Case: Danske Spil

Interdisciplinary Project Danske Spil

2nd semester project

Courses: Software Design & Software Construction

January 2007

2. semester projekt forår 2007 1 Case-decription.

There is a fast development related to the maked for gaming. Every person in Denmark uses app. 6000 kr. on games each year..The goverment institution Danske Spil (before Tipstjenesten) is teh main company on the danish marked. But competition is resing.

The company homepage is at http://www.danskespil.dk/.

Company decription

Danske Spil was founded on 21 July 1948, as Dansk Tipstjeneste A/S, following the passing of a special Danish Pools Act by the Danish Parliament on 9 June 1948. Shareholders' equity today totals DKK 427 million. Danske Spil's shareholders are the Danish State (80%), the Danish Sports Federation (DIF) (10%) and the Danish Gymnastics and Sports Association (DGI) (10%).

The games For more than 40 years soccer pools - Tips 1X2 - was Danske Spil A/S's only game.

However, continuous legislative changes have enabled Danske Spil to offer a large number of different options within five main groups - number games, sports games, instant scratch card games, horse and grey hound races and gaming machines.

Danske Spil's games account for more than 60% of the Danish gaming market.

Revenue Danske Spil Group is among the largest 50 companies in Denmark with an annual turnover of more than DKK 9 billion.

The pools and lottery funds Danske Spil's profits are distributed according to rules laid down by the Danish Parliament for sporting, cultural and other non-profit purposes:

Sporting and general cultural activities, National Federation of Danish Organisations for Disabled Persons, national charity organisations, national organisations for combating diseases, youth activities, non-profit organisations, Team Denmark and Denmark's Olympic Committee, premises and fixed assets fund, support for outdoor activities, national educational associations, horse races.

The funds exceeding DKK 1.5 billion per year are distributed according to a formula specified by the Danish Parliament.

The distribution per Danish Krone in 2003:

 Prizes 57%  Administrative and operating expenses 6,9%  Commission to retailers 7,3%  State duties 12,4%  Pools and lottery funds 16,7%

Retailers Danske Spil's games are sold through 4,000 retailers in Denmark, Greenland and The Faroe Islands.

The retailer network is divided into two groups:

2. semester projekt forår 2007 2  2.805 OnLine retailers sell all Danske Spil's products. Hereof, 255 retailers also sell horse and greyhound games.  962 retailers only sell Danske Spil's scratch card games  By the end of 2003, 27 franchise takers have bought Dansk Automatspil's new concept, PitStop. PitStop comprises all games from Danske Spil and adds gaming machines and Trackside (virtual horse race game), as well as the PitStop Café that shows sports events on large screen and sells soft drinks and sandwiches.

Gaming is a matter of confidence Gaming revenue Gaming should be entertaining In year 2004 more than 1.6 billion Danish kroner from the gaming revenue went to We create new games for you good purposes in society. Organisations, societies, and others can every year apply for part of the money. The pictures below show two of the purposes the money has been spent onto through time.

Copenhagen Jazz Festival

Fencing Club, Trekanten (The Triangle)

The Mission

Danske Spil should in both the long and short term secure the highest possible profits by constantly developing and replacing the games on the Danish market within the framework of the law, and in accordance with ethics and credibility.

Danske Spil is operated in accordance with businesslike principles; profits are distributed according to the decisions made by the Danish Parliament and benefit sports, culture and other non-profit-making activities.

The Vision

Danske Spil has secured its position as one of Denmark's best-known and most reputable companies.

The business concept includes all types of betting and lottery games, which are distributed via authorized agents and businesses, through the company's own betting shops or by means of electronic communication between players and company.

The value of Danske Spil's annual real-term growth corresponds to the regulations made by the Danish Parliament.

Danske Spil was founded on 21 July 1948, following the passing of a special Danish Pools Act by the Danish Parliament on 9 June 1948. Shareholders' equity today totals DKK 427 million. Danske Spil's shareholders are the Danish State (80%), the Danish Sports Federation (DIF) (10%) and the Danish Gymnastics and Sports Association (DGI) (10%).

2. semester projekt forår 2007 3 Danske Spil is a company group comprising of Danske Spil A/S and the subsidiary company Dansk Automatspil A/S. From 2000 and up until January 2005 Dantoto A/S was another subsidiary to Danske Spil A/S, but with effect from 1 January 2005 the two companies merged. In Danske Spil A/S, almost 230 employees are divided into three main business areas:

 Sales and marketing  IT  Service

Danske Spil A/S Board of Directors The Board of Directors has 15 members, ten of whom are appointed by the ministries and organisations distributing the pools and lottery funds.

