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Introduction

Gambling has been used for centuries to finance public projects in Europe and it continues to produce crucial funding for welfare states and welfare projects. Welfare benefits in a jurisdiction accrue either directly through taxation and state-run operation, or indirectly in promoting economic development. The funds collected via gambling operations may be directed to state coffers or to earmarked purposes, such as sports, culture and welfare projects organised by state actors or civil society organisations (CSOs).

However, these profits are not without problems. Previous research has questioned of whether gambling is an ethical or even a cost-effective way to fund public projects (Nikkinen and Marionneau 2014; Adams 2016), and the case studies reported in this book raise similar concerns. Taxes collected through gambling have been declining in countries such as Italy (Rolando and Scavada, this volume) and Slovenia (Besednjak Valič and Macur, this volume), despite increased availability and participation. Vested interests in gambling proceeds have resulted in inconsistent regulatory practices in Germany (Loer, this volume), whereas in Austria and Britain (Bereiter and Storr; Orford, this volume) expansive policies are not in line with the aims of preventing gambling harm. A political scandal in Poland (Wieczorek and Bujalski, this volume) and concern over consumer protection in Norway (Borch, this volume) have recently led to restrictive legislative change.

In this final chapter, we raise the question of whether gambling is or can be consistent with the idea of the European welfare state and welfare production. To this end, we focus on three contradictions in existing ties between gambling and European welfare states.

The first contradiction relates to different justifications used in state-operated gambling. Justifications for gambling provision differ based on whom they are directed at. While European Union (EU) member states justify their gambling provision to EU institutions in terms of consumer protection and prevention of criminality, charitable causes and welfare projects are used to increase its legitimacy among local consumers. These discourses may even be counterproductive as they have the potential to divert from the actual motivations and vested financial interests behind gambling provision.

The second contradiction relates to how gambling is regulated. Gambling can be regulated and deregulated in a variety of ways, and governments take on many roles (cf. Adams 2008). However, the more restrictive models are not always the most effective. This is due to a narrow understanding of gambling harm as individual-level problem gambling that could be solved with ‘responsible gambling’ policies or ‘consumer protection measures’. A wider understanding of gambling harm, including not only the individual but also societal and systemic issues is crucial. To this end, more important than the choice of a regulatory regime appears to be the clarification of government’s role: is it primarily to control, regulate, promote or facilitate commercial gambling (also Dombrink 2009).

The third contradiction suggests that gambling is not in line with the idea of welfare ethically or even financially. The contributions of Orford, Sulkunen and Järvinen-Tassopoulos and Eräsaari introduce conceptual tools to enhance understanding of the difference between the public good, which focuses on raising revenue for public projects, and the ‘good society’ the ‘common good’, or the ‘public interest’, which are related to the overall values and ethics of gambling provision. These ideas highlight the need to consider the risks and side-effects of gambling for the whole population. Attention should be paid to the institutions involved, instead of focusing merely on its financial benefits. However, even the financial benefit of gambling provision to societies should be questioned and not taken for granted.

Justifications

French sociologists Luc Boltanski and Laurent Thévenot (2006) have defined justifications as acceptable and meaningful principles that are used to explain action. Justifications can therefore differ based on whom they are directed at. In sociological theory, justifications are close to what Mills (1940) has called vocabularies of motive. Other theoretical approaches, including the neutralisations theory by Sykes and Matza (1957) or the Moral Disengagement model by Bandura (2002) have come to similar conclusions from a socio-psychological perspective. Previous research on the policy arguments behind gambling legislation has highlighted the financing of sport, the arts and social programmes, the directing of consumption away from illegal towards legalised gaming, and the need for revenue as the most common arguments governments use to justify gambling provision (Marionneau 2015; Chambers 2011; Clotfelter and Cook 2009; Eadington 2008; Kingma 2008).

