Primož Bohinc: Yes Sašo, gambling is always a sensitive part of business and our life in general where politics needs to be careful to meet the expectation of all parts of the society. And Slovenia is not different in regards to that. So, I think that's the reason why there is so much turmoil around this piece of legislation at the moment.
Sašo Papp: Okay, so new legislation is basically in Parliament and it's going to open the betting market if it's passed. But that's quite unusual. If we take a closer look at the neighboring countries as well as other European countries, we can see that a conservative approach to gambling is in general is the rule rather than the exception. So why would the Slovenian government want to go in totally the opposite direction?
Gašper Hajdu: Basically, Sašo, this is true to some extent, there are some euro countries that already practice the open market, as previously explained by Primož. However, there are still a lot of countries with basically a closed market approach. And in my opinion, this is due to the fact that as we all know, gambling is connected to certain risks, such as money laundering, gambling addiction and society as a whole has to be taken into consideration. And the state’s job is to mitigate this risk. And it's a simple, enclosed, smaller market or non-competitive market that is very much easier to control in a sense and that the tourists have more effect and there's less effort to be invested into regulating the market with fewer people in the administration and so on and so on. However, in this sense, I agree that this market has to be regulated. However, we have to look at what is going in practice. If you look for Slovenia numbers shows and clearly that there are a lot of Slovenians already using foreign betting providers and these betting providers are not regulated in any way by the Slovenian state. They do not pay taxes, they do not pay concession payments as this is mandatory in sports law, in the Slovenian sports lottery, and this cash flow simply goes past. I mean it goes around us and we don't have anything from it. So I think that opening the market would help steer some of the lost cash flow back to Slovenia. And as we will touch on a bit late later, it would also allow for the Slovenians consumers that are using these services now where the number is quite high to be protected by Slovenian laws and Slovenian authorities, which is currently not the case,
Sašo Papp: Primož what are the economic pros and cons of opening up the market in such a way? What will be the impact on the Slovenian economy if we decide for a less conservative approach, especially for, especially to the betting industry?
Primož Bohinc: I will start with the pros, Sašo because I think there are more things that we can list here. So in my opinion, the first and most important one is more choice for the consumers. But the second one, if we have more choice, this will lead to better offers, lower prices, better odds and more, for example, business in general. So when we see more business, we will see more taxes collected. When we open our markets, we see foreign investments. So, and as Gašper mentioned before, also a very important part of that is that government could control the financial flows better than in the situation we have now. So, there is always in gambling, there is a risk of problem gambling. So, but based on the research, there are 3-5% consumers who face problem gambling issues. And without any doubt society must help them. Part of the taxes collected to go to the programmes to help people with gambling-related issues. So we have also solution for that. It is estimated that Slovenians spend more than €300 million euros on foreign online casinos and bookmakers. On the other hand, the total revenue of Slovenian online casino operators and the only legal bookmaker, the Sports Lottery. is around 100 million. So, this data proves that the Slovenian stained loses a significant share of uncollected taxes due to the outflow of money abroad.
Sašo Papp: Yeah, that's a lot! We've touched upon the pros and cons for the economy. But what effect will this new, expanded and liberalized betting market have on the Slovenian consumer? Gašper the legislator will surely have to safeguard consumer rights in some way. Right?
Gašper Hajdu: Good question Sašo. Of course, consumer protection has the basic principles that has to be considered while talking about changing the gambling legislation. I believe that there is actually a risk that more people will start gambling. Well, we should not expect a significant rise, as might be argued with some people opposing of the liberalization of the market. I base my opinion on the fact that the number shows that international regional providers are already well known to Slovenian consumers: they're exposed to their advertising basically on each international sports event broadcast in Slovenia. So their entering the market will not have such a novel effect. This is something new that nobody knew about and that people will be coming through the door running. This is my opinion. But there is the other side of the story that the people that are actually using these services will now be able to use them in Slovenia and will be protected by the Slovenian legislation. And in this sense, I think that the current Slovenian legislation and the legislation which is proposed already has sufficient safeguards for the protection of consumers. There are self-ban options, bans on advertisement or, advertisement is really limited to only concession holders; there are programmes in place by the state through the, I think, the national health system, for people who have problems with gambling and I think that actually the liberalization of the market will increase consumer protection and not decrease it in a way that might be argued from some people. Because more people will enjoy protection of the state that are currently not protected.
Sašo Papp: Primož to what extent do we need state interference? What are the basic guidelines that should be set in new legislation? And where should, in your opinion, the state's interference stop?
