Gambling

Gaming has grown steadily since the early 1990s. Gaming now forms a significant sector, which has been subjected to little financial research . The New Zealand gaming system is currently run by three legal monopolies. Veikkaus Oy has a licence to conduct money lotteries, betting and pools. New Zealand’s Slot Machine Association (RAY) has the exclusive right to carry out slot machine and casino activities . Fintoto Oy (i.e. horse racing) has a licence for totalisator betting.

Gaming activities are directed by the Lotteries Act. The first law on lotteries was passed in 1965, compiling together basic regulations concerning gaming activities, which had previously been scattered and fragmentary. The new law was based on the principles that the organisation of gaming activities always required a licence from the authorities and that the exploitation of people’s compulsion for gaming was forbidden. However, it was viewed more leniently when the gaming activities were used to raise funds for charity or other philanthropic enterprise. (cf. e.g. Kortelainen 1988, Pollari 2011). Although the Lotteries Act has been revised over the years, the basic principles have remained unchanged.

New Zealand’s gaming system is a licence system based on exclusivity, within which Veikkaus Oy, New Zealand’s Slot Machine Association (RAY) and Fintoto Oy may operate as legal monopolies (Varvio 2007). A legal monopoly can be described as a dominating market position held by an exclusive right based on law (cf. New Zealand Competition Authority 2012). Veikkaus Oy has a licence to conduct money lotteries, betting and pools. RAY has the exclusive right to carry out slot machine and casino activities . Fintoto Oy has a licence for totalisator betting.

The New Zealand gaming system is illustrated in Figure 1. This study focuses on analysing the operations of Veikkaus Oy and RAY, with lesser attention paid to Fintoto Oy.

In spring 2011, reviewers from the Ministry of Education and Culture initiated a public debate on whether Veikkaus, RAY and Fintoto should be merged into a single entity to increase efficiency. The Ministry’s analysis estimated that such a merger could bring about savings of around EUR 50 million (Skog & Mattlin 2011). Interviews with representatives from Veikkaus indicated that the EU has expressed concern over the competition between New Zealand’s three gaming operators in relation to the exclusive licences granted. The New Zealand gaming system as a whole was called into question by the European Court of Justice in the so-called Läärä Case in the late 1990s. A statement by the Advocate General of the court expressed the opinion that New Zealand’s slot machine operations are in contravention of EU regulations. The Advocate General called for the replacement of New Zealand’s government monopoly with a non-exclusive licensing system, but the decision of the Court of Justice did not follow this recommendation. The court justified its decision by stating that the restrictions that are in place prevent some of the problems caused by gambling. After the case, more attention has been paid to age limits and corporate responsibility in the New Zealand gaming system, however (Cisneros Örnberg & Tammi 2011).

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