus advertisement and continued criticism of non-casino EGMs in Finnish media and social media, Veikkaus announced in September 2019 that it would remove 3,000 EGMs from non-casino locations, such as grocery stores, kiosks, bars, and petrol stations (see Marionneau et al., forthcoming). This announcement can also be interpreted partly as a concession to the citizens’ initiative. Later, Veikkaus announced that it would raise the number of EGMs to be removed to 8,000 (40 per cent) (Järvinen-Tassopoulos, 2020). After these reductions, there are approximately 13,100 EGMs in mainland Finland, of which 10,500 are in non-casino locations and 2,600 are in gambling arcades (mini casinos in practice) or at the Casino Helsinki.

The decision taken by Lidl, as well as the EGM reductions initiated by Veikkaus earlier, can be seen as a part of a wider phenomenon: that of industry self-regulation that has become increasingly prevalent in the field of gambling when state-level regulations are lacking (van Schalkwyk et al., 2021). In Finland, as elsewhere, industry self-regulation has been seen as an auxiliary or even alternative to public policies in gambling regulation (see Jones et al., 2009; Selin, 2016). For example, in the UK, a corporate social responsibility (CSR) programme is a license condition for gambling operators (Jones et al., 2009). Corporate responsibility and industry self-regulation can be described as a form of soft power or as a post-political form or regulation (Garsten & Jacobsson, 2013). While industry codes are necessary, and at times, as in the case of Lidl or even Veikkaus, CSR policies can be more restrictive than public policies, relying solely on the industry to self-regulate puts responsibility goals in direct conflict with commercial goals. Too strong a reliance on the industry to self-regulate may therefore not be in line with the public interest (Hancock et al., 2008).

We argue here that while the initiatives of citizens, business agents, and of Veikkaus to remove or to reduce the availability of non-casino EGMs are to be commended, the Finnish gambling policy cannot rest on them. By amending the Lotteries Act, the Finnish government should reconsider its current EGM policy and instead take initiative to remove the EGMs from all convenience locations. To support our argument, we will shortly examine how availability and accessibility of EGMs can lead to exposure, how limiting the availability of EGMs can reduce consumption and gambling harms, and whether a threat of illegal EGMs exists. Finally, we will discuss what should be done on a legislative level to prevent further gambling harms from EGMs in Finland and elsewhere.

Availability and accessibility of EGMs lead to exposure

The arguments used to justify the citizens’ initiative to remove EGMs from convenience locations, mentioned also by Lidl Finland, concerned the addictive nature of the EGMs, the constant exposure of citizens to the EGMs, the amount of gambling proceeds produced by problem gamblers, and lacking age limit control. Jurisdiction in which gambling products are available in everyday locations are characterised by a normalisation and even a banalisation of gambling (e.g., Egerer & Marionneau, 2019; Nyemcsok et al., 2021). Janne Nikkinen criticised the Finnish EGM placement as early as 2008 by pointing out that EGMs increase impulsive behaviour by customers passing by, as well as the urge to gamble among problem gamblers. To reduce harms, Nikkinen suggested EGMs from non-casino locations should be transferred to controlled gambling arcades (Nikkinen, 2008a, 2008b).

Social accessibility of gambling refers to the familiarity of the venue, the social acceptability of gambling, and to the knowledge of the gambling products available (St-Pierre et al., 2014; Vasiliadis et al., 2013). People may be drawn to EGMs because they are available in everyday spaces. In Finland, due to low age limits until 2011, EGMs have also been available for adolescents for decades. For those not at ease in a casino or in a gambling arcade, non-casino locations offer an easy, almost anonymous place to gamble. While EGM players are in plain sight, no one can really know whether they are regular gamblers or simply chance customers wanting to try an occasional slot game. Gambling opportunities in non-casino locations are always close to the customers and those experiencing gambling problems may feel the urge to gamble every time they enter.

