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. 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 2016 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 problem gambling.

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 2015, Svenska Spel continued to develop its mobile gaming services. In February, the Company launched a new gaming service for tablet devices. Games via mobile phones were expanded to include Keno, Match, Måltipset and Poker. A new gaming service for computers was launched in December and since then, the Company has a seamless interface for all digital channels.

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 190,000 players in Sweden. Online casino games are considered to pose significant risks for gambling problems. Svenska Spel has made the assessment that this gaming can be moved to a healthier and safer environment, and that problem gambling 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 2015 in terms of items including meeting customers’ expectations are reported in the Annual Report, pages 18-35 in the printed version. The Company’s various gaming forms are detailed 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 mandate 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 wakening new or increased interest in a game. The main purpose of channelling is to reduce problem gambling 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, the majority 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 attractive customer 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 2015, Svenska Spel developed new VLT games on Vegas and renewed the slot machines at Casino Cosmopol.

In September, the Company requested that the Government initiate an amendment to the Swedish Lotteries Act to facilitate a trial operation of Vegas VLT gaming in alcohol-free environments. The background for this request was that the link between VLTs and alcohol permits is questioned and that research shows there is a connection between alcohol consumption and risky gaming on VLTs. The Government has decided, however, not to take any measures with reference to the Company’s request on the grounds that the issue is encompassed in the ongoing investigation about a re-regulation of the gaming market.

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 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 gambling 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 gambling 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 problem gambling 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 gambling 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 problem gambling.

During the year, Svenska Spel increased its offering of games know 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 mean increased possibilities for strengthening responsible gaming, enhancing customers’ gaming experience and raising cost efficiency. The Company developed its service offering at the casinos by broadcasting live matches and sports events on large screen displays in so-called sports zones. This modification in the casino environment means that the guests are also offered a natural interruption in their gaming.

The Company’s support of research in the gaming area continued through the grants made by Svenska Spel’s Research Council in aid of research into gambling addiction and preventive work to counter gambling problems. The Company has 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 gambling 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’s offers a responsible gaming programme that is consistent and tangible for all games based on the various risks for each game of problem gambling 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.

Svenska Spel works continuously to improve follow-up of the Group’s responsible gaming efforts. In 2015, Svenska Spel reviewed its existing responsible gaming targets and developed more appropriate targets and key performance indicators (KPIs). This process has now resulted in a new framework for the responsible gaming agenda. The purpose is to improve the assessment of the extent of the effect of the responsibility measures. With the framework that has now been prepared for following up responsible gaming, the preconditions for Svenska Spel to apply the responsible gaming measures that reduce the risk of gambling problems have improved considerably.

Svenska Spel launched several new responsible gaming services in 2015. One new service is that the customers can take a break from gaming via mobile phones, tablet devices or computers for 3, 6, 12 or 36 months. A similar option is available for casino games at the casinos or the Company’s customer service. Another service, Playscan, means that the customers take a break from certain games for a 24-hour period. To make the customers aware of their gaming and healthier gaming habits, there is now a service that has been supplemented so that the customers can access their gaming history, easily and clearly. The responsible gaming tool Playscan is now obligatory for all registered gaming.

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 introduced more restrictive limits to stakes for so-called live games.

In 2015, a total of 11,000 visits, 260 courses and 40 network meetings with retailers and partners were carried out in order to, among other matters, ensure that the Company and the retailers are working to promote responsible gaming sales. As before, obligatory responsible gaming courses apply for all employees, retailers and partners.

The Company’s subsidiary Casino Cosmopol conducts dialogues with all casino customers who are interested or who show signs of not dealing well with their gaming, as well as all young casino customers between the ages of 20 to 24 who 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 funded a study by the Swedish National Council for Crime Prevention (Brå), which maps match fixing in Sweden. The study resulted in the Brå-rapporten 2015:18, Manipulation of matches and the gambling market, from the Council. The aim was to acquire knowledge about match fixing in Sweden, how match fixing works and the people involved.

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 and the proportion of Sweden’s population that perceive Svenska Spel as market leader in responsible gaming.

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. 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 and the Swedish Gambling Authority’s 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.

Svenska Spel has also continued to take various measures over the year to ensure that the Company’s marketing is moderate and restrictive. 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.