In European gambling studies, the term ‘justification’ has been more specifically used to refer to the rulings of the Court of Justice of the European Union (CJEU), according to which member states must provide an objective justification if they wish to restrict their gambling markets. These are the prevention of fraud and other criminal activities, consumer protection, maintaining social, moral and public order and preventing gambling provision from becoming a source of private profit. According to Planzer (2014), the CJEU has been very lenient in accepting justifications of the public interest as long as such interest is not economic, fiscal or protectionist. Raising public revenue is therefore expressly excluded as a valid justification, and the financing of social and charitable activities can only be an incidental consequence of gambling.

CJEU rulings constitute the basis of EU-wide regulations on gambling, but the European Commission can also influence national gambling policies through recommendations or by initiating infringement proceedings or sending out letters of formal notice. In 2014, the Commission announced common guidelines on consumer protection and the prevention of money laundering in online gambling (European Commission 2014). The countries discussed in this book are European Union member states (with an exception of Norway), and are therefore bound by these regulations. Norway is part of the European Economic Area (EEA) and is required to follow similar rulings of the EFTA Court (Planzer 2014). The future status of Britain is still open. EU member states have adjusted their legislative discourses to better adapt to CJEU requirements for a valid justification (Marionneau 2015). We call the justifications that member states direct at the European institutions legal justifications.

However, the power of the European Union over national legislation is not absolute. Gambling has been purposely excluded from EU laws such as the Services Directive, and the harmonisation of gambling legislation is currently off the European Commission’s agenda (European Commission 2012; Littler 2011). Furthermore, both the CJEU and the non-binding nature of recommendations on consumer protection give considerable leeway to member states in terms of gambling policies. Some countries with a long monopolistic tradition of gambling provision, such as Sweden and Germany, are currently looking into introducing a licensing system in online gambling (Cisneros Örnberg and Hettne; Loer, this volume), whereas the process has already been accomplished in countries such as France, Italy and Spain (Marionneau and Berret; Rolando and Scavada; Becoña and Becoña, this volume). However, as the cases of Norway and Poland (Borch; Wieczorek and Bujalski in this volume) show, EU and EEA states may also choose to restrict their gambling markets if the political will or societal pressure is strong enough. EU Member States may even use EU demands as a justification for regulatory change aimed at protecting their own interests despite the lack of pressure from the EU.

Justifications therefore differ depending on whether they are directed at the European Union or at local citizens. Although economic reasoning is excluded from legal justifications, gambling provision is tightly linked to economic interests in national contexts. Gambling revenues are used for a variety of public purposes and as a motor for economic development. These funds have played a significant role in making gambling socially more acceptable, which is why we call justifications used in national contexts welfare justifications. The chapters by Gidluck, Casey and Orford (this volume) use the term alibi to describe the same process. The term was introduced by Kingma (2004, 2008) in his empirical analysis of Dutch gambling policies. According to Kingma, the alibi model depicts gambling as an intrinsically controversial activity that can only be legalised to fund benevolent purposes or to avoid illegal markets.

Unlike legal justifications, welfare justifications differ depending on the type of game and offer. Casino operation tends to be legitimised in the context of tourism development, notably in Slovenia, France and Spain (Besednjak Valič and Macur; Marionneau and Berret; Becoña and Becoña, this volume). Lotteries are introduced to raise money for public projects (Gidluck, this volume), whereas bingo games help with charity fundraising (Casey, this volume), although the potential for either to create net additionality can be questioned (e.g., Gordon 2004; Marionneau and Nikkinen, 2017). Welfare justifications also differ depending on how gambling funds are redistributed. The need for legitimising gambling to consumers in terms of public proceeds may be less acute in jurisdictions in which most of the proceeds go to state budgets than in cases in which gambling money is earmarked for concrete, relatable causes or CSOs (see Marionneau 2015). Such projects may provide a welfare justification for gambling provision that anonymous state budgets cannot.

