Norway ‘losing control of online market’ due to rejection of state monopoly

The prevalence of a state monopoly has led to Norway ‘losing control of its online gambling market’ according to Maarten Haijer, Secretary General of the European Gaming and Betting Association (EGBA).

Under the current system, Norway’s two operators – Norsk Tipping and Norsk Rikstoto – are both state-owned, with the former responsible for lotteries and sports betting, whilst the latter holds primary authorisation for horse race wagering.

In an article posted on the official EGBA website, Haijer expressed his belief that it is ‘not surprising’ that Norweigian bettors are moving away from the state monopoly, instead looking to international operators which offer them ‘better choices and prices’ in comparison to the domestic system.

He stated: “It is estimated that 66% of Norway’s online gambling activity now takes place on international websites, meaning the country has lost control of over half of its online gambling market, is losing out on about 2bn NOK in additional tax revenues each year, and many of its gamblers are not protected by Norwegian laws. 

“This is a significant problem for ensuring the monopoly does what it says: controlling online gambling and protecting players. If Norwegians play with international websites there is no way for the state to control their activity or protect them.”

Making a comparison to the traditional Norse tale of Loki’s wager, Haijer noted that the mythological story made him ‘think of another fallacy’ with regards to Norway’s online gambling market.

“Norway justifies its monopoly under the premise that the state is better placed, than private companies, to control online gambling and protect players from problem gambling,” he remarked. “But this argument, like Loki’s Wager, is based on a fallacy: it’s a country’s regulations and consumer protections which control online gambling and protect players, not whether there is a monopoly or not.”

Describing Norwegian bettors as ‘internet savvy,’ Haijer outlined that the country’s gambling consumers are ‘sensitive to prices and innovation’ and as a result ‘actively search for greater choice and alternatives’ to those offered by the state monopoly – choices and alternatives that are easily accessible online.

Instead of a state monopoly, the Secretary General argued, Norway should instead implement a multi-licensing system, pointing to the models in Sweden and Denmark as successful examples of this.

“In a multi-licensed market, licensed companies must apply a range of regulations and consumer protections which are part of the local licensing rules,” he added.

“Compliance with these licensing rules is monitored and enforced by the country’s gambling regulator, ensuring that the responsibility for controlling the level of consumer protection remains with the authorities.”

The introduction of a multi-licensing model, he stated, would enable Norway to ‘significantly reduce’ the number of bettors shifting to international online operators from 66% to 5% within the first year of implementation.

Referring to the aforementioned Danish and Swedish markets, where state monopolies were replaced by a multi-licensing model, Haijer commented: “While the regulations in both countries are not perfect and can be improved upon, the introduction of multi-licensing allowed them both to significantly reduce the amount of their online gambling activity taking place on international websites and are now in a much better position to control their online gambling markets. 

“They’re now generating more tax revenues from online gambling and more of their gamblers are protected under their national laws, which is particularly important for addressing problem gambling.”

Explaining his belief Norway’s monopoly system does not protect the country’s gamblers any better than other European countries which utilise a multi-operator market, he claimed that ‘this brings into further question the success of the country’s monopoly model’.

By shifting to a multi-licensed sector and allowing companies to obtain license, the system would create ‘necessary competition and choice’ in order to encourage gamblers to continue to bet with domestic operators, rather than via international firms which fall outside of the supervision of local authorities.

This would, in turn, better protect bettors in Norway, as licensed companies would have no choice but to obey a ‘range of regulations and consumer protections’.

Compliance with these rules would be monitored and enforced by the appropriate regulatory body, which would ensure that ‘the responsibility for controlling the level of consumer protection remains with the authorities’.

Concluding his statement, Haijer said: “The time has come for Norway to have a fundamental rethink about how it regulates online gambling. It’s clear that Norwegians increasingly choose not to play with the monopoly, and it’s better to meet, rather than ignore, their demand for alternatives. 

“Experience shows us that online gambling monopolies inevitably fail, and Norway should look to Denmark and Sweden where multi-licensing – while not perfect – proved to be a much more optimum model for controlling online gambling. Only by doing the same can Norway correct the fallacy at the heart of its monopoly and failing online gambling regulation.”

Haijer had previously criticised Veikkaus, the gambling monopoly of Finland, for offering little benefits for both bettors and the government, and called on Finnish authorities to ‘fix’ the country’s gaming policy.

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