Physical accessibility refers to convenience and proximity (Vasiliadis et al., 2013). When EGMs are placed in every supermarket, kiosk and petrol station, the issue of proximity is not a problem. In the Finnish context, this problem persists as, even though Veikkaus reduced the number of non-casino EGMs, the monopoly holder did not limit the number of resale points (Heiskanen et al., 2020). Accessibility is increased by some grocery stores and petrol stations in Finland being open 24/7, including their offer of gambling. In addition to maximised exposure to EGMs, many Finnish supermarkets offer cash withdrawals from the cashier, making it easier to continue to gamble (Järvinen-Tassopoulos, 2020). This availability and accessibility of EGM gambling in Finnish non-casino locations resembles that in international casinos, where ATMs are available inside.

Supermarkets and other business premises may also increase exposure to gambling by placing EGMs in ways that they are highly visible to noticed by customers. As such, exposure is not limited to gamblers, but it extends to children and other vulnerable populations (e.g., youth, elderly people, people with low income). The surface area of resale points determines the placement of EGMs, but in Finland they are usually located in visible spots near the cash registers or customer service desks instead of being hidden behind separators. The role of the personnel is therefore to control gambling and to prevent underage gambling. This task appears not to be easy. According to a mystery shopping study conducted by the Finnish gambling helpline Peluuri in 2017, only 12 per cent of shop personnel asked the young-looking mystery shoppers playing EGMs to show their ID (Peluuri, 2018). This result indicates that it may be difficult for the personnel to control underage gambling alongside their principal work duties, including serving other customers.

As EGMs can be seen and heard by all the customers entering the business premises, and their control is often weak, it is apparent that the Finnish model of non-casino EGM placement not only exposes people to gambling, it also promotes and encourages (excessive) gambling.

Limiting EGM availability reduces consumption and harms

The high availability of EGMs as well as the lack of state interventions to limit exposure to them puts Finland at odds with its Nordic neighbours. Whereas in other Nordic countries legislative reforms have had an impact on the availability and on the accessibility of EGMs, any policy reducing EGM numbers or access to EGMs in Finland has stemmed from either Veikkaus, or now the resale network in the form of Lidl Finland. Legislative measures have only focused on issues such as expanding mandatory identification or setting age limits.

In 2019, Sweden had 4,600 legal EGMs, whereas in Norway Norsk Tipping operated 3,996 EGMs. Even though in Finland Veikkaus has reduced the total number of EGMs by 8,000, it still operates 13,100 EGMs in non-casino locations, gambling arcades, and in Casino Helsinki. Per capita, this number is not only above the Nordic or the European average, but EGMs are also placed more often outside of casinos and gambling arcades in Finland than elsewhere in Europe (cf. Heiskanen et al., 2020).

In 2020, the Finnish Ministry of Social Affairs and Health commissioned a report on the harms caused by EGMs (Heiskanen et al., 2020). In the report, the Finnish system, characterised by a wide availability of non-casino EGMs, was considered particularly problematic. The report concluded that, in order to prevent EGM-related harms, the Finnish regulator would have two alternatives. Either to remove the EGMs from public spaces and confine them in gambling arcades, or to develop the gambling monopoly system in the direction of Norway’s, where harms are prevented by limited availability and accessibility as well as by controlled product characteristics and effective limit-setting. Research evidence collected for the report clearly showed that limited availability limits EGM harms (Heiskanen et al., 2020).

Jurisdictions in which EGMs have been removed or their number has been significantly cut have shown reduced total consumption of gambling and reduced gambling-related harms (see Heiskanen et al., 2020; Sulkunen et al., 2019). The closest example comes from Norway, where the EGM market was monopolised following a parliament proposal and a debate (Lund, 2009; Rossow & Hansen, 2016). Before July 1, 2007, EGMs had been freely available in many accessible premises, but after the legislative change, the machines were banned and removed (Götestam & Johansson, 2009). Norwegian EGMs were later replaced (2008–2009) by other devices with less harmful features and mandatory identification of the gamblers. The new EGMs are still available in non-casino locations such as kiosks, restaurants, hotels, and bars, as well as gambling arcades. The most addictive machines (Belagos) are confined to bingo halls with limited opening hours. The initial removal and later limited reintroduction of EGMs in Norway has been connected to reduced harms (Rossow & Hansen, 2016). The Norwegian example shows that it is possible to reduce gambling harms by increasing state regulatory power to limiting the availability and accessibility of EGMs (Borch, 2018; Nikkinen & Marionneau, 2021).