Theoretically, justifications differ from motivations. According to social theory, justifications are used to make the social order acceptable, rather than being the motivating force (Boltanski and Thévenot 2006). There may well be other motivating forces beyond them, and the use of legal and welfare justifications can divert discussion away from these realities. The production of gambling is more profitable than the production of other commodities, mainly for reasons concerning monopoly-production rights, addiction surpluses and low cost related to the sales price (Young and Markham 2017). This ‘rent’ (Krueger 1974) is a surplus of money over normal profits, for which beneficiaries and operators compete, creating path dependences and vested interests (Paldam 2008; Adams et al. 2009; Borrell 2008; Loer, this volume). European countries attempt to maximise their share and to protect established interests via a diversity of regulatory regimes that may or may not be optimal to the consumer or to citizens. This stifles the wider debate about the role of gambling in European societies (see also Sulkunen et al. 2018; Miller et al. 2014).

Regulations

Regulations are the combination of law, supervision and evaluation, and it can be organised under a variety of institutions and configurations. There are as many forms of gambling regulation as there are jurisdictions. Regulations differ at least in terms of how gambling is defined, the kind of administrative level on which it is governed, the kind of control structures that are in place, how the revenue is redistributed and the authorised regimes of gambling provision. These differences are a result of different understandings of the objects of regulation and the division or power and responsibility. Governments take on many roles in regard to gambling, ranging from law maker, law enforcer, provider, promoter, monitor and policymaker to revenue collector, harm alleviator and broker (Adams 2008), but some of these tasks can also be attributed to other actors or institutions.

How gambling is defined determines the conditions under which it can be provided. In Slovenia (Besednjak Valič and Macur, this volume), for example, the distinction between ‘classic games’ and ‘special games’ has historically defined who can participate in gambling. Austria (Bereiter and Storr, this volume) and Poland (Wieczorek and Bujalski, this volume) do not define sports betting as a ‘game of chance’, resulting in its more liberal regulation. In Britain, different categorisations of EGMS allows underage players to gamble (Orford, this volume). Different definitions also affect regulations on marketing in Poland. In the case of online charity bingo, the definition that bingo enjoys as a charitable game has allowed charities to engage in increasingly commercial practices and to offer riskier games without much criticism (Casey, this volume).

Regulations take effect on many levels. Federal countries are free to regulate gambling either on the provincial level, as has been the case with gambling machines in Austria (Bereiter and Storr, this volume) or at the federal level, as in Germany (Loer, this volume). Other countries, such as France Spain and Slovenia (Marionneau and Berret; Becoña and Becoña; Besednjak Valič and Macur, this volume), have centralised gambling in state hands, but regions and municipalities enjoy significant power over licensing and taxing gambling. Federal or international regulation may prevent jurisdictions from competing for comparative advantage by introducing new games or reducing tax burdens on providers (Sulkunen et al. 2018). All jurisdictions, regardless of their regulatory structure, seem to face similar challenges related to balancing between safeguarding established interests in gambling revenue and maintaining consumer protection. The level of regulation does not appear to affect this, but tensions between regions and the central state may result in competition for gambling funds, as has been the case in Spain (Becoña and Becoña, this volume) and Britain (Orford, this volume).

Regulations also depend on the kind of control structures that have been put in place to secure these interests. Given its multifaceted nature, gambling relies on the competences of several administrative branches, including ministries that regulate it, benefit from it and seek to prevent gambling-related harm. Gambling is typically regulated by Ministries of Finance or their subsidiary departments. Previous research has shown that the choice of controlling body tends to depend on which arguments were used to legalise gambling, ranging from promoting tourism to financial concerns and preventing criminality (Polders 1997; Sulkunen et al. 2018). The ministries that deal with the consequences, focusing mainly on problem gambling, may be the same as the control bodies, such as in Spain (Becoña and Becoña, this volume). More typically, however, consumer protection is organised under ministries responsible for health and social issues. The ministries that benefit may be the same as or separate from the controlling ministries, depending on the level of earmarking of gambling funds. Sometimes the interest in controlling actors seems to override concerns for public welfare, as exemplified in the case of who is allowed to offer a charity lottery in Spain (Lotnext 2016).

