NBO Secretary General: Norsk Tipping-Rikstoto merger could bring “a lot of problems”

Norsk Rikstoto is struggling, according to critics. In 2023, Rikstoto contacted Norsk Tipping to investigate the possibility of a merger. This fall, the Ministry of Culture is expected to decide whether the two operators should merge.

Carl Fredrik Stenstrom, Secretary General of the Norwegian Online Gambling Industry Association (NBO), recently wrote about the proposed merger in Norwegian media. He argues that its financial benefits are far from certain, pointing to experiences in countries such as Finland and Denmark, where horse betting has struggled after being incorporated into broader gambling operations. Meanwhile, large parts of the Norwegian equestrian sector are skeptical of the merger.

Global Gaming Insider approached Stenstrom, a past contributor to the publication, for further insight into the proposed merger. He elaborated on his concerns about the process, its potential financial impact on horseracing and whether the interests of the sport are being adequately protected.

What are your main concerns about the proposed merger between Norsk Tipping and Norsk Rikstoto?

This merger is not up to Norsk Tipping and Norsk Rikstoto. I'm very critical of the process around this because it's not up to the two monopoly companies to decide. It's up to the Government and the politicians. And the operators spent significant sums of money on this project, including on reports.  Prior to this, we've had several reports in Norway looking into a merger between Norsk Tipping and Norsk Rikstoto, all coming from the Ministry of Culture. But this time, the process comes from the monopoly companies themselves. I find that very interesting. They are also, at the same time, very vocal in praising the monopoly system.

They need to respect the regulations. Their job is to provide gambling products to the Norwegian public; they are not a political instrument. So, what happens in 2029 if the Progress Party wins elections supporting a licensed model, and a new government decides to go that way? What happens then with Norsk Tipping and Norsk Rikstoto? Can we rely on them to remain neutral and accepting of the new regulation? And then they may have to compete with other organisations, like for example Française des Jeux and others. If they decide to merge Norsk Rikstoto and Norsk Tipping, I just have to say good luck, because they will face a lot of problems. Tote products are something totally different from what Norsk Tipping offers today.

We're going to have an election in 2029 in Norway. The largest political party in the polls at the moment is the Progress Party, with about 30% support. Of course, that can change. Nevertheless, there is a liberal wind in Norway. The Progress Party strongly supports a licensing model like those in Denmark, Sweden and soon Finland.

You have pointed to the 2017 merger in Finland as an example of what could happen in Norway. What lessons do you think Norway can take from the Finnish experience?

There was an interesting merger in Finland in 2017, when Veikkaus, RAY and Fintoto were put together. At the time, management from Fintoto got high-level positions at Veikkaus and had significant influence. They did their best to integrate Fintoto’s products into the Veikkaus system. The tote products also received good recognition on the Veikkaus site. And you can see where Finnish horseracing is today.

You can also talk to people who were directly involved in the process in Finland. They are not very positive about the merger, what happened and its consequences for Finnish horseracing. For instance, I spoke to one Finnish industry expert at a gaming conference in Norway in May. He warned Norwegian horseracing against taking the same step and moving into Norsk Tipping.

You also say the financial benefits of merging Norsk Rikstoto and Norsk Tipping are highly uncertain. What do you think the financial consequences would actually be for horseracing?

Norsk Rikstoto‘s turnover is decreasing. Racing turnover is also decreasing in other countries, like Sweden and France. So it's not only a Norwegian phenomenon.

But if you move Norsk Rikstoto's turnover into Norsk Tipping, you also have to consider Norsk Tipping's own turnover, which decreased last year for the first time in a long time. So Norwegian horseracing would receive funding from Norsk Tipping's results in the future, but if those results are also declining, there will be less money available, while more organisations will be competing for a share.

It is hard to believe that Norwegian horseracing will see an increase. In Finland, for instance, I think Suomen Hippos received 4% of Veikkaus' result, and that was not sustainable. They have to find a way to address this in Norway as well. And I don't think the Sports Federation in Norway will be happy about having another organisation receiving money and taking a share from them.

What would be the risks of changing or harmonising Norsk Rikstoto's loss limits with those of Norsk Tipping?

Norsk Tipping wrote to the Minister of Culture at the beginning of this process, stating that if Norsk Rikstoto is going to be moved to Norsk Tipping, it cannot be done without protecting Rikstoto's loss-limit rules, which are different from Norsk Tipping's. With horseracing, the loss limits are less strict. I think it is around 8,000 customers from Norsk Rikstoto who provide 49% of the revenue. That is public information from a PwC report. So you can imagine that tweaking the loss limits for those customers would have a huge impact.

Furthermore, in Norway, if you win more than NOK 10,000 at Norsk Tipping, the amount above NOK 10,000 is immediately moved to your bank account. So, if you win NOK 20,000 with Norsk Tipping, NOK 10,000 is moved to your bank account any day of the week. With Norsk Rikstoto, if you win NOK 20,000, the money stays in your betting account. You have to actively request that it is moved to your bank account.

So imagine how that works on a Friday, Saturday or Sunday, when most horse betting takes place, particularly from six to 10 o'clock. The money will be sent to your bank account, but you won't see it until the next banking day. So, for instance, if you win NOK 50,000 on a Friday, you're not going to have that money in your bank account before Monday. And that money is very important for Rikstoto and its horse-betting customers over the weekend, with Saturday being the most important day of the week.

Do you believe all stakeholders' interests are being protected in the merger process?

Early in the process, Rikstoto said the sports, trotting and gallop organisations would ultimately decide whether to move to Norsk Tipping. But now, that train has left the station, and they will not have a vote.

That is particularly significant given that the sports federation helped establish Norsk Rikstoto and horse betting has a long history in Norway. But now it seems like they are saying goodbye to that history.