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Board of Director's Annual Report

Norsk Tipping is a state-owned limited company based in Hamar in Norway. The company operates gaming activities pursuant to the Norwegian Gaming Act (lov om pengespill). Its role in society is to offer attractive games in a responsible manner, from which the profits go to support good causes. The company operates under the remit of the Norwegian Ministry of Culture and has its terms of reference set out in the document "Retningslinjer for eierstyring av selskaper mv under Kulturdepartementets ansvarsområde" (Guidelines for the corporate governance of companies under the remit of the Ministry of Culture). In accordance with requirements stipulated by the Ministry, the company adheres to the recommendations regarding corporate governance and management issued by the Norwegian Corporate Governance Board (NCGB) to the extent that these are relevant.

Norsk Tipping submits reports describing its social and environmental impact in accordance with the international standard for sustainable reporting issued by the Global Reporting Initiative (GRI). In 2017 the company submitted its reports in accordance with GRI – G4 (Core level). The company's reporting of its social responsibility is not set out in a separate document, but is integrated within the annual report.

Summary of financial results for 2017

In 2017, the Norwegian parliament debated the White Paper “Alt å vinne — Ein ansvarleg og aktiv pengespelpolitikk” (Everything to gain – a responsible and proactive gaming policy). The White Paper is based on the principle that the regulation of gaming activities involving Norsk Tipping as a monopoly company provides for a greater degree of responsible gaming than a licence-based model, and that this consideration supports the continuation of the state monopoly model.

The parliamentary debate provides greater clarification of the objectives of Norway’s gaming policy, in which the focus on responsible gaming is assigned the greatest weight. That the profits from gaming are as far as possible used to fund charitable causes remains a secondary consideration. This acknowledges Norsk Tipping’s role in society, and also provides key guidelines going forward.

2017 represents the first year after the company’s introduction towards the end of 2016 of key improvements in the regulations governing responsible gaming. The most important change involved the introduction of a system by which customers have to decide and set limits on how much money they can allow themselves to lose each month. The initiative applies across all products with the exception of the non-digital Flax game. The maximum limit is set at NOK 20,000 per month.

The company's total operational revenues increased from NOK 32 billion in 2016 to NOK 35 billion in 2017. Moreover, the company’s total customer numbers increased compared with 2016, and in 2017, a total of 1.96 million customers played using Norsk Tipping’s products. The properties of the games vary widely in character. As a result of different prize distributions and high levels of reinvested winnings for some of the company's games, financial results are assessed in terms of gross gaming revenues (gaming revenues minus winnings), which is a better measure of the scale of gaming activities. Gross gaming revenues increased from NOK 7.7 billion in 2016 to NOK 7.8 billion in 2017, representing an increase of 2 per cent. Together with the effect of reduced costs, this resulted in a growth in profits from NOK 5 billion to NOK 5.25 billion, an increase of 5 per cent on the previous year.

Growth in turnover is the result primarily of the relatively recent popularity of online gaming products, with which the company has succeeded in consolidating its position as a provider of attractive and responsible gaming products in competition with unregulated companies. Moreover, the non-digital Flax game has enjoyed positive growth. Gross gaming revenues for the other gaming products has been somewhat lower than in 2016.

Lotteries account for the largest share of sales, and represent 64% of the company's gross gaming revenues for 2017. Lottery games represent the company’s most prolific gaming category measured both in terms of the number of players and in gross gaming revenues. In other European markets there is a trend towards a decline in lottery revenues and Norsk Tipping is thus pleased to see that the channelling of sales into lottery games in Norway remains relatively stable compared with 2016. Lotteries are regarded as a form of gaming that involves a lower risk than other categories in terms of promoting problem gaming. A robust lottery portfolio thus indicates that the company is succeeding in channelling more of the general public’s enthusiasm for gaming into responsible gaming products.

The growth in gross gaming revenues in 2017 is derived primarily from online gaming products. Revenues in this category increased by 37 per cent compared with 2016, representing a clear acceleration in growth. Online gaming is subject to high levels of competition from unregulated companies, which employ relatively intensive levels of marketing with the aim of attracting players from Norway. Norsk Tipping’s growth in sales in this area indicates that the company is succeeding in diverting gaming from this segment into the regulated market, although Norsk Tipping’s share of total sales in this category is not dominant. The authorities have signalled the introduction of additional measures with the aim of restricting the opportunities that the unregulated companies have to offer their gaming products in Norway. This will contribute towards reinforcing the aforementioned channelling effect.

An increasing share of sales of the company’s gaming products involves digital media. This means that systems that enable gaming via digital media are becoming an increasingly important part of the company’s customer contact and sales tools.