Primož Bohinc: Sašo I have always advocated the lowest possible level of state interference in any business. The main task of the state is to adopt quality legislation and implement it consistently. Due to the probable perception of the general public that the gaming industry also has negative externalities, it could also be the task of the state to communicate it in the right way. The purposes for which selected gambling taxes are levied and to develop programmes to combat problem gambling. Everything else should be left to the laws of the market and competition.
Sašo Papp: Okay, I guess you both have an idea which betting companies are looking into the Slovenian market? What do you think who is more interested: EU or Balkan companies and why? Primož?
Primož Bohinc: As per my knowledge, all major European betting companies are interested in entering the Slovenian market if and when the legislation changes. I also got directly approached by some regional companies from the Balkan region, which desire to start a business if the market opens to the foreign capital. Due to the historical ties and knowledge of the business environment, the Slovenian markets is certainly more interesting for online casino embedding operators from the Balkans. It is also interesting to note that the majority of the users of gaming products in Slovenia demographically come from the countries of the former Yugoslavia. So they have roots there or have immigrated to Slovenia. Because of this connection and because it's much easier to reach them with advertising, they are better equated with brands originating from the Balkan countries than to those from western Europe. Despite its small size, the Slovenian market will also be interesting for major European operators who are looking for their opportunity and want a piece of the pie in all regulated markets.
Sašo Papp: Gašper, do you want to add something?
Gašper Hajdu: I agree with Primož, I think that he covered everything here. We are seeing the same in our line of business. And there are people and companies that are patiently waiting to see what's going to happen with the law that is currently pending in parliament.
Sašo Papp: So important global and regional players, both, all companies are interested?
Primož Bohinc: Sašo, Slovenia is not as small as it seems, you know? So it's all, it's interesting for business in all the segments of business in general, so I expect that we will see quite high interest among online casino and sports betting operators.
Sašo Papp: Well, this brings me to the last topic of this episode. Slovenia has at the moment only two organizers of classic gambling and we know that the profits generated by those two organizers are used to finance various sports and nonprofit organizations. We all know that the global players you have mentioned before quite often also sponsored various sports. The question that comes to mind is why do we allow sports organizations to find their finances on the market, rather than through public financing system? Do you have any thoughts? Primož?
Primož Bohinc: Sašo, as you know, sport is business. A global business. And it would be fitting to allow business entities, in this case, gambling organizers in any form to directly connect with sports club themselves and provide them with the sponsorship funds that will enable them to develop the sport, compete or even survive without unnecessary bureaucracy and state interference. It would be urgent to change the law to allow gambling advertising as well. Gambling is in no way a different business than, let's say, the production of alcoholic beverages or the like. And Slovenia should follow these trends. In general, the legislators should liberalize the gaming market and allow advertising. In particular, sports and sports betting are two inseparable segments where such liberalization would achieve enormous synergies.
Sašo Papp: Okay, Gašper, anything to add here?
Gašper Hajdu: As Primož already mentioned advertisement is banned in Slovenia, because only concession holders are allowed to advertise in Slovenia. So currently this is only the Slovenian Sports Lottery. And if we allow more players on the market, I think there will be more funds available to sport and sporting organizations, which will not only have an economic, but also a social effect on the whole Slovenian community, which we all know, it's very much a sporting, we are very much a sporting nation. So, and at the end of the day, if we look at the conditions sports organizations or sportsmen and women have, they're not really comparable to ones from big countries, which allow sponsor funds to come into base sports organizations. I have one question for Primož for the end. Are you basically trying to, are you looking forward to the complete liberalization of the market? Do you think that it has to be a bit limited or fully open?
Primož Bohinc: In my opinion, you know, all the limitations, bring us to, let's say cases where people try to avoid, you know, and break the rules. So in my opinion, because I see gambling in general as nothing but normal business. So I would suggest that Slovenia liberalizes this in a way that all these operators will be allowed to participate in sport and to pay the sports clubs the amount they want. So in my opinion, there should be no limits for that.
Sašo Papp: Dear Primož and Gašper, thank you very much for this debate, which was so eye opening in many ways, it was a real pleasure talking to you. Let's wait and see how the story will develop in parliament. To all of you listening to this episode of At Center Stage, thank you for being with us. If you missed our previous episodes, you can always find them on the CMS website and in all major podcast apps such as Apple and google podcasts and Spotify or wherever you listen to your podcasts. Until next time, stay safe and enjoy.
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