Addressing gambling harms by reducing the supply of electronic gambling machines: a comparative study of Italy and Finland – BMC Public Health – BMC…

The results are divided into two parts. First, we considered the justifications and expected outcomes of EGM reduction policies in Italy and Finland using the press material. In the second part, we considered the impacts of the EGM reductions on total consumption using financial figures.

The debate preceding the EGM reduction policy in Italy followed from a disagreement between the state and the regions regarding whether to adopt a state-level EGM reduction policy. As reductions had already been initiated by municipalities, the debate reflects a conflict of interests between the central and local administrations in Italy. The main stakeholders present in the Italian discussion were therefore not gamblers or gambling providers, but political actors at different administrative levels as well as journalists functioning as watchdogs of political decision-making.

The first article in the discussion (CS 6.4.2016a) reported Prime Minister Matteo Renzis announcement to reduce 30% of EGMs, including all non-casino EGMs. The justifications presented by the government were related to the social and health consequences of gambling expansion, as well as the requests of local governments. To reduce the risk of illegal machines, new AWPs would also function on a remote connection. However, on the same date, another article (CS 6.4.2016b) reported a suspicious change in the number of EGMs to be reduced. According to the Italian Stability Law, the calculated reduction of 30% should have been based on the number of machines registered in July 2015 (378,109) instead of the number registered in December 2015 (418,210). This difference was attributed to the lobbying power of the gambling industry. The article also noted that the wide availability of legal gambling does not necessarily prevent illegal gambling one of the most used justifications by the state to expand gambling [27] but it does increase state revenue.

The topic was picked up a few days later (CS 12.05.2016) in an article arguing that industry lobbies are so powerful that they change the course of the law. In a reply (CS 12.05.2016), the ADM (the Italian monopoly administration) clarified that the December 2015 date referred to the prohibition of issuing new permits for slot machines that are not substitutes for those in use. This claim was followed by a rebuttal by two journalists, arguing that this misalignment enabled the industry to pull over 40,000 old EGMs out of the warehouse, increasing the number of EGMs by 10.6% in 4 months. According to the article, this was another example of corruption in gambling policies. The same was argued in later reporting, pointing out that the stability law has not been followed by any implementing ministerial decree and the actual number of EGMs had increased (CS 16.11.2016; CS 08.04.2017).

In May 2017, discussion on EGMs was re-sparked following a new agreement resulting from the Permanent Conference to reduce the number of gambling venues and EGMs as well as to impose minimum distances between EGMs and sensitive places (such as schools or hospitals) (CS 05.05.2017a; b). The president of the national association of municipalities thought it was a good compromise (CS 05.05.2017a). However, in a more critical commentary by a journalist, the agreement is deemed unpresentable and unsatisfactory, as the suggested regulation was less strict than the local regulations already in place. The article also points out that anti-gambling movements were not satisfied with the agreement. Again, this unsatisfactory result was attributed to industry lobbying. The issue of minimum distances raised further discussion throughout the period researched, mainly from the perspective of local representatives demanding tighter restrictions (CS 09.11.2016; CS 07.07.2017).

Overall, items from 2016 are more openly in favour of heavy EGM reductions and critical of the state and industry lobbies. The need to reduce the number of EGMs was justified in terms of reducing poverty and social inequalities (CS 12.05.2016; CS 29.3.2017) but also the risk of corruption was noted (CS 16.11.2016; CS 08.04.2017).

In 2017, the reporting changed. Individual responsibility for gambling harms was highlighted in an interview about gambling treatment services (CS 28.05.2017), a researcher of the Istituto Superiore di Sanit (Italian National Institute of Health) underlining that the problem is not gambling itself but the relationship with it. The previously critical media appears to have accepted the compromise solution concerning EGM reductions. In the last openly critical item of the analysed period (CS 15.11.2017), a journalist noted that no government, either right or left, or even the media was willing to give up gambling proceeds. This may be part of the reason Corriere della Sera did not discuss EGMs further in 2018-2019. Another reason might be the policy decision regarding the extent of national-level reductions, although this is less likely given the important space given to the issue before. Only one press item was retrieved per year during 2018-2019 and neither focused directly on EGMs.