In 2017, sales linked to traditional gaming products on digital media amounted to NOK 6.9 billion, compared with NOK 6.2 billion in 2016, representing an increase of 11 per cent. The growth in sales from digital media contributes towards greater cost efficiencies for the company in the form of reduced sales commissions, but also places increasing demands on media capacity and functionality. Advancing developments in digital media technology will thus continue to be an important area of focus for the company.

The so-called Grassroots Share (Grasrotandelen) fund provides players with an opportunity to influence how some of Norsk Tipping's profits are distributed. Funds are growing each year in step with increased sales, and also as a result of a continued growth in player numbers linked to the Grassroots Share. In 2017, players distributed NOK 455 million to clubs and associations via the Grassroots Share . This amount will increase significantly in 2018, when the rate linked to the Grassroots Share increases from five to seven per cent.

The company is reliant on predictable and stable operations in order to remain accessible to its customers. It is a great pleasure to report that there have been no significant interruptions in operations during 2017, and that during 11 months of the year, sales channel accessibility has exceeded the stated target of 99.6%. Demands on accessibility close to submission deadlines and draw times are considerable, but in spite of this, there have been almost no interruptions during 2017. Stable operations provide security both for the company and its customers, and it is important for maintaining confidence and our reputation among our customers.

Responsible gaming

Norsk Tipping's operations are rooted in the company's ability to counteract undesirable gaming behaviour. The company has dedicated much focus towards providing attractive gaming opportunities for its customers, within a responsible and secure setting. This approach permeates both the organisation as a whole and the products and services the company offers.

In October 2016, Norsk Tipping launched a new and ground-breaking loss limit system. In doing so, it became the first gaming company in the world to adopt loss limits for all its gaming products. All customers who play risk-based games are required to set their own maximum loss limits. This provides players with increased awareness and a better opportunity to govern their gaming behaviour. As well as everyone having to set their own personal limits, there is also a maximum limit for how much any individual player can lose in the course of a month. This is an extra precaution designed to limit losses for the most vulnerable players. Following the introduction of these new limits, there has been a reduction in the company’s proportion of sales involving players at high risk of developing problematic gaming behaviour.

In 2017 the systems employed in this area have been further improved. This has enhanced the accuracy of data analyses enabling the feedback provided to players to be more targeted.

As part of the work to promote responsible gaming, the company has, since 2016, made direct contact with players who exhibit gaming behaviours that may indicate an increased likelihood of developing problems linked to gambling. The aim of contacting players is to make them aware of their gaming histories, and to encourage them to consider if they need to take steps to limit the extent of their gaming activities. Most players who are contacted appreciate the interest taken by the company and for many, measures are implemented that contribute towards reducing their losses.

Norsk Tipping is working with research centres in the field of gaming and gaming behaviour with the aim of obtaining a better knowledge of the factors that may influence problematic gaming behaviour. The company aims to become a world leader in the promotion of responsible gaming.


Both the Board and owner are placing major emphasis on how the company can best fulfil its role in Norwegian society. This entails not only aiming to maximise profits, but also carrying out its operations cost-effectively.

Norsk Tipping monitors the proportion of gross gaming revenues that go to good causes. Since 2015, a cost-efficiency programme has been implemented that has identified many areas with cost-efficiency potential, and where measures have subsequently been put in place. This programme has contributed to the fact that total costs levels, measured both in terms of nominal value and as a proportion of gross gaming revenues, have declined from 2016 levels.


At the close of 2017 the company's accounts revealed a total balance of NOK 6.3 billion and an equity ratio of 5.7 per cent. This can be compared with corresponding figures of NOK 5.95 billion and 6.1 per cent for 2016. As of 31.12.2017, the company's unrestricted equity amounted to NOK 214 million.

The low equity ratio must be seen in the context of the company's special situation by which the year's activities accumulate a profit that is distributed during the following year. On the date of distribution to profit recipients, equity is consolidated as a result of activity taking place during the following year.

In the short term, there is relatively little uncertainty linked to the company's future finances. Norsk Tipping's status as a 'statutory company' operating within a predictable regulatory framework means that it has adequate equity reserves and a satisfactory financial position in spite of the low equity ratio figure. In the opinion of the Board this situation will continue to apply in the short term.

Cash flow statement

Gaming revenues represent the company's most important source of cash flow. Following deductions for prizes, gaming revenues have increased by NOK 0.2 billion compared with 2016. In 2017, net cash flow from operational activities amounted to NOK 5.5 billion, compared with NOK 5.4 billion in 2016. Expenditures linked to the purchase of fixed assets are less than in 2016. This can be explained primarily by the fact that in 2016 the company made considerable investments in remodelling the interiors of its sales agents’ premises, while there has been no such activity in 2017.