These ministries are: The Ministry of Finance, the Ministry of Culture, the Ministry of Taxation and the Ministry of Education.

The organisations are: The Danish Sports Federation (DIF), the Danish Gymnastics and Sports Association (DGI), the Danish Football Association (DBU), the Outdoor Council, the Danish Company Sports Association (DFIF) and the Danish Youth Council (DUF).

In addition there are five employee representatives on the Board.

The chairman of the Board is appointed by the Minister of Taxation.

Management

. HC Madsen, CEO, Danske Spil Group . Jørgen Falsvig, IT management

Dansk Automatspil A/S Dansk Automatspil A/S was formed on January 1st, 2001, as a subsidiary of Danske Spil. It was the new law governing the use of gambling machines - Law for pay-out gambling machines - passed in parliament on May 26th, 2000, which provided the background for the formation of Dansk Automatspil.

The law came into effect on January 1st, 2001 and makes it possible for a subsidiary of Danske Spil to set up and run gambling machines under the conditions governing other players in the market.

The share capital of Dansk Automatspil is 10 million Danish kroner and the net capital is 0.5 million Danish kroner. Danske Spil is sole shareholder.

In 2003, the turnover of Dansk Automatspil was 1.4 billion Danish kroner.

Management

. Jan Svendsen, CEO, Dansk Automatspil A/S

Board of directors The board of directors consists of three members appointed by Danske Spil:

. Chairman, HC Madsen, CEO, Danske Spil . Pernille Sonne, Legal manager, Danske Spil

. Allan Wahlstrøm, financial manager, Danske Spil

The beginning In 1947 Denmark's social democratic government proposed the first legislation on pool betting to the Folketing. Previously

2. semester projekt forår 2007 4 there had been debate lasting several years on the adverse effects of 'gambling mania' on society. Some politicians argued that state-organised pools would lead to an increase in the record-breaking betting craze.

Thus, there was no majority to pass the Act in the Folketing. "By playing on the pools, people start relying on luck instead of trusting in the rewards of hard work, diligence and thrift", was one opinion voiced at the time. In spite of the resistance Denmark's major sporting organisations managed to turn the prevailing mood around.

The Danish Sports Association organised a demonstration at Christiansborg Slotsplads, after which 20,000 demonstrators from various associations gathered outside Christiansborg to support the Government in its battle for a "Betting Act". A month after this, on the 9th June 1948, the Act was passed through the second and third readings, and adopted with votes from mainly the Social Democrats and Conservatives.

Following this, Danske Spil (Denmark's state-owned pools agency) was founded on the 21st July 1948, and on the 16th August it was approved as an organiser of the pools.

The share company Danske Spil A/S was founded with a share capital of DKK 250.000. The Government contributed DKK 200.000, while the Danish Sport Association and the Danish Shooting, Gymnastics and Athletics Associations invested DKK 25.000 respectively.

On the 8th May 1949, the first pool series was issued with 12 football matches on the coupon. The price per row was 25 øre (a quarter of a Krone), and the first week's turnover reached approximately DKK 423.000. The prize ceiling was DKK 50.000 and any one Dane was only allowed to bet 48 rows per week.

Below you will find a list of the key games run by the Danske Spil Group.

Number games are Danske Spil's largest business area, representing some 70% of the total revenue.

Lørdags Lotto Lotto is the Group's best-selling product, with an annual turnover of approximately DKK 3 billion.

In Lotto seven winning numbers and two supplementary numbers are drawn each Saturday from a pool of 36 numbers, resulting in approximately 8.3 million possible combinations.

The largest prize so far was won in August 2000 in Copenhagen - DKK 15,9 million.

Onsdags Lotto Onsdags Lotto is the world's first international number game and is marketed in Norway, Sweden, Iceland, Finland, Estonia - and Denmark.

Each Wednesday the players have to predict six numbers out of 48 possible. The game is managed locally in each of the countries and only the first prize pool is shared by the six countries.

The largest prize so far was won in January 2005 in Copenhagen - more than DKK 32.4 million.

Joker Joker was launched in January 2000 and is a supplementary game to other number games and football pools. The OnLine terminal prints two rows, each of seven random numbers between 0 and 9.

The three largest prizes in Danske Spil's history were all won in Joker. The record prize was won in southern Copenhagen in March 2005 - DKK 35.8 million!

2. semester projekt forår 2007 5 Boxen Boxen was launched 26 August 2002. In Boxen one has to be the first to have 18 out of 75 numbers. The game is part of a tv-show, broadcasted on the national Danish tv-channel, DR 1, every Sunday noon.

