Does the System Matter? Surplus Directed to Society in Monopolistic and License-Based Gambling Provision.

Abstract

The comparative advantages of license-based and monopolistic gambling regimes have been discussed in previous literature from the perspective of their capacity to prevent harms, but less is known about the ability of different regimes to produce public revenue. Gambling is nevertheless an important source of revenue for public service provision. The current paper compares figures from the financial statements of two monopolistic gambling providers in Finland (Veikkaus) and Norway (Norsk Tipping), to four license-based companies operating in the Italian market (Snaitech, Sisal, Gamenet and HBG gaming) to analyze how much surplus they contribute to their host societies and what kind of factors these amounts depend on. The results show that overall, the Nordic monopolistic operations appear more effective in terms of producing gambling surplus to society than the Italian license-based companies. This difference is analyzed in terms of game product portfolios, operating costs, and levels of normal profit. The role of operating costs appears to be the most important factor explaining the lower surplus generated by Italian companies. However, the bulk of these operating costs are directed to the redistribution network which creates employment. If these employment effects are considered, both licensing and monopolistic regimes appear similarly effective. We conclude by problematizing the use of financial effectiveness as a measure for good gambling policy. High surplus collected for societies is also related to high overall gambling volumes that go against public health objectives of reducing harms.