Financial risk

Norsk Tipping conducts certain transactions, and holds a limited amount of reserves, in foreign currencies. This exposes the company to a certain level of financial risk. The company also operates with a credit risk linked to settlements with its sales agents. Settlements for the preceding week's sales are paid during the succeeding week by means of automatic withdrawals. Guarantee and deposit arrangements have been established that considerably reduce this credit risk. The company continuously monitors the status of its outstanding receivables, and measures designed to reduce losses in the event of non-payment are implemented immediately. The company has not incurred any significant losses linked to sales agent-related receivables in 2017. The liquidity situation is satisfactory since the company generates significant disposable funds by means of its day-to-day operations. At the turn of the year, the company's holdings in terms of bank deposits, cash reserves and suchlike amounted to NOK 5.5 billion. The greater part of this has been transferred to the Norwegian Central Bank as sight loans to the Treasury. The company believes that the levels of uncertainty linked its financial status next year are relatively low.

Going concern assumption

In the opinion of the Board, the annual accounts and annual report provide a true picture of the company's financial status and activities at the close of the year.

Preparation of the annual accounts is based on the going concern assumption. The Board is not aware of any significant factors that have emerged or events that have occurred during the accounting year, or subsequent to the close of the accounting year, that impact on the going concern assumption or the annual accounts.

Research, development and innovation

Norsk Tipping does not carry out its own research and development activities as defined in the Norwegian Accounting Act (regnskapsloven). However, the company continues to involve itself in development activities in several fields linked to innovation and development in connection with its products, systems and services. At any one time, it is estimated that more than 30 per cent of the company's employees are working on development projects.

One of the most important initiatives implemented during 2017 was the development of an operator ID system for our sales agents. The new system enables transactions conducted via our sales agents to be easier to trace, both for the sales agents themselves, and for Norsk Tipping. Among other things, this will enable better monitoring of cash transactions at our sales agents’ outlets.

An increasingly greater share of the company’s sales is conducted via digital media. To date, the company has operated with separate PC and mobile phone gaming systems. In 2017 the company launched the development of a shared and integrated system across both of these media. Going forward this will enable the release of resources for the further development and simplification of both operations and future advances.

A regeneration of the Vikinglotto lottery was carried out in 2017 by means of a number of changes carried out across all the participating countries with the aim of boosting the long-term development of the lottery.

The company has established a new IT development process that entails that a greater proportion of development activities will involve small modifications and renewals rather than the previous practice involving the implementation of large projects. The aim of this new approach is to shorten the time between needs arising and the development and implementation of new systems.

Future prospects

The current operational and regulatory framework under which Norsk Tipping operates provides a solid platform for further development. The gaming policy White Paper was debated in Parliament, with the result that the current Norwegian model, by which both Norsk Tipping and the horse race betting company Norsk Rikstoto operate in a monopoly environment, will continue. In the White Paper, the government concludes that now is not the time to introduce a licensing system permitting operations by overseas gaming companies. Licences have been granted for the operation of five new lotteries in Norway, but under a number of restrictions, involving marketing, among others. Norsk Tipping envisages that under the current regulatory framework, the new lotteries will only have a small influence on the future prospects of the company.

The content of the White Paper represents a value-based choice in the best interests of Norwegian society, and lays a sound foundation for the future development of Norsk Tipping. At the same time, it reduces uncertainties that have been linked to regulation in this area following evaluations of several aspects of the gaming sector in recent years.

A comprehensive project has been carried out in 2017 linked to the company’s branding strategies. In order to consolidate Norsk Tipping's standing in society, a new visual identity has been developed for the company, which will be launched in 2018. This represents just one aspect of the company’s efforts to become more relevant to the younger demographic who do not view Norsk Tipping and the company’s role in the same way as older sections of society. This will be supported by a brand new profile, combined with an emphasis on more value-based communication that will make clear that there is a difference between Norsk Tipping and the unregulated companies. In this connection, it is pleasing to see that the company’s good name, as revealed in TNS Gallup’s syndicated reputational survey, is at a record high. Norsk Tipping has risen from eighth to fifth place in the rankings.

Norsk Tipping will continue to expand development of its products and systems in line with the company's role in society to provide access to attractive and responsible gaming products from which the profits go to support good causes.

Social responsibility

Norsk Tipping considers it important to contribute towards a sustainable society. The company’s aim in connection with its work to promote social responsibility is to leave a positive footprint. By this we mean that the company shall assume responsibility for the influence it has on people, society and the environment. At the same time, Norsk Tipping shall identify areas where it is possible to make even more positive contributions to community development.

