Scrutiny of Norway’s state-owned gambling monopoly may escalate following regulatory enforcement actions against both Norsk Tipping and Norsk Rikstoto.

In the case of the former, the state-owned operator of sports betting, casino and lotteries, the firm is moving to implement a number of measures recommended by accounting firm KPMG.

Norsk Tipping’s Board commissioned the report earlier in the year after a series of technical errors occurred, chiefly around lottery draws, which have proven politically embarrassing for the company.

However, the company has been facing scrutiny in other ways, notably due to incidents of underage consumers gambling via its products. KPMG’s two reports have mapped out measures Norsk Tipping should take around competence, organisation, scrutiny of suppliers, and risk management.

“We are well underway in following up on most of the measures recommended by KPMG,” said Sylvia Brustad, Chairwoman of Norsk Tipping.

Brustad added: “The shortcomings are numerous and serious, and the board will be an active party in the work to implement the measures KPMG has recommended. Many of them we are already working on, since PWC pointed out many of the same weaknesses.”

Some dodgy draws

The abovementioned lottery draw errors led to fines against Norsk Tipping issued and upheld by Lottstift, Norway’s Lotteries and Foundation Authority.

A technical failure around the Super Draw in April led to a NOK 25m (€2.1m) penalty while an error around the Eurojackpot in June led to a NOK 10m (€851,443) penalty.

Both errors saw ticketholders incorrectly informed about their winnings, with some being told that they had won millions only to be told later that this was not the case. The incidents led to concerns that Norwegians may lose confidence in the competency of the state gambling system.

Looking back at these errors, KPMG has recommended a review of Norsk Tipping’s organisational model and culture and for better systems for developers and testers to be established.

Its two reports also argue for mandatory guidelines for the development, testing and operation of state lottery systems as well as mechanisms to ensure compliance with these standards.

On top of this, KPMG recommends a new system for supplier management including stricter requirements. Finally, there are recommendations around senior management and leadership – clearer requirements and expectations for leadership roles, and a general strengthening of senior management.

“KPMG’s assessment is that Norsk Tipping has not been sufficiently aware of the inherently high risk of critical technical errors,” Brustad summarised the report.

“Deficiencies in technological professional management and understanding of technical risk and complexity have, over time, led to deficiencies in technical competence, capacity and understanding of roles and responsibilities, as well as inadequate operational routines in development, testing and operations.

“We believe that the high pace of launching new products and services over a long period of time has come at the expense of quality assurance of our own and external IT deliveries.”

Norsk Tipping not wasting time

As well as business interests, Norsk Tipping may have some political incentives to get its house in order as soon as possible – and not just to safeguard against future regulatory penalties issued by Lottstift.

The country’s opposition party, the Conservative Party, has been mulling over whether to push for the abolition of the Norsk Tipping and Rikstoto monopoly – Rikstoto having also been hit with a penalty over AML failures last month.

Abolishing the monopoly would lead to the creation of a multi-licence system, something stakeholders like the European Gaming and Betting Association (EGBA) has been calling for for some time, and a process which is taking place in neighbouring Finland.

Vegar Strand, CEO of Norsk Tipping, shared that the firm has ‘not waited for the final report to initiate the measures, and no one here is in doubt that the work has the highest priority’.

He said: “There is no doubt that the report hits us hard as a company. We are now working purposefully to put the problems behind us, and we are on the right track.

“Of the 25 measures that KPMG has proposed, we are currently implementing 22. It will be demanding for the entire organization, but it is absolutely necessary to strengthen quality and rebuild trust.”