While reviewing and comparing casino and sportsbook operators on sustainability in order to find out where players can enjoy sustainable gambling, I started to wonder:
- What is my frame of reference?
- What would a truly sustainable casino look like?
- What would be required to gain a hypothetical 5-star rating?
In this post, I will explore these ideas.
The most sustainable gambling experience.
No matter how much good a company does, if its product or services are not loved by its customers, then the company won't be successful. So the website needs to work flawlessly, have the highest digital security standards, offer great games with fair RTP and excellent customer service and payment methods.
But how would ESG-driven choices impact the players' experience? A player won't notice whether the electricity used to run all servers and computers comes from renewable or nonrenewable energy sources. Neither will playing slots or table games be more or less enjoyable if a company does or does not gives importance to gender equality, fair taxes or supports local environmental or social projects.
The biggest footprint of casino and sportsbook operators are their third scope emission about which we will explain more below. But what it comes down to is that what has the most impact is its selection of third-party providers. Most casinos don't make their own games and are therefore dependent on software providers, the companies that create and operate the games. The most sustainable casinos would only choose to work with companies that also have sustainability on their agenda and have made ESG part of their corporate strategy.
So what if a popular casino game provider does not give any priority to sustainability? The casino would have two options. Either do not offer games of that provider which comes with the risk that players will choose another casino that does offer those games. Or through a partnership between both businesses, the casino could try to convince the software provider to adopt more sustainable business practices and make ESG part of their strategy.
Below I will go deeper into the vision and mission of a sustainable casino and look at the implications from an environmental, social and governance perspective.
The vision of a sustainable casino
What is the vision and purpose of a casino? Obviously, it has to do with gambling. But can the vision be bigger? Can it benefit a larger group of its stakeholders and not only its shareholders? Could it benefit other businesses that work towards a sustainable world? And maybe from all the profits from online gambling, can a bigger percentage of these profits be invested back into society and partly used to solve the problems we face?
If a company’s sole purpose is profit-driven, then it’s inevitable that certain choices are made in order to reduce costs and improve competitive edge and shareholders' ROI.
An alternative to profit-driven is ‘purpose driven'.
A purpose-driven company is one that sees profit not as an end in itself, but as a means to an end: to drive change and make the world a better place. They think beyond their products and services, and instead, look at how their business can help solve bigger problems. As a result, they create products that are more than just commodities—they build something people actually care about, even when those people are not customers!
So in this sense, a purpose-driven brand will automatically be more sustainable than a for-profit company that has as its core objective to maximise profit for its shareholders.
A purpose-driven gambling company would want to create a great entertainment experience for its customers while at the same time playing its part in creating a better world.
For examples of purpose-driven companies, learn more about B Corp or Steward Ownership
Now that we discussed the why, let's look at the environmental, social and governmental (ESG) aspects of a sustainable online casino
Environmental: the ecological footprint of a sustainable casino
Let’s start with greenhouse gas emissions (GHG): How much does an online casino operator emit?
That is not an easy question. The proper way to measure is using the 3 scopes method:
- Scope 1 are all emissions generated as a result of direct fuel consumption. These are usually linked to the operation of the company’s facilities and the use of vehicles. In the case of online casinos, these are linked to their offices and therefore are relatively low.
- Scope 2 emissions are generated as a result of energy consumption. In the case of casinos, this is the energy used for heating, cooling and lighting offices. Also not too much.
- Scope 3 emissions are all indirect down and upstream activities. 90% of online casinos' emissions are a part of this scope. This includes emissions from suppliers and hardware. Since computers and servers are required to run 24 /7, then online casinos and sportsbook operations need a significant amount of energy which generates GHG emissions that are accounted for in this scope.
Online casinos' Scope 3 emissions will look very similar to those of Apple, except that the biggest percentage will relate to product use instead of product manufacturing.
Looking at this analysis we start to wonder:
- Can all scope 3 product use emissions from casino operators be reduced to 0?
- Can a casino offset 100% of its GHG emissions?
In theory, yes, but…
The shortcut to reaching a net zero carbon footprint is by offsetting carbon emissions. But offsetting emissions is a delicate business, with many reported cases of greenwashing and profit-oriented mechanisms behind it that have proven to be corrupt and in many cases do more harm than good (watch The carbon offset problem). Also, offsetting emissions may not be a reason not to reduce emissions. It should only be used to compensate for those emissions that are currently impossible to prevent.
