Summer is coming! – Finnish gambling update

Interesting things are happening in Denmark, Finland and Sweden. Our Nordic Gambling team looks back at what has happened in 2022 and gazes into the crystal ball to give their view on what 2023 will offer in the Nordics. First in line is Finland. The crystal ball includes the first regulatory steps towards Finnish liberalisation.

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FINLAND

Although Finnish people are eager to make use of gambling services, the Finnish market provides only a few locally-regulated business opportunities to gambling operators. This is due to the gambling monopoly, which Finland has been strongly defending over the past decades. However, as the development of online gambling continues, Finland turns out to be on the verge of having to reconsider the next steps in its gambling policy.

The Finnish gambling system is based on a state monopoly, and licenses to provide gambling services within Finland cannot be awarded at all, whether B2B or B2C. According to the Lotteries Act (1047/2001) (“Lotteries Act”) only state-owned Veikkaus Oy (“Veikkaus”) may offer gambling games in Finland. Even though EU market freedom is considered as a sufficient justification for providing cross-border gambling services under EU Law, the European Commission has previously confirmed that the Finnish gambling monopoly is justified as it was considered the best way to control and prevent the negative effects of gambling. However, in 2021 the Finnish Competition and Consumer Authority (“FCCA”) stated that the current gambling system has not succeeded in minimizing the negative effects of gambling. The FCCA suggested additional measures, relating to transferring the returns into a state budget instead of granting them directly to the beneficiaries, to be implemented in order to decrease negative effects caused by gambling.

What’s happened during 2022?

Until recently, the political will in Finland since 2019 has been to strengthen the monopoly and support responsible gambling. In recent years, Finland has implemented several measures in favour of Veikkaus, the state-owned monopoly operator. For example, the Lotteries Act included amendments including compulsory identification and administrative penalties as well as payment blocking measures, meaning that payment service providers are obligated to place a payment block on payment transactions from a natural person in Finland to gambling operators. These blocking measures apply to gambling at online casinos and betting sites that direct their marketing to mainland Finland in violation of the Lotteries Act and whose marketing has been prohibited by the National Police Board. The majority of the amendments took effect in 2022, but the implementation of payment blocks entered into force in January 2023.

However, the fast-moving development of online gambling services has caused challenges to the state monopoly in the recent years. Even with the amendments, the state monopoly has not succeeded in preventing Finns from gambling on foreign online gambling sites. In September 2022, Veikkaus announced that its market share in online gambling services had dropped, and expressed the view that it is time to consider other options for the Finnish gambling market. In a debate, held in Helsinki in November 2022, Veikkaus announced that it holds less than 70 % market share and it no longer holds an actual monopoly anymore. Therefore, it declared that it is in favour of dismantling the monopoly and switching to a license system. In the debate, both gambling professionals and representatives of the biggest political parties were present, all giving more or less a green light to the change.

What can be expected in 2023?

The past year has been remarkable when it comes to the change of ideological beliefs towards the gambling market in Finland. Parties that have traditionally been backing up the state monopoly have started to reconsider their support. Mostly, the reasons seem to be financial, as a big slice of proceeds gained particularly from online sales is channelled to online gambling sites provided by foreign gambling operators. By licensing the commercial online gambling market, Finland would presumably gain more revenue in the form of taxes than now via the state monopoly.

Both political and economic views seem to be that the change is necessary, although the transition time has given rise to a difference of opinions. Veikkaus itself is in favour of a quick transition, while some of the political parties prefer well-measured, slow transitions. The next parliamentary elections are to be held in April 2023, meaning that we are only weeks away from revealing the next steps in the Finnish gambling market.

What would the Finnish, blue-white license system look like?

It seems likely that Finland would seek to learn from its neighbours’ experiences by picking what it considers the best features of the Swedish and Danish models, and creating its own licence system. With the upcoming elections in Finland, it is very likely that the future of the state monopoly and the potential licence system will be one the leading topics in the election debates.

 

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