All eyes are on the future of the Finnish gambling market after the country’s government recently dropped heavy hints that it is prepared to shake-up the current licensing system.
Veikkaus has held a monopoly over the gambling market in Finland since 2017 but the agency, alongside industry stakeholders, has been vocal in its desire to transition to a partial-licensing system.
Tytti Tuppurainen, Finland’s Minister of Europe and Ownership Management and a member of the governing Social Democratic Party (SDP), appeared to give the move a governmental green light last week, leading Antti Koivula, Partner and Legal Advisor at Legal Gaming Attorneys at Law, to explain to SBC News why this is taking place now and the practicalities behind it.
“The reason behind the up-and-coming change is simple: money and market share,” said Koivula. “Veikkaus’ GGR and market share (which in this case is also a synonym for the channelisation rate of the monopoly system) has been rapidly decreasing and it has become obvious that the only way to turn this trend is to abandon the monopoly system.”
Veikkaus has been struggling to maintain a strong market share for a considerable period, with its current GGR for H1 2022 estimated at €1-1.1bn (2017: €1.8bn), with ‘offshore leakage’ – customers betting outside the regulated system – of €500m (2017: €200m).
Meanwhile, the firm had an overall channelisation (market share) rate of 66% (2017: 88%) and online channelisation of 50% (2017: 70%), and for online fixed odds sports betting this stood at around 20% and for online casino games 40%, these being the products most likely to be moved under a new licensing system.
Prevention of problem gambling has been the main justification behind Finland’s gambling monopoly, Koivula further observed, but with channelisation rates dropping drastically the monopoly cannot soon even ‘in theory’ achieve this aim, given that rates of 50% are generally considered ‘the magic line’.
“If the situation is allowed to develop to that point, Finland will have to abolish the gambling monopoly anyway, but the state would have less control over the change.
“Also, Veikkaus’ starting position for the licensing market would be much worse. After all, it’s easier to hold the market share, for example, at the level of 40% than to start from 15% and try to increase it to 40%.”
Highlighting the advantages of the transition, such as revenue generation and the creation of more jobs, Koivula also noted the issue of declining market share.
“The most notable advantage is that in a well-constructed licensing system a great majority of gambling takes place under the regulated system.
“This would allow more effective supervision and for example extending the desired level of responsible gambling requirements to all licensed operators.”
While noting the potential for the transition to “screw up badly” by implementing a licensing system with ‘unreasonable’ conditions that could deter prospective operators, Koivula is confident that arrangements can be made to suit all parties.
“It is of utmost importance to create a well-balanced licensing system in which taxation and restrictive characteristics are not overly strict but at the same time the state gets decent income and effective prevention of gambling problems is guaranteed.
“Finland has the chance of a lifetime to create the world’s best licensing system as we don’t have to reinvent the wheel but instead, we can look for example, in good and bad, from the other European licensing models.”
On January 5, the Ministry of Interior named four people to conduct a study on the current licensing system, which is expected to be ready by April 15, though the next stage could be impacted by Finnish parliamentary elections on 2 April.
The following steps will then have to be left for the incoming government in June, meaning it will not be possible to move to the second phase of the transition before the new administration – and its own programme – is in place.
Next up is the preparation of the government’s draft proposal and informing the European Commission (EC) followed by a standstill period – all in all, Koivula predicts that the entire legislative process to change Finland’s licensing framework will take “at least nine months, possibly more”.
The final two stages will involve the drafting of the government’s actual proposal, which should be already ‘a few months’ after the EC standstill has passed, after which there are ‘several stages’ in parliament – likely resulting in alterations – and finally the law will be ready for implementation.
Koivula concluded: “Considering the process as a whole, it is possible that Finland would have a licensing system in place as early as in the beginning of 2025, but this requires that everything must go smoothly from the beginning to the finish line and there will be no room for hiccups.”
Lotteries machines are unlikely to experience change, however, as Sari Multala, an MP for the opposition liberal-conservative National Coalition Party (NCP), recently confirmed that they would remain within Veikkaus’ monopoly for ease of regulation.