Keno Keno was launched 26 January 2004 and is the Group’s most recent game. In Denmark Keno is played every day, all year through. Every day at 9.30 PM 20 numbers out of the total 70 are drawn. In order to win you need from two or more – max 10 - correct numbers on your Keno ticket.

In Keno the stake varies from 5 till 100 kroner. Prizes are calculated in odds with odds 200.000 being the highest, thus 20 million Danish Kroner being the highest prize.

Bingo Bingo was launched on danskespil.dk on October 30th 2006. Bingo is the first game on danskespil.dk where the players play directly with (or against) each other. Players can communicate before, during and after a game through the chat functionality.

Bingo is a number game with 75 numbers. A card comprises either 1 or 3 quadrants. A quadrant is a 5x5 grid containing 25 numbers.

Bingo exists in to versions; classic bingo and Variation bingo.

 In classic bingo a card consists of one quadrant (5 row and 5 columns). You can win on both rows and columns and, in some games, diagonals  In variation bingo a card consists of 3 quadrants placed on top of each other. You win by getting bingo on 1, 2, 3, 4 or 5 rows within the same quadrant.

Bingo can be played in two ways; as a single player game or as a multi player game.

 In the single player games the prize you will win is dependant on how many numbers that have been drawn when you get bingo.  In the multi player games it is the player(s) that get bingo first that wins.

Danske Spil's responsibility policy

1. Introduction This is a description of the measures Danske Spil has implemented to fulfil the requirements specified in gaming legislation, Danske Spil's license and Danske Spil's internal responsibility regulations and goals.

2. Background This is a description of the measures Danske Spil has implemented

2. semester projekt forår 2007 6 to fulfil the requirements specified in gaming legislation, Danske Spil's license and Danske Spil's internal responsibility regulations and goals.

2.1 All forms of gaming for money is forbidden in Denmark, unless you are in possession of a special licence.

Danske Spil has, in accordance with gaming lottery and betting legislation, since 1948 had a licence for operating gaming, lotteries and betting activities. Legislation further specifies that Danske Spil can offer all types of gaming except:

 gaming related to pigeon racing and cycle track racing  national state lotteries  physical gaming casinos  pay-out gaming machines and  premium bonds

The licence forms the basis for Danske Spil's activities and is issued to Danske Spil for 1 year at a time.

In accordance with the licence, Danske Spil is obliged to act as a supplier of popular and attractive gaming products, which channel demand for the gaming permitted by law into controlled and ethical frameworks.

Danske Spil must furthermore not develop new games or market to an extent which exceeds that necessary to fulfil this obligation.

3. Measures and initiatives for limiting the risk of gaming addiction Danske Spil has been assigned responsibility for operating gaming activity within a socially responsible framework, so providing Danes with access to gaming under controlled conditions.

Danske Spil wants to take a joint responsibility for preventing the harmful effects of money based gaming, including gaming addiction.

Danske Spil therefore strives to provide permanent and goal orientated initia-tives to ensure gaming is supplied within the most responsible and serious framework possible.

Danske Spil wants to act as a responsible gaming provider, for the benefit of the Danish population. Danske Spil exercises great care and integrity, and is very aware of the mandate delegated to Danske Spil.

Danske Spil therefore understands that its role in society is broader than to solely acquire funds for public service purposes via gaming. It is important that Danske Spil acquires these funds without at the same time generating abuse problems among vulnerable groups. This is why Danske Spil has, on its own initiative, implemented a number of measures which are described in more detail below.

3.1 Brochure on responsible gaming Danske Spil released a booklet in 2004 on responsible gaming, in which Danske Spil's guidelines for preventing or limiting the harmful effects of gaming are described.

3.2 Internal guidelines for marketing Danske Spil complies with Danish marketing law regulations and with the ICC's international code on advertising practice. Danske Spil has in addition and for many years had internal guidelines on how Danske Spil should market its products, including with respect to children and youth.

The guidelines includes descriptions of Danske Spil's duty, as a responsible gaming provider, to always maintain a balance between offensive and efficient marketing and to ensure that marketing is not

2. semester projekt forår 2007 7 offensive or encourages irresponsible gaming.

Danske Spil's marketing must therefore not be experienced as being aggressive in design or scope. Marketing must not encourage gaming beyond gamer's capacity or encourage gaming by the young.

Games marketing must therefore never be targeted at children and youths under 18 years, which should also be reflected in communication design and media selection.

The goal of all marketing is to profile Danske Spil's gaming and activities as exponents for enjoyment and entertainment within a socially responsible framework.

