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Navigating Finland’s Gambling Reforms

Article authored by Advennt and is an interview with our Finnish contributor, Antti Koivula of Legal Gaming Attorneys at Law, and provides expert insights for businesses.

Finland’s gambling landscape is on the cusp of a major transformation. The longstanding state-owned monopoly of Veikkaus is set to be replaced with a licensing system by 2026, signalling a shift in the nation’s approach to gambling regulation. To unravel complexities of these impending reforms, we interviewed our Finnish contributor Antti Koivula from Legal Gaming. In our discussion, Antti shed light on potential restructuring of Veikkhaus, licensing structures, the expected market impact, ongoing concerns, and the overall significance of this change.

Is there an indication of how the state-owned Veikkaus be restructured under the new system? Will it still hold exclusive rights for some areas of gambling?

In essence, Veikkaus will be restructured into four different sections. Fennica Gaming Oy, where Veikkaus’ game development was moved, has been operating since the beginning of 2022. Additionally, it was announced late last year that the remaining Veikkaus functions will be divided into three sections:

1. Domestic business, which will remain under the exclusive rights system, including lottery games, scratch cards, slot machines, and the company’s own gambling halls,

2. Domestic business under the licensing system, including online casino games and betting, and

3. International business.

What types of licenses are expected to be available, will B2B licensing be required and what are the expected eligibility criteria?

It was announced in the government’s program in June 2023 that the licensing system will include online casino games and betting, while the other games will remain under the exclusive rights system. It has not yet been decided whether a separate license will be required for casino games and another for betting, but at the moment, it appears likely that one license will cover both of these game groups.

The preliminary study group, which published their recommendations in April 2023, suggested the implementation of a Swedish-type B2B licensing system in Finland, but since then, there has been very little discussion on the topic. As the schedule related to the Finnish gambling reform is extremely ambitious, it seems likely that the B2B licensing system will not be included, at least initially. This is also supported by the fact that there is only a limited amount of experience available in this regard from Sweden, which is the country that has been most benchmarked during the reform process. If the schedule extends considerably, it will increase the likelihood of B2B licensing being implemented from the beginning.

How do you believe the introduction of competition will impact the Finnish gambling market and consumer choice?

It all depends on how successful the decision-makers are in creating a balanced system under which businesses may flourish while also considering the responsible gambling perspective, minimizing gambling harm, maximizing customer protection, and not to mention increasing state revenue. It should be borne in mind that while Finland, in theory, currently has a gambling monopoly, the competition online is already fierce as Finnish law doesn’t prohibit foreign gambling operators from accepting Finnish customers nor does it prohibit Finnish customers from participating in those games. Veikkaus’ online market share is around 50%, while in certain competitive product areas, it is much lower; for example, in online casino games, it’s only around 10%.

Since it is not necessary to start from scratch and reinvent the wheel, but instead, it’s possible to learn from the successes and mistakes of others, I tend to be optimistic. At best, the new system will have a positive impact on all fronts. However, if the system is too restrictive and the tax rate is set too high, it will not incentivize operators to apply for a license, and we could end up in a situation in which the channelization rate will plummet drastically while the black market grows exponentially. Under such circumstances, no good would come from the reform, and everyone would suffer—the industry, consumers, and the state.

How have the public and the gambling industry reacted to the planned reforms? Are there any specific concerns or challenges identified?

The reactions from the public have been twofold but mostly positive. Finland has more or less always had an exclusive rights system, and the public has been extremely effectively made to believe that a monopoly is the best way to arrange gambling. While this misconception is still firmly entrenched in some, especially the younger generation, which is already familiar with offshore options, they have had more tools at their disposal to question this propaganda. Support for the exclusive rights system has been in decline, but it is still relatively strong. I am not aware if it’s officially measured any longer, but for example, in 2019, a staggering 72% of Finns considered a monopoly the best way to organize gambling.

The most notable concerns have related to responsible gambling and the prevention of gambling harm. The rationale of this discussion may be simplified as follows: more operators in the market automatically translate to more gambling harm. Naturally, it is not that simple, and there’s a lot more to it. I personally consider the greatest challenge to be creating a gambling system that balances the two main aims of the reform: increasing the channelization rate and preventing gambling harm. Without a balanced approach, there’s a considerable danger that the result will only serve the interests of the black market.

Do you foresee any potential delays to the reform plan?

According to the government program, the new system will be in place no later than January 1, 2026. This aim is extremely ambitious, and at this point, it appears clear that not everything will be ready by the beginning of 2026. My current estimation is that the legislation would be approved in parliament by then, but operators would be given a permit to operate only from the beginning of 2027, while 2026 would be a transition period during which final preparations will be made, and the licensing process would be started.

What are your overall thoughts on the 2026 gambling reforms and their potential impact on Finland’s gambling landscape?

It is easy to predict that the online gross gaming revenue (GGR) keeps growing and Veikkaus’ market share is in decline until the reform is completed. I also expect the total market size to increase towards what it was a few years ago, i.e., from the current level of EUR 1,6 billion to EUR 2,0 billion. When it comes to the ongoing reform in general, my first thought is better late than never. In my opinion, this is something that should have been done already a decade ago, and everyone would have been better off. Regarding the specific expectations on the impact of the reform, I’d prefer waiting for the first draft law before making any predictions.

How effective do you think the new regime will be against offshore unlicensed operators?

According to the government program, when the licensing system is introduced, the supervision of the gambling industry will be enhanced, and sufficient resources to achieve that will be ensured. There has also been a lot of discussion throughout the process regarding the necessity for effective enforcement against the black market. I personally delivered a speech at the Ministry of Interior’s expert hearing last November on the topic of supervision, in which I emphasized that the focus must be on the black market and not on licensed operators. In the end, it will all depend on how the law will be written, but at least it’s a promising starting point that the necessary political will is present, and the decision-makers have sufficient information to include the right things in the legislation.

Any indication of onerous marketing restrictions, such as limiting or banning acquisition-type advertising?

According to the government program, the reform will ensure that consumption can be directed to licensed suppliers through marketing. Furthermore, it has been stated that marketing may not promote harmful gambling, and it may not be directly targeted at minors. Gambling marketing must be moderate and responsible in terms of its content, scope, visibility, and rate of repetition. Individually targeted marketing of games without the express consent of the person will be prohibited.

While the government program leaves many questions unresolved, it is clear that marketing will be allowed but at the same time will include restrictions. According to the Ministry of the Interior, which is leading the reform process, the main issues to be resolved include: 1) permissible marketing content and prohibited marketing methods and techniques, 2) prohibition of marketing targeting minors, 3) ban on direct marketing, 4) information to be provided in connection with marketing, and 5) the question of sponsorship. It is worth highlighting that marketing restrictions have been a hot topic throughout the ongoing reform process, having caused colorful discussion also in the working group responsible for drafting the new law.  

If you would like to know more about Finland’s upcoming gambling reforms, get in touch with our team of experts at [email protected] or fill up our enquiry form at the bottom of our Contact page.