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Svenska SpelSvenska Spel

Report on the company's measures stemming from the mandate under the shareholder directive adopted by the 2012 AGM

On 24 April 2012, AB Svenska Spel’s AGM adopted a shareholder’s directive for the company, which included the owner’s mandate for the company. Furthermore, this states that, ahead of the AGM, the company is to submit a report to the Government Offices of Sweden detailing the company’s measures in connection with ­Section 1, items a), b), c), d) and f) and that as the company’s ­accessibility in line with Section 1, item e) is clearly stated.

Svenska Spel should contribute to a healthy and sustainable gaming market. The objective of Swedish gaming regulations and, accordingly, the owner’s mandate to the company is not to raise revenue for the state. On this basis, Svenska Spel is to prioritise social protection considerations across operations while, concurrently, acting in a professional manner. Svenska Spel must endeavour to achieve a favourable financial performance without maximising profits and without contributing to substantial growth in gaming in Sweden. Minimising the negative effects of gaming always weighs more heavily than profits.

AB Svenska Spel (“Svenska Spel”) is hereby permitted to make the following report ahead of the 2014 AGM. AB Svenska Spel (“Svenska Spel”) is hereby permitted to make the following report ahead of the 2014 AGM.

Svenska Spel is to meet consumers’ demands for attractive gaming operations

The company’s possibilities of fulfilling this part of the mandate depends on which permits under the Swedish Lotteries Act and Casinos Act that are applied for by the company and granted by the government. The company’s valid permits are detailed on the company’s website svenskaspel.se.

The company endeavours to provide a broad range of games with developed and differentiated experiences, and to offer games in the forms of distribution in demand in the market. In 2013, Svenska Spel has been able to present two major new products for customers. The international number game Eurojackpot was launched in January. Sweden is one of 14 countries participating. Svenska Spel can operate international gaming partnerships in accordance with the scope regulated in the government permits. Such gaming partnerships should only occur with members of industry bodies of state-controlled gaming companies, such as the World Lottery Association and European Lotteries.

Eurojackpot is a random generated number game which is drawn once a week and is assessed as a game with a low risk of the customer developing gaming problems. Regarding low risk games, Svenska Spel intends to be at the forefront in terms of renewal and development. However, the top prize in the Euro­jackpot is extremely high compared with other products and the company is particularly cautious in its marketing of the game.

For gaming forms with high or medium-high risk, Svenska Spel does not drive the development of new forms of gaming and, instead, carefully follows developments. On receiving a permit, the company can introduce new games with higher risk under the prerequisite that the game already exists in the market and the assessment is that gaming can be channelled to a healthier and safer environment and, thereby, reduce problem gaming.

During the year, the company applied for and received a permit for raising the payout percentage for the Oddset game. The in­­creased payout percentage strengthens Svenska Spel’s competitiveness in a sports games market that has developed substantially over the last decade and where, primarily, unlicensed online operators have captured large market shares through extensive advertising and, to a certain extent, through a price war in terms of odds. The financial margins on betting are extremely small at many of Svenska Spel’s competitors and the gaming form comprises a method of attracting customers to other forms of gaming where profits and margins are larger.

Despite substantial competition in the sports games market, Svenska Spel’s advertising for these gaming forms is extremely restrained and significantly below Svenska Spel’s share of the total game advertising in the market.

To evaluate this part of the mandate, Svenska Spel follows up the proportion of satisfied customers among those playing with Svenska Spel as well as the company’s total market share and shares for individual gaming forms.

The company’s targets and target fulfilment in 2013 in terms of items including meeting customers’ expectations are reported on pages 26-31 of the Annual Report. The company’s various gaming forms are detailed on pages 32 and 33 of the Annual Report.

Svenska Spel will provide gaming forms that can be deemed to entail risks of a social nature, within the framework for social responsibility, when this is believed to be able to curb illegal gaming in uncontrolled forms

Svenska Spel carries out its assignment in this section by providing games in video lottery terminals (Vegas), international casino games and poker over the Internet.

The essence of this part of the mandate is about how well ­Svenska Spel is able to channel unregulated and illegal gaming to the company. Channelling is defined as moving existing gaming interest to a healthier and safer environment. Channelling does not mean wakening new or increased interest in a game. The main ­purpose of channelling is to reduce problem gaming in society and the commercial aspect is of subordinate importance.