Sweden similarly removed EGMs from public spaces in 1973 and from restaurants in 1979 following a legislative bill (Prop. 1977/78:9). EGMs were only reintroduced in 1996 and 2001. EGM expenditure has since surpassed horse race betting as the gambling form having the largest turnover (Abbott et al., 2014; Nikkinen & Marionneau, 2021). However, unlike in Finland, Svenska Spel operated EGMs are placed solely in casinos (hosted by subsidiary Casino Cosmopol), bars, restaurants, and airports (Cisneros Örnberg & Hettne, 2018; Heiskanen et al., 2020). The prevalence of both EGM gambling and EGM-related harms are lower in Sweden than in Finland (Heiskanen et al., 2020).

In other European countries, such as Italy, different regional and provincial laws prevent gambling availability (Aronica, 2018). In the Italian region of Piedmont, EGMs cannot be placed closer than 500 metres to “sensitive locations”, such as schools, churches, therapeutic communities, and ATMs (Rolando & Scavarda, 2018). In many cases, the regional laws permit local authorities to also identify other locations as sensitive. Businesses, which declare not to have EGMs in their premises, may use the logo “no slot” and are offered exemptions in local taxation (Aronica, 2018).

Further evidence on the harm-reducing potential of limited availability has been provided by the COVID-19 pandemic. COVID-19-related restrictions on social interactions forced gambling operators in Europe to act and shut down casinos, gambling arcades, and EGMs in order to prevent the virus from spreading. From March 2020 to July 2020 EGMs placed in Finnish non-casino locations, gambling arcades, and Casino Helsinki were similarly closed. It was anticipated that EGM gamblers would migrate online, but that did not happen in Finland or in Sweden (Håkansson, 2020; Järvinen-Tassopoulos et al., 2020; Lindner et al., 2020; Veikkaus, 2021). Instead, harms appear to have reduced and Finnish gamblers expressed relief that EGMs were shut down. The majority of those surveyed during the time also wished that non-casino EGMs would not be reopened (Järvinen-Tassopoulos et al., 2020).

The threat of illegal EGMs?

One of the arguments used to justify the wide availability of EGMs in non-casino locations is that gambling would otherwise move to illegal markets (cf. Heiskanen et al., 2020). Illegal operation of EGMs is, in fact, no oddity in Europe, and illegal gambling operations have also been connected to organised crime (e.g., Alezra, 2014). For example, in Belgium, EGM operation in coffee shops is strictly regulated, but there are thousands of profitable illegal machines. As business owners of coffee shops struggle to survive, there is an incentive to circumvent national EGM regulations by installing illegal machines (Van Baeveghem, 2018). Similarly, in France the same phenomenon occurred in the 1990s and the early 2000s when members of organised crime placed illegal machines with bingo or poker games in bars (Alezra, 2014). In the Nordics, Sweden has counted some thousands of illegal EGMs, but their numbers appear to be declining (De Geer, 2011; Heiskanen et al., 2020).

However, whereas other European countries have fought to prevent illegal EGM operation, Finland has been fairly protected from it. Part of the reason may be that legal machines are already widely available, leaving little space for the illegal market. Another may be that attempts at non-legal EGM operation have been effectively prevented. In the 1990s, private entrepreneur Markku Läärä operated EGMs in Finland without a valid license under a company called Cotswold Microsystems Ltd. incorporated under English law. The case was brought to court. After the ruling in the Court of Appeal in Vaasa, the Läärä case (C-124/97) was then brought to the Court of Justice of the European Union (CJEU). The CJEU supported the Finnish monopoly model, noting that “given the ‘risk of crime and fraud’, an exclusive right was more ‘effective in ensuring that strict limits are set to the lucrative nature of such activities’” (Littler, 2007, p. 31). At that time the Finnish gambling operator RAY (Raha-automaattiyhdistys, Finnish Slot Machine Association) had the monopoly of EGM operation.

