State of Gambling in Finland – New Regulation in the Works

Starting Points

There are hundreds of thousands of Finnish online poker and sports betting enthusiasts. The number of gambling sites available in Finland is today counted in at least hundreds, if not thousands. The gambling market is thereby significant in size, approximately at around EUR 400 billion worldwide.

According to Finnish regulation, only the state-owned gambling company Veikkaus Oy has the right to offer gambling services and thereto related marketing in Finland – in other words, a state-controlled monopoly. In the case of gambling, the most important piece of Finnish legislation is the Act on Lotteries, supplemented by governmental decrees. In Finland, gambling is supervised by the National Police Board, by which illegal gambling operators can be ordered to cease their activities at the risk of a fine.

Although, according to the Act on Lotteries, only Veikkaus is allowed to engage in gambling activities within Finland, the Act is not able to directly prohibit foreign companies from offering gambling services in Finland. Foreign gambling companies can technically operate in Finland, and gambling on foreign sites is completely legal for Finnish citizens.

An exception to the state monopoly of Veikkaus is the gambling company Paf, situated in the self-governing province of the Åland Islands. In addition to international operations, Paf has the permission of the Åland Government to organize games in Åland and on the seas. Paf cannot therefore sell or market its games on the continental side of Finland.

Future Outlook for Finnish Regulation

The reform of the Act on Lotteries is in progress. According to the Government’s proposal, gambling providers would in the future be obliged to identify their slot machine customers. Subsequently, gambling on slot machines would practically be possible only through a Veikkaus’ gaming account. The planned restraint would largely exclude foreign tourists from using Finnish slot machines, as Veikkaus could only open an account for people permanently residing in Finland. However, it is intended that the machines would remain playable without a gaming account in Veikkaus’ own gambling halls and casinos. In addition, the proposal also includes amendments to the application of the Act on Money Laundering and the simplifying of licensing procedures. According to the proposal, the Act would enter into force gradually between autumn 2019 and January 2022.

The Ministry of the Interior is also currently conducting a preliminary study on the possible introduction of technical restrictions on access and money transfers. The result of the planned provisions would be that Finnish players could not access or transfer money to foreign gambling sites in the future. Veikkaus’ vice president Velipekka Nummikoski has also confirmed that the company is supporting the blocking of foreign gambling operators and money transactions to certain gambling accounts. Thereby Finland would be regulation-wise moving towards so-called IP-blocking, which effectively would result in Finnish players not being able to access foreign gambling sites.

The Future of the Monopoly

The Government’s proposal to amend the Lottery Act has attracted the attention of the Finnish Competition and Consumer Authority (FCCA). In its statement to the Ministry of the Interior, the FCCA calls for a comprehensive and critical analysis of Veikkaus’ current monopoly position. FCCA requires a thorough analysis of whether the gambling monopoly indeed generates the benefits that justifies the existence of the monopoly. Preventing the disadvantages of gambling is a prerequisite laid down by the European Union for allowing a state-controlled gambling monopoly. However, recent research made by the National Institute for Health and Welfare shows that the recent reforms have not succeeded in preventing the harm and disadvantages caused by gambling.

Veikkaus has also recently been heavily criticized for its gambling activities and thereto related marketing measures, which have been viewed as promoting gambling in an excessive manner. Also this aspect supports the need to thoroughly analyse the current monopoly-based system and whether there exists sufficient grounds to maintain the monopoly of Veikkaus.

Regarding the regulation-based measures now planned by Finland, namely the plans of IP-blocking gambling sites and restricting of money transfers, said measures and their effectiveness as well as appropriateness in the era of online wallets and cryptocurrencies have especially been questioned by parties active within the gambling sector. An example of this are the statements given by the recently founded Finnish Sports Bettors Association, which heavily oppose the planned regulation.

Furthermore, in light of the development in the other Nordic countries – for example Sweden and Denmark, where the gambling market has been deregulated – the Finnish gambling monopoly can in many ways be considered outdated. In its current form it remains unclear what the benefits and disadvantages of the Finnish gaming monopoly are compared to a deregulated – but still supervised – gambling market, in which gambling companies would operate on a license-base. It however remains to be seen how the Finnish gambling market will evolve during the upcoming years – will Finland continue to be stuck in a gambling rut, or will Finland follow the example of the other Nordic countries and start proactively modernizing the gambling market?

Our Trainee Jere Lehtimäki took part in writing of this article.

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