Channelling is mainly used for those gaming forms that according to available research is to be considered the riskiest from a ­gambling addiction viewpoint. Examples of such forms of gaming include, slot machines and online bingo and casino games.

Channelling is mainly used for those gaming forms that according to available research is to be considered the riskiest from a ­gambling addiction viewpoint. Examples of such forms of gaming include, slot machines and online bingo and casino games.

In 2013, among other actions, Svenska Spel developed new VLT games on Vegas, renewed the slot machines at Casino Cosmopol and launched online poker for mobile phones and tablet computers. Svenska Spel has also applied to be able to organise online casino games, a form of gaming that is extremely risky but which is also the fastest growing form on the market at present and which is only offered by foreign-based online companies.

To evaluate this part of the mandate, Svenska Spel follows the development of the proportion of players with gaming problems in society and, over the year, has also evaluated the effect of the company’s responsible gaming measures on the company’s customers.

A separate report of Svenska Spel’s measures aimed at securing social protection considerations may be seen in the separate re­­ports submitted to the government by Svenska Spel pursuant to the government permits.

Svenska Spel will be a credible but also attractive alternative to, first and foremost, uncontrolled gaming operations

This point in the mandate, mainly deals with considerations similar to the two preceding points. In practice, the credibility requirement means that Svenska Spel must translate the social protection considerations to concrete actions. Harmful effects in the form of gambling addiction, fraud and criminality are best combated if they are highlighted and become a natural part of the company’s decision-­making at all levels.

Svenska Spel endeavours to offer a responsible gaming programme that is consistent and tangible for all games based on the various risks of each game of problem gaming and the individual customer’s gaming behaviour. In addition, the programme must be clearly communicated to Svenska Spel’s customers and other stakeholders.

As far as possible, Svenska Spel’s concrete measures to combat gambling addiction must be based on research. Where relevant research is lacking for the gaming area, Svenska Spel must still implement measures that the company assesses will counter problem gaming. During the year, the company decided to use the same measuring tool in its own surveys as that used by the new Public Health Agency of Sweden for measuring gaming problems and the risk of gaming problems, namely the Problem Gambling Severity Index, (PGSI).

In 2013, Svenska Spel also continued its initiatives to make the customer offering more attractive with the support of developed systems and services, and a modern IT infrastructure. In turn, these initiatives are expected to lead to increased possibilities for strengthening responsible gaming, enhancing customers’ gaming experience and raising cost efficiency.

To evaluate this part of the mandate, Svenska Spel follows trends including the proportion of Sweden’s population that perceives Svenska Spel as leading in responsible gaming, the development of the proportion of players with gaming problems in society and, over the year, also evaluated the effect of the company’s responsible gaming measures on the company’s customers.

Svenska Spel takes into account social considerations, fraud risks and consumer interests in the development of gaming forms and in the business as a whole

Svenska Spel should take a leading position regarding responsible gaming. Consumer protection should pervade all operations. ­Svenska Spel offers a responsible gaming programme that is consistent and tangible for all games based on the various risks of problem gaming in each game and the individual customer’s ­gaming behaviour.

As far as possible, Svenska Spel’s concrete measures to combat gambling addiction must be based on research. Where relevant research is lacking for the gaming area, Svenska Spel must act ­cautiously and responsibly.

Svenska Spel’s information about customers and customers’ playing comprises sensitive confidential information. This means that Svenska Spel must take into consideration and prioritise integrity aspects throughout operations and, particularly, in responsible gaming efforts.

In 2013, Svenska Spel renewed its certification through the WLA (World Lottery Association). The company is already certified under the European Lotteries. The certification aims to assure the quality of the foundation and framework for responsible gaming efforts.

A decision was taken during the year to implement a responsible gaming centre under the framework of the company’s customer service. Staff have received particular training to facilitate dialogues with customers and their relatives about responsible gaming issues with the aim of preventing more people suffering from gambling addiction and, also, to improve possibilities for individuals with gaming problems to receive rapid help.

Suspicion of manipulation of sporting results and other gaming-­related corruption reared its head on a number of occasions in 2013. Svenska Spel took a decision at the start of the year to fund a position at the Swedish Sports Confederation tasked with, among other items, coordinating anti-gaming-fraud measures together with the separate sports associations. Svenska Spel also reported a number of football matches to the police where unusual gaming patterns were noted. In addition, together with the Swedish Basketball ­Association, the company prepared two reports to the police regarding suspicion of irregularities in conjunction with a number of basketball league matches.