Zero carbon emissions in our current society are literally impossible. For example, the use of computers and mobile technology is inevitable. And creating those products, harvesting the necessary resources, and transporting and processing them into the end product generates emissions. Period. Therefore it´s even more important that procurement chooses brands that are leaders in creating a circular economy by making products that are designed with the end of their life cycle in mind, such as Cradle to Cradle initiatives, and the Right to Repair.
Also beyond electronic devices, much can be done. Mundane items such as office equipment, from furniture to refillable whiteboard markers, there is always a choice between more and less sustainable options.
In order for us to consider a casino's environmental performance to be positive, all of these issues must be at least considered in their sustainability reports. In best-case scenarios, measurable waste and emissions reduction targets should be set with a time frame for their accomplishment.
Social impact relates to all actions that aim to contribute to the well-being of all company’s stakeholders: employees, players, governments, providers and local communities. Online casinos should focus on becoming purpose-driven companies and design plans to give back to society.
When talking about employee satisfaction, examples of important KPIs are gender equality and the gender pay gap. Companies have to set targets to achieve minimum female:male ratios in management positions, like 40:60 or even 50:50.
Players' well-being should consider providing the conditions of a safe gambling environment that prevents addiction or harmful gambling. There are many indicators that can be set, like the roadmap of Kindred to reduce revenue from high-risk clients to zero,
Governmental actions should focus on policies designed to minimise the negative sides of gambling like money laundering and players’ addiction. Research should be done to treat gambling issues and find the best way to inform all players about the possible risks of gambling.
The governance of a sustainable casino
Governance refers to corporate decisions companies make which have impacts on their social and environmental performance.
One of the main indicators I consider is transparency. This refers to how standardised and public are a company's sustainability targets and results. For example, regarding environmental indicators, a company can decide whether to set its own targets (which are less transparent) or enter into a public system like SBT (Science Based Targets), or CDP (Carbon Disclosure Project).
Another pillar of a company’s governance is business decisions made to create a healthy company that can thrive through recessions or bad economic times. That way, these external changes won’t have significant negative effects on stakeholders, which will improve their overall trust in the business.
Also important when it comes to governance are ethics. Some of the questions I want to answer are:
- How far should the company go in terms of redeeming players that suffer from addictions from using the company’s services or products?
- How are members' and executive managers' salaries determined? What is the minimum to attract talent and what is too much?
- Should the company make all of these statistics publicly available to all stakeholders? How do they set the limit for confidential/non-confidential information?
Other important decisions related to a company’s governance are partnerships and associations. Who companies do business with is also something I consider to describe its values and ethics.
Conclusion: the most sustainable casino and sportsbook operator
In this post, I have only explored the tip of the ESG iceberg and what a casino could do in order to be truly sustainable. A lot more examples can be given and I could go into a lot more detail, however, for the purpose of this post, I think I have painted a pretty good picture of what it could look like.
To summarise, the most sustainable casino operator:
- is not profit-driven but purpose-driven
- should always consider its stakeholders‘ well-being in all corporate decisions and actively help them to become more sustainable too
- always aim to reduce its negative impacts on the environment
I consider certified companies, or those that disclose their impacts through public organisms, have higher levels of transparency than those that don’t. Therefore companies:
- must measure their emissions through Gold Standard or ISO 14064.
- disclose their emissions through public records like CDP
- set their GHG emissions reductions through science-based targets (SBT)
- use GRI reporting standard
Sustainable casino operators should do their best to not only offset all of their emissions but also purchase renewable energy enough to reach 100% of their energy use. All purchased renewable energy should come from certified renewable sources.
In terms of internal social actions, I think that a useful indicator is a ratio between men and women in management and board positions, as well as the ratio between the highest and lowest wage in the company.
I also think that the most sustainable casino and sportsbook operators should give employees the option to work remotely or at least in a hybrid model. This improves not only the overall employees' satisfaction but also reduces the carbon footprint of the company’s scope 3 emissions due to reduced commuting.
A must for a sustainable casino operator is that it pays fair wages, but also contributes to good pension and health plans for all of its employees. That contributes to their well-being and also allows them to adopt a sustainable lifestyle. It is desirable that the company encourages all of its employees to participate in environmental or social projects and have a certain amount of paid work time allocated for these activities.
In terms of governance, sustainable operators are those that only partner with companies that have an ESG strategy and choose to be leaders in sustainability. Any suspicious partnerships will affect the company’s overall sustainability score.
Last but not least, the casino operator with the highest sustainability scores make sure they invest their surplus profits into society, always trying to improve their impact on communities and the environment.
Now the question is, is this feasible or even desirable? This I´d love to discuss. I dedicate my time to asking this question to everyone in the industry so that they can share their opinions and have this conversation with me.