The negative financial outcomes of the reductions appear to have been taken for granted and were not explicitly discussed in the Italian newspaper data. At the same time, other measures, such as tax reform on EGMs winnings to increase state gambling revenue was later introduced (CS 25.10.2018).

Like the Italian case, the developments that led to EGM reductions in Finland followed from a longer discussion on EGM harms, but also from the justification of the Finnish gambling policy [36]. One of the legal justifications for the Finnish gambling monopoly is to prevent and reduce gambling-related harm (Law 2112.2016/1286, section one). However, the aggressive advertising campaigns of the monopoly holder and the placement of EGMs increased critical public discussion during 2018 and 2019 (IL 14.8.2019). In March 2019 (MTV3 20.3.2019), a citizen initiative was launched by experts by experience of gambling harms with the aim to remove EGMs from public spaces. In Finland, citizens can initiate a process for legal change by petition. In August 2019, the Minister of the Interior Maria Ohisalo also suggested looking into removing EGMs from public spaces (HS 12.8., 2019; MTV3, 12.8.2019).

As in Italy, the Finnish media was also initially critical of EGMs. However, unlike the Italian case, the debate in the Finnish press appeared to consider a wider network of stakeholders in EGM policy while the role of journalists remained marginal. The main proponents of removals were citizen activists (MTV3, 20.3.2019), researchers (HS 14.8.2019; HS 16.8.2019), and a few politicians (HS 25.11.2018). Their main argument was to reduce gambling-related harms particularly amongst lower income groups (MTV3, 12.8.2019; HS 16.8.2019). A citizen opinion poll from 31 August 2019, reported widely across the media (IL; KSML; YLE; MTV3; HS 31.8.2019) showed that 60% of Finns were willing to move EGMs from non-casino locations to separate gambling arcades. Some members of parliament (MPs) also supported removing EGMs from public spaces. Based on an opinion poll amongst MPs, those connected to the gambling monopoly Veikkaus were more likely to be against EGM removals than MPs without any relationship with Veikkaus (IS, 17.8.2019). One-quarter of Finnish MPs disclosed a connection with Veikkaus, either as members of the Veikkaus board or via their positions in associations benefitting from revenue generated by Veikkaus (IS, 17.8.2019).

The most vocal stakeholders against the removal of EGMs were representatives of the redistribution network (IL 15.8.2019; MTV3, 16.8.2019; HS 26.8.2019). In Finland, supermarkets, kiosks, and restaurants receive commissions for providing gambling products, including EGMs (YLE 15.2.2020; IL 15.2.2020). The main argument in support of EGMs was the revenue from machines particularly for smaller shops and restaurants and the ensuing effects on employment (IL 15.8.2019; HS 26.8.2019).

Following from this discussion, Veikkaus announced in September 2019 that it would reduce the number of EGMs during 2020 along with other changes to improve its approach to responsible gambling (HS 5.9.2019 KSML 5.9.2019). In October, Veikkaus specified that it would remove 3500 EGMs during 2020 and up to 8000 machines in total (IS 31.10.2019; KSML, 31.10.2019). The reductions would be conducted mainly by removing some of the machines from locations with a high number of EGMs (YLE 3.12.2019). The suggestion by Veikkaus was much inferior to the initial suggestions. Furthermore, and in contrast to the Italian case, the reductions did not target the number of resale points. This was probably due to the opposition of resellers. One representative of resellers stated that we now have five machines. You take away the two that make the least profit and replace them with one that makes more. The impacts will be minor (IS, 24.2.2020). Some criticism of the limited extent of the proposed reductions emerged from researchers (KSML, 31.10.2019), but reporting on this was limited. The suggestion of the monopoly holder appeared to be accepted in the media without further need for public discussion.