Suspicion of manipulation of sporting results and other gaming-­related corruption reared its head on a number of occasions in 2013. Svenska Spel took a decision at the start of the year to fund a position at the Swedish Sports Confederation tasked with, among other items, coordinating anti-gaming-fraud measures together with the separate sports associations. Svenska Spel also reported a number of football matches to the police where unusual gaming patterns were noted. In addition, together with the Swedish Basketball ­Association, the company prepared two reports to the police regarding suspicion of irregularities in conjunction with a number of basketball league matches.

In the spring, suspicion was directed at 15 poker players suspected of cheating and breaching the company’s rules for online poker. The players were excluded, reported to the police and SEK 3.8 million repaid to the customers who were victims of the cheating.

Over the past year, the company also started the roll-out of log-in possibilities with budget and time limits for Vegas VLTs and decided to implement mandatory registration for all games excluding paper lottery tickets and games at Casino Cosmopol from mid-year 2014.

To evaluate this part of the mandate, Svenska Spel follows trends including the proportion of Sweden’s population that perceive Svenska Spel as leading in responsible gaming, the development of the proportion of players with gaming problems in society and, over the year, has also evaluated the effect of the company’s responsible gaming measures on the company’s customers.

Svenska Spel will endeavour to provide a broad service in both urban and rural areas

Svenska Spel will strive to distribute its offering of gaming services throughout Sweden. A well-developed service means, among other things, Svenska Spel ensuring that there is a high degree of accessibility for the company’s gaming services. The distribution of gaming services should also be viewed as a key element of a greater public service that provides the necessary conditions for regional growth and reasonable living standards in rural areas and the ­countryside.

Svenska Spel is currently represented by about 5,800 gaming and lottery retailers across the country and about 2,000 business partners at restaurants and bingo halls. Even in comparison with other public services, such as chemists, post offices and off licences, accessibility is extremely good.

Svenska Spel continuously follows up its presence in rural areas and, for a number of years, has had lower turnover requirements for its retailers in these areas. As regards restaurant business partners, the number of sales locations is governed partly by permits from the local municipality and the applicable turnover rules for offering Vegas VLT games, which are set by the Swedish Gambling Authority.

Svenska Spel will focus on social responsibility in its marketing to avoid being perceived as excessively intrusive

The overriding requirements governing Svenska Spel’s marketing are set by the government through the conditions for the company’s gaming permits. The requirements of the above include that Svenska Spel’s marketing of games to consumers should observe particular moderation and that advertising and other marketing efforts are not permitted to be intrusive or aggressive.

Svenska Spel’s marketing must be adapted to the game’s degree of risk. This means that Svenska Spel is to be particularly restrictive in its marketing of the riskiest games.

Marketing should be founded on the principle of well-informed decisions. This means that consumers are entitled to receive correct, easily accessible and easily understood information to facilitate informed choices regarding their gaming.

Channelling gaming from an unregulated market to a controlled, healthy and safe alternative is another key element of Svenska Spel’s mandate. Marketing comprises a key tool for achieving this. The challenge for Svenska Spel is that total game advertising in the Swedish market has increased substantially since the start of the century, particularly over the past three years. Unfortunately, the ban on marketing under the Swedish Lotteries Act, which applies to all unlicensed operators, is not upheld. Foreign unregulated online operators currently account for 60% of game advertising in Sweden. Investment by these operators increased further in 2013 when they started to market their services on outdoor advertising hoardings.

Channelling gaming from an unregulated market to a controlled, healthy and safe alternative is another key element of Svenska Spel’s mandate. Marketing comprises a key tool for achieving this. The challenge for Svenska Spel is that total game advertising in the Swedish market has increased substantially since the start of the century, particularly over the past three years. Unfortunately, the ban on marketing under the Swedish Lotteries Act, which applies to all unlicensed operators, is not upheld. Foreign unregulated online operators currently account for 60% of game advertising in Sweden. Investment by these operators increased further in 2013 when they started to market their services on outdoor advertising hoardings.

In addition, Svenska Spel is the first operator in the market to remove all bonuses and discounts on games.

To evaluate this part of the mandate, Svenska Spel follows trends including the proportion of Sweden’s population that perceive Svenska Spel as market leader in responsible gaming. In addition, Svenska Spel measures the company’s share of total game marketing in Sweden – for all games together and by risk level.

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