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Svenska SpelSvenska Spel

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

On 24 April 2012, AB Svenska Spel’s AGM adopted a shareholder’s directive for the Company. This directive also states the owner’s mandate to 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) as well as clearly stating the Company’s accessibility in line with Section 1, item e).

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 including its subsidiaries ("Svenska Spel "or the "Company") is hereby permitted to make the following report ahead of the 2015 AGM.

Svenska Spel is to meet customers’ 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. Svenska Spel’s valid permits are detailed on the Company’s website www.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. Regarding low risk games, Svenska Spel intends to be at the forefront in terms of renewal and development. 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 gaming problems.

Svenska Spel currently offers a variety of gaming forms that are distributed via physical retailers or over the internet (computers, and tablet and mobile devices). In addition, the Company offers games on VLTs (Vegas) in restaurants and bingo halls as well as casino games at four physical casinos.

In 2014, Svenska Spel launched three new scratch lotteries, ­Trissammans and MiniTriss, which are variants of the classic Triss, and Skrap-Matcha. Furthermore, during the football World Cham­pionship in Brazil, the Company provided an extra-large offering of sports games. In June, the Company launched a new mobile ­service, which means, among other things, that customers can access a large quantity of sports and gaming information in real time with the ability to make personal settings for their favourite sports. Responsible gaming is also more clearly highlighted in the mobile app.

For a long time, Svenska Spel has monitored the development of casino games on the internet. This gaming form is currently offered in the Swedish market by offshore, private gaming companies and attracts about 120,000-160,000 players in Sweden. Online casino games are considered to pose significant risks for gaming problems. Svenska Spel has made the assessment that this gaming can be moved to a healthier and safer environment, and that gaming problems will be reduced, if the Company offers casino games on the internet. Therefore, the Company has applied for a permit for this form of gaming.

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 2014 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 in Svenska Spel´s strategic target area Customers.  Read more about Svenska Spel´s gaming forms here.

Svenska Spel is to provide gaming forms that are 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 through ­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 rousing new or increasing interest in a game. The main purpose of channelling is to reduce gaming problems in society and the commercial aspect is of subordinate importance. Channelling is mainly used for those gaming forms that according to available research are to be considered the riskiest from a gambling addiction viewpoint. Examples of such forms of gaming include gaming machines and online bingo and casino games. Svenska Spel’s channelling must be carried out in a moderate and responsible manner. Among other things this means that Svenska Spel must always provide better customer protection than the unregulated alternatives available in the market. At the same time, most of these gaming forms where channelling may be relevant are relatively risky and it would not be consistent with Svenska Spel’s mandate, guidelines or permits, etc., to market these forms of gaming in an extensive and aggressive manner. Instead, the success of channelling builds on Svenska Spel having a competitive offering, on responsibility measures being effective and perceived as positive by customers, and on the Company being perceived as a professional, safe and reliable operator.

In 2014, among other things, Svenska Spel developed new VLT games on Vegas and renewed the slot machines at Casino ­Cosmopol. As mentioned previously, Svenska Spel has also applied to organise online casino games. Swedish customers currently have no alternative to the online casino games offered by unregulated, offshore gaming companies with private profit interests and which are outside the control and licensing of the Swedish authorities.

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 must 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 into tangible actions. Harmful effects in the form of gaming problems, 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 for each game of gaming problems 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 tangible measures to combat gaming problems 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 gaming problems.

During the year, Svenska Spel increased its offering of games known as live games. In addition, the Company also continued its ­initiatives to make the customer offering more attractive with the support of developed systems and services, and a modern IT infrastructure. These latter initiatives are expected to lead to increased possibilities for strengthening responsible gaming, enhancing customers’ gaming experience and raising cost efficiency. The Company’s support of research in the gaming area has continued through the grants made by Svenska Spel’s Research Council in aid of research into gambling addiction and preventive work to counter gaming problems. Furthermore, Svenska Spel has initiated a partnership with Lund University to fund a research position in addictive disorders with particular focus on gambling addiction.

To evaluate this part of the mandate, Svenska Spel follows, among other things, the stability and health of Svenska Spel’s customer base in comparison with other market operators, the proportion of Sweden’s population that perceive Svenska Spel as market leader in responsible gaming and the trend for players with gaming problems in society.

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

Svenska Spel should take a leading position regarding responsible gaming. Customer 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 for each game of gaming problems and the individual customer’s gaming behaviour. As far as possible, Svenska Spel’s tangible 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. Svenska Spel is already certified under the World Lottery Association and by the European Lotteries. The certification aims to assure the quality of the foundation and framework for responsible gaming efforts.