The remaining articles focused on the expected financial outcomes of the reductions. Veikkaus estimated that the planned reductions of EGMs, alongside other changes (reductions in marketing, mandatory identification in 2021) would reduce its annual gross gambling revenue (GGR) by approximately 150-200 million Euros as of 2021 (YLE, 31.10.2019; KSML, 31.10.2019). Reduced total consumption would also impact the revenue of beneficiaries and the redistribution network. Previous research has shown that 60% of Veikkaus GGR is directed to beneficiaries and almost 10% to the resale network [37]. Reductions are estimated to impact almost 2200 resellers (of 6300) (YLE 3.12.2019), some of whom also voiced concern over reduced revenue in media reporting (MTV3, 7.11.2019). Interestingly, impacts on the levels of gambling-related problems or harm were no longer discussed: all discussion on expected outcomes only focused on revenue and beneficiaries.

As discussed above, in both Italy and Finland, EGM reductions were justified in terms of public health concerns, but the amplitude of policies varied. In Italy, the aim was to reduce machines by 35%. In Finland, the initial plan was to reduce 18% of non-casino machines, but the aim later increased to 43%. The Finnish reductions did not reduce the resale points, as opposed to a 31% reduction of gambling locations in Italy.

In the following we present available data on the impacts of the reduction policies on total consumption.

The Italian data on the total consumption of EGMs focus on the reductions targeting non-casino AWP machines during 2016-2019. Figure1 describes the total reduction in machine numbers during the period while Fig.2 describes the reductions in venue numbers.

Total numbers of AWPs and VLTs in Italy 2016-2019

Total numbers of AWP and VLT venues in Italy 2016-2019

As shown in the figures, most reductions took place between 2017 and 2018. Overall, the number of AWPs had decreased by 35% and the number of venues had decreased by 31%, as planned. However, reductions targeting AWPs also translated into a 7% increase in the numbers of VLTs (a structurally more addictive type of EGM confined to gambling arcades). This shift suggests that while the overall numbers of EGMs declined in Italy, some machines were substituted with more addictive modern multigame terminals.

Figure3 shows the impacts of the AWP reductions on total GGR in 2016-2019 as well as the shares of the industry and state revenue as reported in the ADM yearly reports.

GGR, state, and industry revenue in Italy 2016-2019 in MEUR

The figure shows the main outcomes. First, the GGR, or total consumption, of AWPs decreased in the period 2016-2019 by 13%. The GGR of VLTs increased in the same period by 2%. Overall, the total consumption of EGM gambling therefore declined by only 6%, and not proportionately to the reduction of 35% in machine numbers. A possible explanation for this is that the AWPs targeted for removal were already not profitable and the highest producing machines were left in the market. Furthermore, a substitution effect from AWPs to newer VLTs has compensated some of the loss of GGR, although not fully. Substitution between gambling products is rarely complete. New gambling products substitute some consumption of existing ones, but also increase total market (see also [38]).

Second, state revenue (the surplus raised after operating costs) increased by 7% in the case of AWPs despite reductions, and by 44% in the case of VLTs. This observation also supports the substitution hypothesis. A shift towards VLT gambling increased overall state revenue. The increase in revenue is also explained by a pay-out reduction from 2019 lowering the return percentages of AWPs from 70 to 68% and the return percentages of VLTs from 84 to 83%. In the same period, industry revenues from EGMs declined.

The Finnish data obtained from Veikkaus only covers the initial phase of the reductions as the impacts of EGM removals were confounded by the impacts of COVID-19-related EGM closures after March 2020. The data were indexed by the gambling operator. Figure4 presents the indexed number of non-casino EGMs and the indexed GGR produced by non-casino EGMs between 2018 and 2020. The number of EGMs and the total GGR from EGMs in January 2018 are indexed at 100 and subsequent data points are calculated to show trends in the change.

Number and GGR of non-casino EGMs in mainland Finland, January-February 2018-2020

The data show that during the first 2 months of 2020, the number of non-casino EGMs had been reduced by 5%. The starting situation indexed at 100 refers to 18,500 EGMs in non-casino locations. The GGR of EGMs had also declined, but the regression suggests that the decline was connected to a longer-term trend of declining EGM gambling rather than the reduction. However, this was expected due to the limited scope of the reductions during the period of analysis. The impacts of theoverall reductions could not be analysed with thesedata due to the onset of COVID-19.

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