Finally, jurisdictions vary in the kind of regulatory regime they have in place. All or some gambling operations may be centralised around a state-operated monopoly, as has been the case in Norway and increasingly in Poland (Borch; Wieczorek and Bujalski, this volume) and with regard to national lotteries (Gidluck, this volume). Gambling provision may also be open to private operators via licensing or concessionary systems. These are becoming particularly popular in online environments, in which restricting competition is more difficult, but many casino and sports betting markets are organised under some form of licensing. In some cases, gambling is operated under a charity system, bingo being a good example (Casey, this volume). Countries such as Sweden, Britain and Spain also allow charity lotteries to operate (Gidluck, this volume).

It seems from the examples discussed in this book that none of these regimes are more or less effective in terms of consumer protection and preventing criminality. Even seemingly restrictive monopoly regimes, such as those in Austria and Poland (Bereiter and Storr; Wieczorek and Bujalski, this volume) may be expansive, or they may lack adequate tools to control the illegal market. On the other hand, analyses from Sweden and Germany (see Cisneros Örnberg and Hettne; Loer, this volume) show that opening online markets to licensing systems may help to control the illegal market, although the same does not seem to apply to land-based gambling (Svenska Spel 2014). What is more important than the choice of regulatory regime, appears to be the effective prevention of gambling harms and separately from mere fiscal interests.

The aims of gambling regulation should be to protect consumers and societies from gambling harms. However, due to the requirement to legally justify their policies in terms of consumer protection, European countries have come to depend on the negative externalities of gambling to maintain their protectionist regulations (Littler 2011). Problem gambling, in particular, is used to justify the existence of national gambling monopolies, or to restrict cross-border offerings (Cisneros Örnberg and Tammi 2011; Kingma 2008), but it also overshadows the wider understanding of gambling harm that includes not only problem gambling, but also crime, health issues, family problems, economic difficulties and equality questions (Sulkunen et al. 2018). Gambling is a regressive tax that harms different populations than those it benefits. Overall, gambling participation is most prevalent among those who have a lower income, are unemployed and have a lower level of education than the general population (e.g., Costes et al. 2015; Orford et al. 2010; Kramer 2010). The benefits of gambling, on the other hand, tend to go in favour of the middle strata of society.

When the funds are used to subsidise sports, gambling proceeds tend to favour larger and more important entities, as described in the chapter on France (Marionneau and Berret, this volume). This not only privileges more affluent participants, but also diverts attention from the need to encourage grassroots participation. The subsidising of culture from gambling funds benefits only the small percentage of the population who go to the opera or the theatre, the kind of high culture that receives the bulk of the available resources. Even more problematically, when gambling funds are used to subsidise the treatment of problem gamblers, treatment professionals and researchers may have a financial interest in the existence of gambling problems (Sulkunen; Orford, this volume). This, again, raises questions regarding the efficiency of preventive policies.

Welfare

Defining gambling as a service that can be limited to protect consumers contrasts directly with the utilitarian understanding of the overall benefit of gambling to individuals or societies, and instead highlights the damage inflicted. Although government-sanctioned gambling could be considered acceptable in terms of the public good, it may prove to be more problematic from the perspective of welfare. Modern welfare regimes in Europe were based on citizens’ social as well as civil and political rights (e.g., Marshall 1950; Esping-Andersen 1990; Kaelble 2004). Although welfare states are political as much as ideological constructions, they have had a significant impact in reducing poverty, settling class conflicts and improving the quality of life in European countries. Limiting rather than promoting the consumption of gambling would therefore better reflect this ideological basis, particularly given that based on available research, the total-consumption model appears to apply to gambling: increases in the total consumption of gambling also seem to increase gambling harm (Sulkunen et al. 2018). National gambling regulations are justified in terms of protecting consumers, but the discourse remains mainly cosmetic, aimed at providing an acceptable justification to protect national markets and national revenues. A welfare approach would rather protect citizens by reducing gambling participation and thereby the associated problems.