Even though the Läärä case was ruled in favour of the Finnish gambling monopoly system, then-Attorney General Antonio La Pergola noted that placing EGMs in non-casino locations means a clear incentive for the business owners of the retail outlets involved not to limit the number of EGMs installed in their premises. La Pergola observed that this kind of practice could even lead to “relaxing checks on the age and spending habits of users”. In his Opinion (section 35, I-6096), the Attorney General then noted that placing EGMs in non-casino locations would not be in harmony with the Finnish Lotteries Act, which should protect individuals from the exploitation of their urge to gamble. Yet, little changed in Finnish gambling policy and the same problems in the Finnish gambling landscape that were identified by La Pergola in 1997 persist today.

Towards more controlled gambling: The Lotteries Act should be the key to harm prevention

EGMs are what Peter Adams (2016, p. 9) calls “legal addictive consumptions” that create addiction, addictive behaviours, and addicted players. If the Finnish Lotteries Act justifies the gambling monopoly in the name of preventing gambling harms, the widespread offer of EGM gambling despite its addictive nature should be reconsidered.

The industry, comprising gambling operators but also other suppliers and resellers involved in gambling provision, can self-regulate up to a point. But the conflict that any representative of the industry has between profitability interests and regulatory interests is likely to result in suboptimal solutions (Marionneau & Nikkinen, 2020). For example, while the decision of Lidl Finland was responsible and created a gambling-free opportunity to shop for groceries, it only concerned a small fraction of all non-casino EGMs in Finland. Other Finnish supermarket chains have not followed suit and overall EGMs remain widely available. The future of (Finnish) gambling regulation should not rest solely in the hands of the industry or its stakeholders, but in those of an independent regulator responsible for the legislation and control of gambling, guided by the principle of harm prevention and public health (also Nikkinen & Marionneau, 2014; Wardle et al., 2019).

The current amendment of the Finnish Lotteries Act (1047/2001) would have offered the perfect opportunity to reconsider the availability of EGMs in non-casino locations, but this did not happen. The most plausible reason is the path dependencies created by significant financial interests related to EGM operation. EGMs not only bring revenue to the resale network (including Lidl Finland), but also to the 4,000 third-sector Veikkaus beneficiaries (see Marionneau & Nikkinen, 2020). These revenue interests even appear more protected by legislation than those of gamblers. In 2012, an anticipated decrease in EGM revenue following the implementation of new age limits was compensated with a permit issued by the Finnish Government for the Finnish Slot Machine Association (RAY) to introduce 2,500 new EGMs across Finland. This measure has been accomplished even though the gambling harms and the prevalence of problem gambling were already known from the results of Finnish gambling prevalence surveys (in 2007 and 2011). Similarly, the revenue losses of Veikkaus following the shutdowns of EGMs due to COVID-19 have been compensated fully to the beneficiaries from the state budget despite cuts elsewhere. This is the direct result of the political influence that the wide network of Veikkaus beneficiaries can exert on politicians. From the perspective of harm prevention, it seems absurd that many gambling policies should focus on maintaining the profits from gambling rather than protecting consumers.

The main reform to strengthen consumer protection, rather than limiting availability, has been the introduction of mandatory identification of EGM players announced by the Finnish Ministry of the Interior in 2018. The initial idea was that players would have to identify with their Veikkaus loyalty card when playing on EGMs placed in non-casino locations, but not in gambling arcades. The Ministry of the Interior explained that this reform would prevent gambling harms and allow monitoring compliance with the age limit (18 years) more effectively. In addition, the intention was to monitor and assess whether the amended Lotteries Act would help to prevent gambling harms. If so, compulsory identification would be expanded to EGMs in gambling arcades. In 2019, the Ministry of the Interior announced that the compulsory identification on EGMs would be introduced in 2022, because a transition period is needed to prepare the technical implementation of compulsory identification and to set restrictions on gambling accounts. However, Veikkaus, in another act of industry self-regulation over laxer state-level regulation, announced it would implement the identification measure in 2021.

The decision of Lidl Finland to remove the EGMs from its premises was overdue for any company concerned with its public image and corporate responsibility. We sincerely hope that other supermarkets and business owners in Finland will follow this example. However, the decision about whether Finnish public spaces have or do not have highly visible and normalised gambling should not be left to business owners or the industry only. EGM policy, like all gambling policy, should be a question of public policy guided by public health concerns rather than a question of industry self-regulation or corporate social responsibility.