In 2017, work to promote social responsibility adopted a main emphasis on the implementation of the company’s policy in this field that was approved in October 2016. The policy document contains 14 principles and sets out requirements for how ethical, environmental and social considerations will be integrated into the company’s operations. The policy was prepared on the basis of the Norwegian government’s expectations regarding state-owned companies’ work to promote social responsibility, as described in its report on state corporate ownership published in 2013-2014. This in addition to a significance analysis of combined internal and external stakeholders’ expectations of the company in the field of social responsibility.

As well as the work to implement this policy, the company’s management has, during 2017, developed a high-level road map, involving seven areas of focus linked to its work to promote social responsibility.

Five of these areas (responsible gaming, business ethics, anti-corruption, human rights and the environment) have been defined within a so-called “compliance level”. This is the level at which the expectations of Norsk Tipping from its owner and other stakeholders are most explicit. Within the two remaining areas, equal opportunity/diversity and working environment/health), expectations of the company’s work are less explicit. However, in relation to these, the company, which has a major and key role in society, has the greatest opportunity to contribute positively to community development. These areas have thus been categorised within a so-called “value generation level”.

Given the resources and nationwide range of influence that Norsk Tipping possesses, the company has every opportunity to play a role in the community that sets the agenda in terms of challenges facing society and to contribute towards effective solutions for the benefit of society as a whole. This is the company’s ambition.

The company’s annual and social report has been prepared in accordance with the Global Reporting Initiative (GRI-G4). This is an international framework for corporate reporting based on a tripartite categorisation involving economic, environmental and societal considerations.

The working environment

Norsk Tipping is defined as an inclusive working life (IA) company and aims to encourage an inclusive and diverse corporate culture. The company is currently assigning priority to further boost diversity by means of promoting a more balanced composition of its staff in terms of age, gender and cultural background. This objective is in step with the aims set out in the Norwegian Anti-discrimination, and Anti-discrimination and Accessibility Acts (diskrimineringsloven / diskriminerings- og tilgjengelighetsloven).

Working environment initiatives must be specifically targeted and contribute towards achieving the aims of the 2016-2020 strategy document and annual activity plans. The company also aims to improve its operational efficiency and change competence. An important measure designed to achieve these aims has been the introduction of a new IT development framework completed in 2017. Moreover, the company is carrying out work to improve other processes, including those involving innovation organisational governance. As well as process improvement, an additional organisational development process has been launched with the aim of facilitating better communication, efficiency and implementation capability. The organisation is being further developed to be better equipped to meet future demands, and to continue to deliver effectively in compliance with the guidelines set out in the White Paper. The company shall offer attractive and competitive gaming products in secure and responsible settings, and the profits shall be used to fund good causes in the fields of sport, culture and humanitarian work. Culture, values and leadership are key factors in contributing towards Norsk Tipping becoming equipped to adapt to current acceleration in developments.

Fifty per cent of the company's top management team are women. The proportion of women in management positions is currently 32 per cent, while 37 per cent of the company's total of 406 permanent employees are women.

In 2017, the sickness absence rate was 3.1 per cent, and two incidents of absence from work due to injury were recorded.

The external environment

The single most important factor that impacts on the external environment is the production of paper-based materials and their distribution to the company's sales agents. The increased use of digital media means that the number of paper coupons and other materials linked to our sales agents’ activities is gradually declining. With a view to reducing the volumes of excess printed matter, the company continuously monitors the volumes of such material it sends to individual sales agents. Digital screens are increasingly replacing printed material as a means of providing information at sales agents’ outlets.

Norsk Tipping's CO2 emissions for 2017 are estimated to be 1114 tonnes, and are mostly the result of electricity used on company premises and for IT systems, and in connection with travel by company employees. The company's premises are connected to a district heating system where energy is sourced primarily from bioenergy and recycled heat. This helps to reduce CO2 emissions resulting from heating. Norsk Tipping is continuing to reduce its energy consumption and make energy use more efficient.

Allocation of annual profit

The company's unrestricted equity is held in an investment fund and other equity items. Total unrestricted equity as at 31.12.2017 is NOK 214 million.

The Board's proposal for the allocation of profits is as follows:

Styrets beretning 2018 - Anvendelse av årsresultat - EN
To the fixed distribution formula (Tippenøkkelen)NOK 4,715 mill.
To the Grassroots Share (Grasrotandelen)NOK 455 mill.
To the Bingo Operators' Profits for Good CausesNOK 66 mill.
Measures to combat gambling problems NOK 15 mill.

Linda Bernander Silseth

Board Chair

Per Olav Monseth

David Hansen

Anne Lise Meyer

Bjørn Vidar Mathisen

Hege Andersen

Kari Skeidsvoll Moe

Andreas Egge Torsheim

Åsne Havnelid



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