Danske Spil therefore tests all new communication concepts to ensure that the messages are understandable, that the marketing is not offensive or misleading and that marketing complies with legislation and with Danske Spil's own marketing guidelines.

3.3 Internal guidelines for product development Danske Spil has since 2004 had internal guidelines for product development with respect to gaming addiction. As a part of these guidelines, Danske Spil has developed a traffic light system, which indicates whether a game or future planned game requires special monitoring or any restrictions in the form of amount or quantity restrictions before it can be developed.

The traffic light system is solely a guideline tool, which can give a first indication of a program's product characteristics in relation to gambling addiction.

Even though a game is classified in the 'red danger class', this does not necessarily mean that we should stop the development and launch of the game. Before launch, it must however be assessed whether restrictions should be applied to the game.

Four product characteristics which in particular determine whether a gamer continues to game and therefore potentially can develop gambling addiction, have been defined by the English professor in gaming psychology, Mark Griffith:

 Event frequency The shorter the interval between the end of the game and the gamer being able to stake these winnings, the greater the risk of addiction.  Chasing The greater the game's return and the chance of winning, the greater the illusion that a gamer can win back lost money and the greater the risk of developing addiction.  Payout interval Payout interval is the time interval between placing a stake on a game and the win-nings being paid out. The shorter the interval, the greater the risk of addiction.  Skills and greater involvement The opportunity to become involved in the event which is bet on and the opportunity for the gamer to use their own skills to evaluate the result provides the basis for nearmiss psychology. This reinforces the feeling that the gamer has control of the game which increases the risk of addiction.

In addition to the above 4 product characteristics, Danske Spil's traffic light system also includes distribution (availability) as a parameter.

The traffic light is used each time Danske Spil plans launching a new product. The traffic light is also to a certain extent used as a management tool for assessing the need for elements such as stake

2. semester projekt forår 2007 8 limits and age limits for new games and new distribution forms.

3.4 Ethics commitee In the spring 2005, Danske Spil established an internal Ethics Committee, which should ensure that Danske Spil has a well founded responsibility policy.

The Ethics Committee evaluates the existing stake and age limits which apply to Danske Spil's games and the need to introduce further restrictions. The overall goal is to ensure that Danske Spil meets the desired and required level of responsibility and that Danske Spil limits the risk of gambling addiction to the extent required.

3.5 Age limits

3.5.1 Gaming via Danske Spil's agents On 1 January 2006, Danske Spil will be introducing a general 16 years age limit for the purchase of games from Danske Spil's agents.

The background for this decision is that in the course of 2005, Danske Spil has received inquiries and complaints from parents and others who are concerned about children and youths purchasing games from Danske Spil.

Even though these can be games which do not have critical product characteristics, it can be questioned whether Danske Spil is acting responsibly when receiving stakes from very young children, where there level of mental development means that they do not have the same capacity as adults to evaluate elements such as the game's degree of difficulty or the chance of winning.

Through the introduction of a 16 year age limit, Danske Spil will be able to prevent gaming by children in the most critical age groups. Danske Spil has therefore actively responded to the signals Danske Spil has received from the outside world.

3.5.2 Gaming via Danske Spil's web site, www.danskespil.dk Danske Spil, on launching gaming via the Internet, introduced an age limit of 18 year for gaming via www.danskespil.dk.

The background for this is that gaming via the Internet represents a greater risk that children and youths use too much money on gaming, as the young when gaming are not in contact with adults. Gaming via the Internet is in addition a more impulsive act than gaming via Danske Spil's agents.

When gaming via Danske Spil's agents, the agent is in contact with the young and therefore has the opportunity to and (in accordance with the agent contract) is obliged to react to young people purchasing games.

However, here Danske Spil sells games directly to gamers via Danske Spil's own shop, www.danskespil.dk and Danske Spil therefore has a far greater capacity, using technical measures, to control gaming and to ensure that it remains controlled and within ethical frameworks.

3.5.3 Other age limits Danske Spil has in addition found it necessary to set an 18 years age limit for the number based game Trackside, which is offered by a limited number of agents (40). Danske Spil also has an 18 years age limit for the purchase of AbonnementsLot

3.6 Limits for games

3.6.1 Gaming via Danske Spil's agents There are essentially no stake limits for games purchased via Danske Spil's agents.

Danske Spil however in 2004 introduced a stake limit on Danske

2. semester projekt forår 2007 9 Spil's bookmaker game Oddset, which limits the individual gamers to stake of DKK 5,000 per day.

The background for this introduction was Danske Spil desire to limit the opportunity for high stake gaming and therefore limit the risk of gaming addiction and crime.