Several terms have been put forward to describe such an approach, but also to separate it from financial motivations, including the common good (Järvinen-Tassopoulos and Eräsaari, this volume; also Nikkinen and Marionneau 2014), the public interest (Sulkunen, this volume) and good society (Orford, this volume) . These concepts highlight the wellbeing of populations rather than the monetary benefit of societies in drawing on the idea of empathy and joint responsibilities, but they are not completely interchangeable. The common good as a concept seems to be more applicable in contexts in which gambling directly benefits charities or CSOs. Järvinen-Tassopoulos and Eräsaari (this volume) describe the common good as a ‘gift’ that assumes some return. The common good approach also expects the state to act morally (Nikkinen and Marionneau 2014) which may explain why the concept is seen by some as moralistic (Planzer 2014; Sulkunen, this volume).

The public-interest model is more political, and perhaps more appropriate in state-run welfare provision. Unlike the common good, it does not expect a moral position or absolute criteria that should be followed. This may run the risk of making it merely descriptive and less open to offering policy goals or models towards which policymakers could strive (see also Wright and Head 2009). ‘The good society’ argument is more ethical, as it expects the government to take its duty to protect the wellbeing of its citizens seriously. These three concepts highlight the risks and side-effects of public-revenue collection, and to involve all relevant institutions in decision-making on gambling, not only those with fiscal interests based on the fiscal good. This would mean emphasising public health, crime prevention and welfare institutions instead of fiscal interests.

The fiscal interests in gambling are nevertheless manifold. They may be hidden, as in the case of legal justifications to European Union institutions, or they may be overt, as when they serve as welfare justifications for local citizens. They may also be implicit in terms of stabilising coalitions of beneficiaries, which may well not be obvious to the public. This connection between gambling and public finances could equate its provision to the idea of advancing the public good through its capacity to generate funds for societal purposes, but it also has the potential to create a vicious cycle we have called the welfare cycle (see Fig. 16.1, cf. Sulkunen, this volume).

Fig. 16.1
figure 1

The welfare cycle

Full size image

Comprehensive European welfare services have been built on the premise that they tax their population and corporations operating in their territory efficiently. Welfare states have also taken on new roles beyond basic services, further increasing revenue needs. The expansion of gambling has been one solution to these revenue needs, alongside with increased sales and excise taxes (see Nikkinen, Egerer and Marionneau, this volume). Expanded gambling provision creates a variety of social and individual harm, but also broader systematic problems and vested interests (Orford 2013). When gambling is legalised and allowed to expand, it is more difficult to restrict it afterwards. There is always a demand for ‘more evidence’ when gambling-related harm is discussed (Cassidy et al. 2014).

Countries can direct gambling profits to state treasuries or to earmarked and designated purposes (Nikkinen, Egerer and Marionneau, this volume). Both models create different kinds of vested interests. On the one hand, the high-level dispersion of competences may result in benefit maximisation at the cost of increased problem gambling. This is particularly the case when associations and charities join state bodies as strong stakeholders as has been the case in Germany (Loer, this volume). On the other hand, centralising both the regulation and benefits of gambling under the same Ministry may create conflicts of interest, as illustrated in the chapter on France (Marionneau and Berret, this volume). However, given that the state budget relies on a number of other sources of revenue apart from gambling, interest in revenue maximisation through this channel may be weaker than in systems with stakeholders that depend on gambling for the majority of their revenue. Regardless of the model, vested interests risk turning into negative effects on the quality and efficiency of service production (see Loer; Orford; Gidluck; Rolando and Scavada, this volume).

Welfare services become increasingly costly to maintain, putting further pressure on taxation. This may in turn further erode the tax base as corporations choose to relocate to less costly jurisdictions, and unemployment increases, putting further pressure on welfare states to offer welfare services. These systemic processes have not been discussed in previous gambling literature and require further studies, but the welfare cycle does suggest that gambling is in fact contrary to the idea of welfare, not only socio-ethically, but also in a macro-economic sense.

