Q&A: Paf deputy CEO on framing gambling as an “expensive hobby”

Earlier this month, Åland Islands-based operator Paf announced a further reduction in its annual loss limits for over 25s to €16,000. Alongside the decrease from the previous limit of €17,500, Paf CEO Christer Fahlstedt stated the business is aiming to eventually have an €8,000 limit in place for its 25+ customer cohort.

The operator first implemented loss limits in 2018 at €30,000, before gradually reducing the level in subsequent years and also putting specific limits in place for younger players. In fact, alongside the drop to €16,000, those aged 20 to 24 had their loss limit cut from €8,000 to €6,000. Customers aged 18 and 19 have a separate annual loss limit of just €1,800.

Paf and its leadership team have been vocal about the need for the gambling industry to recognise excessive spending and reduce the dependence on a small percentage of high-spending players, instead switching to a wider, recreational consumer base.

In comments released alongside the latest reduction, Paf deputy CEO and chief responsibility officer Daniela Johansson said the decision was a “concrete thing to do and […] the right thing to do”.

Speaking to EGR, she extrapolates on those comments, noting that the internet-first world today’s young people are growing up in has shifted their understanding of gambling, requiring a new approach from businesses like Paf.

She also notes that taking these steps to drive responsible gambling to the front of the conversation in the sector hasn’t won Paf many fans or friends. But she is resolute in her stance. Change needs to come; and Paf will deliver.

EGR: Why was now the right time to lower loss limits for over 25s down to €16,000?

Daniela Johansson (DJ): We introduced the yearly loss limit back in 2018 and have gradually lowered it over time. This time, we’ve reduced the limit for players over 25 to €16,000, and we’ve also lowered the limit for 20- to 24-year-olds to €6,000.

What we’ve seen in the industry over the past few years is a rise in young players joining. Ten years ago, we didn’t see this many young players. There’s a whole new generation that’s grown up with gaming, where gambling-like features – buying skins, loot boxes and so on – are normal. They’ve been exposed to gambling elements from a young age, and now they’re showing up on our sites.

That’s why we felt it was especially important to lower the limit for 20- to 24-year-olds too. We’re moving towards a more sustainable customer base and revenue model. From a business point of view, this kind of change needs to be done step by step.

EGR: Is there any technology in place to help decide what the new loss limits should be?

DJ: We do a thorough analysis on the effects, both from a sustainability perspective and from a business perspective. We assess what the appropriate limit is at a given point in time, how it impacts the business and, of course, what the positive effects are from a responsible gaming perspective.

EGR: Are you seeing users’ losses falling, or are they treating loss limits like a speed limit and trying to max out the restrictions in place?

DJ:  In general, we see that the losses of the customers are falling but it’s only a small portion of players who reach the limit.

Sometimes people say the limits are high, but they act as a safety net. We understand that for some €16,000 is still too much to lose in a year. We also offer individual voluntary limits. Just because the loss limit is €16,000 doesn’t mean people aim to lose that much.

EGR: How do customers react when these levels are lowered? Is there a positive communication channel between Paf and its users?

DJ: We don’t get a lot of feedback. Occasionally, individual customers reach out and ask why, saying they can afford to lose more. But often, they just accept it.

For players who do reach the limit, we’ve been in contact with them beforehand. We monitor risk behaviours, so when someone does hit the limit, they’ve likely already had some form of interaction with us. It’s rarely a surprise.

We’ve also done a small study to understand what happens when customers reach the limit, do they stop playing or go elsewhere? Around 50% said they had decreased or stopped playing, while the other 50% said they continued gambling elsewhere. So for many, it works as a kind of reality check.

EGR: In the latest press release, Paf CEO Christer Fahlstedt said there were plans to eventually lower loss limits to €8,000 for over 25s. Why was €8,000 chosen as the final level?

DJ: We have a clear vision in that we think gambling in Western and Central Europe is going to transform into entertainment in the future. The €8,000 is to symbolise an expensive hobby such as having a boat or horse. When we reach it is dependent on many factors, so I don’t dare to guess.

EGR: Is there scope to go beyond that level, or does the business itself then become unviable from an operational perspective?

DJ:  The industry depends heavily on a small group of high-spending players for revenue and profit. But that’s exactly what we want to move away from. If you look at our customer segments last year, we’ve been growing in the lower-spending segments and becoming less dependent on the heavy users. That’s the direction we’re heading in, but it takes time to fully make that transition.

EGR: Do you have conversations with other operators about the possibility of introducing loss limits? And do they see Paf as a leader in this regard?

DJ: I wouldn’t say we’ve received much love from the gambling industry for these initiatives, but there are a few who understand and support the idea. We have to remember that Paf has a very different background. We were founded by the Red Cross and Save the Children, and our profits go to the benefit of society.

There’s a balance between industry and regulation. But no, we haven’t seen many operators following our lead. I haven’t seen anyone else publish their customer segment data, for example.

EGR: In terms of other ESG efforts, last September Paf pledged support for the Keep the Archipelago Tidy Association. How important is it to support local efforts as a business?

DJ: It is important in the community that we live in, but it is also important for our employees. We are dependent on highly educated tech people and really talented staff. Many of them wouldn’t work with a gambling company that doesn’t also do good. That’s something we take seriously.

EGR: Finland has laid out its plans to move from a monopoly to a multi-licence model. Do you think there will be any negative impact on Finnish consumers?

DJ: There are different opinions regarding the proposal but I believe it’s the right step to move into a licensing system in Finland. The consumer protection as it’s stated in the proposal isn’t very strong and we’re likely to see a significant increase in gambling advertising once the market opens. I don’t think that’s a good thing and I wouldn’t be surprised if we see stricter regulations introduced later on.

EGR: Does Paf’s loss limits impact customer acquisition at all in a newly regulated market like Finland?

DJ: No, it doesn’t affect the customer acquisition. The customers care about good products and good offerings.