3.6.2 Gaming via Danske Spil's website, www.danskespil.dk There is a total stake limit for all gaming via www.danskespil.dk of DKK 5,000 per 24 hour period per gamer. The background for this introduction is that www.danskespil.dk is Danske Spil's own shop, which places more stringent requirements on the way Danske Spil handles gamers.

The gamer has at all times the opportunity to set a lower daily stake limit. If the gamer sets a lower stake limit, the stake limit can only be increased by the gamer can after 14 days.

Danske Spil does not however want gamers to be able to game up to the limit every day or often. Danske Spil has therefore introduced a limit for daily transfers from bank accounts to gaming accounts of DKK 5,000 and an annual limit of DKK 100,000. The maximum balance on a gamers account is furthermore limited to DKK 30,000.

This means that if the gamer has winnings of more than DKK 30,000, the excess winnings are transferred the gamer's bank account. The gamer can however at all times via www.danskespil.dk choose a lower limit for transfer of winnings to the gamer's bank account.

3.6.3 Scratch card games In September 2005, Danske Spil launched a scratch card game on the Internet. On introduction of this game, a stake limit of DKK 500 per gamer per day was introduced, which is a part of the total stake limit of DKK 5,000 per day per gamer.

The background for this is that the games are fast paced. Gaming is not furthermore based on an event or events and there are therefore no external incentives to stop or take a break from gaming.

The stake limit of DKK 500 per day per gamer is as previously mentioned a part of the general stake limit of DKK 5,000. Purchase of scratch card games via www.danskespil.dk is therefore included in the stake limit of DKK 5,000.

3.7 One gaming account per gamer Danske Spil has, to support gaming stake limits for gaming via www.danskespil.dk, carried out technical adjustments that only allow one gaming account per gamer to be set up.

3.8 Gamer controlled block Danske Spil has recently resolved that gaming via www.danskespil.dk will include an option for gamer controlled blocking.

The gamer should be able, where the gamer wants to cut themselves off from gaming, to have the option to block themselves from gaming.

If the gamer has been blocked from gaming (gamer controlled block), the gamer will only be able to open their account after a period of six months has elapsed.

3.9 Excluded gaming Danske Spil has excluded a number of the games and measures which today are offered via the Internet, as these games and measures contain several of the characteristics which result in an increased risk of gaming addiction.

Danske Spil has therefore excluded casino gaming, poker and other aggressive gaming types from its Internet range.

2. semester projekt forår 2007 10 3.10 Contact with gamers Danske Spil's call centre is open daily from 7.00 am to 12.00 am. Gamers therefore can contact Danske Spil throughout the period in which it is possible to game.

The call centre also advises gamers and gamer next of kin on issues of an ethical nature.

3.11 Danske Spil's agents

3.11.1 New agent contract In June 2004, Danske Spil issued a new agent contract in which it was specified that sales to children and youths should be evaluated in accordance with circumstances and be refused or be limited to the extent necessary.

It is furthermore specified that agents should exercise good and ethical conduct in the sale of Danske Spil's games, so that excessive gaming as far as possible is avoided.

3.11.2 Training at agent schools All Danske Spil's agents should complete an obligatory basic course at one of Danske Spil's two agent schools. In this basic course product knowledge, ser-vice, customer care, ethics and gaming addiction is taught.

3.11.3 Contact with agents Danske Spil has around 4,000 independent agents. Danske Spil's 12 regional managers make around 400 visits to agents in their shops each week. Danske Spil's call centre also contacts by telephone 2,300 agents a week.

This contact provides support and guidance to agents in all issues relating to the sale of Danske Spil's games, including issues of an ethical nature.

3.11.4 Protection against high stake gaming Danske Spil, to ensure implementation and support of the DKK 5,000 stake limit for Oddset per day per gamer, has established protection against high stake gaming.

When more than DKK 5,000 is staked on Oddset on a single terminal in a one minute period, an alarm is triggered in the call centre. The call centre then follows the gaming at that agent. An alarm is also triggered at the call centre when more than DKK 7,500 is staked within one minute.

Alarms are furthermore triggered when on a single terminal in one day Oddset sales exceed DKK 30,000, DKK 60,000, DKK 90,000 etc. Danske Spil monitors all terminals when they are open for gaming.

3.12 Co-operation with treatment institutes Danske Spil has a continuous co-operation with a number of treatment centres for gaming addiction. This cooperation relates to launch of new games, participation in information meetings, co- operate on TV items etc.

Pernille Sonne Head of HR and Legal Department

2. semester projekt forår 2007 11