Conclusions

This concluding chapter has focused on three contradictions related to justifications, regulations and the idea of welfare, topics with which European jurisdictions seem to be struggling to find the right balance between regulating and obtaining proceeds from gambling. Although the evidence remains limited, and conclusions should be drawn with caution, the analysis does imply that there may be some general guidelines that policymakers should follow to develop gambling policies that would be in line with welfare.

First, legal justifications should not be separated from the realities of the market. The need to justify national gambling policies under the terms set by the CJEU has had the unintended consequence of distancing the discourses utilised in gambling legislation from the real motivations as well as the welfare justifications used in national contexts. Kingma (2008) argues that the European Union’s focus on the single market has had the paradoxical effect of pushing member states towards more restrictive rather than more liberal gambling policies. This appears to be true in terms of safeguarding national markets from outside competition. Consumer protection and criminality are cited as reasons for restricting gambling, or protecting the national offer. However, at the same time these very arguments are used to expand the markets of national providers in the name of channelling. This creates a confusing situation that could be resolved in two ways: The first option would be to allow financial justifications that appear to be the true reason behind protectionist gambling policies. A recent decision of the European Commission to close infringement and complaints procedures in the gambling sector may hint in this direction (European Commission 2017). The second option would be to follow the welfare argument and harmonise European regulatory frameworks based on common values and goals that already exist, and are apparent in the justifications that have been accepted in CJEU rulings. This could be accomplished by applying an instrument known as the open method of coordination, which is a commonly used tool in EU social policymaking. It involves agreeing on similar goals, but leaves the means of achieving them to the member states (e.g., Zeitlin et al. 2005; Heidenreich 2006). Such a harmonisation would have the advantage of not only resolving the contradiction between different justifications, but also avoiding unfair competition in cross-border gambling and indirect pressure on member-state autonomy (cf. Leibfried and Pierson 2000).

Second, in terms of regulations, financial interests should be separated from the prevention of gambling harm, understood in the wide sense beyond problem gambling and the power of financial stakeholders should be reduced. Inherent in gambling provision are contradicting interests and monetary stakes. This creates conflicts of interest as well as moral inconsistency. None of the European models presented in this book seem to be free of this type of interest-group politics: the aim of gambling regulation should be to prevent harm rather than being subject to lobbying or even promoting its own interests over those of its citizens. There are a number of regulatory arrangements that could achieve this. The evidence presented in this book seems to indicate that both monopolistic and licensed markets may be effective or ineffective. Regulation is also effected at federal, state or local levels. More important than how regulation is organised is that it remains independent not only of beneficiaries and gambling providers, but also of state financial interests. The key is therefore to better define what the role of the government should be in gambling—beneficiary or regulator.

Third, gambling policies should be aligned with European welfare-state ideology, not only in providing funding for welfare projects, but also in promoting social welfare by protecting the whole population. This, again, only seems plausible if financial interests are separated from gambling policies and the prevention of harm. Good causes can be supported in other ways than through gambling. One option would be not to earmark gambling proceeds for beneficiaries in that jurisdiction, but for international relief operations or development aid. Such a configuration would break the welfare cycle in which money only circulates between the same stakeholders. For example, in Finland, funds used in development aid roughly equal profits from gambling (both approximately 1.1 billion euros within a year). This would allow states to use other, non-gambling-derived funds, to address gambling harms similarly to alcohol and tobacco, while reducing the importance of vested interests. By reducing the pressure to promote gambling participation, such a separation between gambling and the welfare state might also reduce the total consumption of gambling in the population (Sulkunen et al. 2018) and align gambling provision with ideas of the common good or the public interest. This type of theoretical debate is crucial in terms of finding the right balance and best-practice policies in future gambling regulations.