During the year, Svenska Spel increased requirements for obligatory registration. This means that, similar to the digital channels, customers must now register for purchases of the Company’s games at Svenska Spel’s retailers and on VLTs (Vegas). The registration requirements also mean that customers must set limits in terms of time and money for their gaming, and that customers can exclude themselves from gaming in all of the Company’s distribution channels. The overriding reason for Svenska Spel Swedish Game restricting possibilities for customers to anonymously participate in the games offered by the Company is to effectively prevent and counteract risks of the adverse consequences for individual customers, Svenska Spel and society in general associated with anonymous gaming. This pertains, in particular, to the risks of customers developing gaming problems and the risks of games being used for crime, for example, match fixing (manipulation of sporting competitions for financial gain) and money laundering. However, Svenska Spel will continue to offer a few gaming products with no requirements for registration, namely scratch lotteries and games at the physical casinos. However, visitors to the casinos are registered in accordance with the Casinos Act for the purpose of preventing and disclosing crime.

To assess the degree of danger with a game, all games are tested against the GAM-GaRD tool and then modified.

As part of the Company’s investments in responsibility, the Company has introduced more restrictive limits to stakes at retailers for sports games. The measures mean a limitation to how much a customer can use for gaming in parallel with limiting how much retailers can accept for a specific game.

As before, obligatory training in responsible gaming applies for all employees, retailers and partners. During the year, all employees underwent training in managing customers’ confidential information to ensure safety in the handling of Svenska Spel’s information about customers and customers’ playing.

The Company’s subsidiary Casino Cosmopol conducted ­dialogues with all casino customers between the ages of 20 to 24 that made 15 or more visits within a three-month period.

The Company has also continued its partnership with the Swedish Sports Confederation, special sports associations and the law enforcement authorities with the aim of countering match fixing. During the year, together with the Swedish Sports Confederation and the Swedish Football Association, Svenska Spel decided to fund a study by the Swedish National Council for Crime Prevention (Brå), which aims to survey match fixing in Sweden. The aim is to acquire knowledge about match fixing in Sweden, how match fixing works and the people involved. The study will be presented in autumn 2015 and will also lead to measures to prevent and combat crime.

To evaluate this part of the mandate, Svenska Spel follows, among other things, the stability and health of Svenska Spel’s ­customer base in comparison with other market operators, the ­proportion of Sweden’s population that perceive Svenska Spel as market leader in responsible gaming and the trend for players with gaming problems in society.

Svenska Spel must endeavour to provide a well-­developed 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 5,400 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. Casino games at physical casinos are available in Gothenburg, Malmö, Stockholm and Sundsvall. The casinos are open seven days a week with opening hours of between 12 and 16 hours.

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

A key aim of Svenska Spel’s marketing is to steer gaming from the unregulated market to the regulated market. Marketing comprises a key tool for achieving this.

The Company’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 customers are entitled to receive correct, easily accessible and easily understood information to facilitate informed choices regarding their gaming. 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 last three years. Unfortunately, the ban on marketing under the Swedish Lotteries Act, which applies to all unlicensed operators, is not upheld. Unregulated, offshore online operators currently account for the majority of game advertising in Sweden. Their investment increased further in 2014. The Company’s marketing may not result in an increase in social problems related to gaming. To ensure this, Svenska Spel continuously measures the problems that gaming is at risk of creating based on products and distribution channels.

The overriding requirements governing Svenska Spel’s marketing is set out in the conditions for the Company’s gaming permits. In 2014, the Swedish Gambling Authority developed these requirements in the form of separate conditions for marketing. The conditions require, among other things, that Svenska Spel’s marketing of games to customers should observe particular moderation and that advertising and other marketing efforts are not permitted to be intrusive or aggressive. During the year, Svenska Spel has also updated its own internal governance documents for marketing based on the new conditions.

Svenska Spel has also continued to take various measures over the year to ensure that the Company’s marketing is moderate and restrictive, for example, the Company has stopped marketing of Triss at the point of sale at gaming retailers. As before, high risk games, such as Vegas, casino games and poker are marketed extremely restrictively or not at all. The Company is also restrictive in terms of marketing to customers with risky gaming behaviour. The Company continues to give no bonuses or discounts on games. The Company has introduced an opt-in measure for the marketing of gaming services, namely, customers must give their agreement to receiving advertising from Svenska Spel. The Com­pany’s internal Ethical Council ensures that marketing is moderate and that it complies with the industry’s and the Company’s governance documents.

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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