27 / 76
May/June 2016 // PUBLIC GAMING INTERNATIONAL //
27
J
ean
-L
uc
M
oner
-B
anet
D
irector
G
eneral
,
S
ociété
de
la
L
oterie
de
la
S
uisse
R
omande
P
resident
of
the
W
orld
L
ottery
A
ssociation
(WLA)
Following is a synopsis of the presentation made to the
audience at PGRI SMART-Tech on April 6 in New York. It
included a large number of slides that illustrated the points,
most of which are not included here. View the complete
presentation at
www.PGRItalks.com.
Edited by Paul Jason
THE CONTEXT IN EUROPE:
Theoretically, each jurisdiction has
an organized regulatory framework in place. It might include a
monopoly model, or a single license model, or a multiple license
model, or a combination of these. It is this diversity in Europe
that makes everything so challenging, especially from a regulatory
point of view. The good news is that effective regulations and
responsible gaming are increasingly important. Game portfolios,
advertising communication, and promotional methods are com-
ing under more and more regulatory control.
The problem is that licensees and authorized operators are fac-
ing fierce competition from offshore online operators who do not
comply with the laws of the jurisdictions in which they operate,
i.e. the “consumptive” markets where the players actually reside.
They may be legally licensed in the jurisdiction where they are
based, like Gibraltar or Malta, but they operate in other jurisdic-
tions where they are not legally licensed. Further, the jurisdic-
tions where they are licensed have a very low tax rate, sometimes
as low as 1% or 2%, and very low fees to acquire the license.
So that lower cost-base gives them a big competitive advantage
over authorized operators who pay higher taxes and comply with
higher standards of operation. Security, integrity, and responsible
gaming required in the regulated markets are much higher than
the offshore tax havens. Offshore operators do not comply with
rules that limit the kind of advertising, promotion, and market-
ing communications required in the regulated markets. And they
access the regulated markets via the low-cost and ubiquitous
channel of the internet. There are methods to block access to the
consumers of the regulated markets, but governments and the EU
Commission are reluctant to apply them. There are reasons for
that, most of which we may not agree with, but it remains a mat-
ter of fact that we have to deal with. In the U.S., you are getting a
taste of this kind of situation as it applies to Daily Fantasy Sports.
Imagine if DFS operators are able to convince state and federal
legislators that DFS is not gambling and should not be regulated
or taxed as gambling. Not only would that completely reshape the
whole world of sports-betting in the U.S., it would open the door
for creative operators to develop new play-styles and marketing
methods that deliver a games-of-chance player experience and yet
fall outside of existing regulatory statutes and restrictions against
cross-border commerce of gambling products. You may have seen
the ads for Publishers Clearing House that look like they are op-
erating a lottery. That is what has been happening in Europe, on
a much larger and diverse scale, for many years now.
That is why it is so important that the community of govern-
ment-gaming operators build a strong brand and differentiate
ourselves from others in the games-of-chance industry. Is Europe
in the throws of a disintegration of the state monopoly model for
lotteries? Yes and no. In theory the answer is “no,” but in practical
reality the market is opening up to new kinds of operators who
are disrupting the monopoly model that state lotteries and the
good causes they support rely on.
Direct competition from games-of-chance operators is increas-
ing, which means that we clearly must identify our strengths and
advantages to compete more effectively. Let’s compare the state
lottery model and the for-profit offshore gaming operators, and
try to identify our competitive advantages and how we can lever-
Forging a Future
for Government-Lotteries
in the Face of Increasing
Competition from For-Profit
Gaming Operators