Guest Author, Jari Vähänen
The preparation of Finland's gambling system has officially started
I'm Jari Vähänen, a Finnish gambling consultant. I cooperate with Finnplay and have promised to update you on the progress of the change in the Finnish gambling system. In this, my first blog, I write about the planned change and its target schedule at a general level.
Why does Finland want to change the gambling system?
The Finnish state-owned company Veikkaus currently has a monopoly on all gambling in Finland. Veikkaus' product range includes lottery games, betting (both sports and horses), and casino games in retail and digital channels. However, Veikkaus' monopoly is realized in practice only in the retail channel, where no other gambling companies exist. On the other hand, Veikkaus faces tough competition in digital channels from offshore operators. Because of this, Veikkaus' market share of all digital gambling is around 50 %. In online casino games, offshore companies control about 2/3 of the market, and in fixed-odds betting, the share of foreign companies is already 90 %.
Veikkaus' weak revenue development and collapsed market share are why the Finnish government has decided to reform its gambling system and move from a monopoly to a partial license-based model. In fact, the biggest driver for the progress of the change was Veikkaus' announcement, in which the company said it wanted to give up its monopoly position in the area of digital casino and sports betting.
At the beginning of 2023, the Finnish government appointed an investigation group to analyze possible changes to our gambling system. The investigation resulted in two alternative models, one of which was an increasingly strict monopoly system, as has been done in Norway. However, the primary model ended up being a partial license-based system according to the Swedish and Danish models. Based on this, the new government that started in the summer recorded its government program as the goal of moving to a partial license-based gambling system by the beginning of 2026. The government program states that betting on digital channels and online casino games would be transferred to the license-based system.
The details will be worked out in the preparatory work
Unfortunately, the Finnish government had more important tasks than gambling matters in the summer and early autumn, so the official preparation work of the gambling system was only started at the end of October when a working group and a steering group were appointed. The starting point for the preparatory work is the approximately one-page entry on gambling matters in the government program. The target schedule is still by the government program; the new system should be valid from the beginning of 2026. Due to the delayed start and the significant content of the change, the schedule looks pretty tight.
All the details of the future legislation are still open, so nothing has been decided so far. Even the big questions, such as the division of product groups between monopoly and license systems and the division of different sales channels, are still open. In this situation, there is no information about even more detailed questions. However, due to the tight preparation schedule, information is expected to start coming in during the winter, as the first version of the law must be ready by March 2024.
The lobbying to influence the content of the future legislation will, therefore, take place during the next three months. In principle, you can try to influence the content of the legislation until the parliament has approved the new Lottery Act. In practice, however, it is difficult to influence the details during the public hearing round, the EU notification process, and the parliamentary hearing. In those stages, the focus is usually on the legal aspects of the legislation. If the schedule plans come true, the parliament will take up the official bill in the spring of 2025 and approve it by the end of 2025.
In the last week of November, the Ministry of the Interior, which is in charge of the legislative project, organized a hearing that lasted all day, where the different parties could present their views on the most critical issues of the reform. All the most significant parties were present, among whom was Finnplay's CEO, Jaakko Soininen. I also had the honor of presenting my views there. Based on the event, I can say that, at this stage, there is no unified vision about anything. Only the strict schedule did not lead to a disagreement, but the conclusions were different in that matter as well. Others would want more preparation time, but others do not want to postpone the legislation's entry into force.
The unfortunate fact is that the planned schedule is really tight. The working group has only four months to complete the content of the law. After the three-month opinion/hearing round, the law must be sent for EU notification, which takes 3 to 4 months and should be ready by the end of 2024, according to the plans. After this, a few more months will be needed to prepare an official bill for the parliament, ideally completed in February 2025. It is a large package of laws, which will take at least six months to process in the parliament, possibly more. I believe that the parliament will approve the new law in 2025. Still, it does not necessarily mean that the license-based system will be implemented immediately from the beginning of 2026. The changes in supervision (new regulator and technology) and the granting of licenses take time, which may postpone the practical start.
With the help of the future gambling system, the aim is to raise the channelization rate of Finnish gambling as high as possible. In principle, the target level should be 100 %, which means that all gambling should take place in Finland within the framework of the legal system. In practice, however, the system has been highly successful if the channelization rate can be raised close to 90 %. When almost all gambling takes place within the framework of the system, then responsibility measures aimed at preventing gambling problems can also have an impact.
The degree of channelization can only be increased in a situation where gambling companies have an interest in applying for a Finnish license. The generation of interest is particularly affected by the level of taxation, the strictness of marketing regulation, the limits on gambling, and any product restrictions. As I already stated, at this stage, it is still too early to speculate on what the restrictions will be. I will return to these issues in my future blogs once we have more information on the system details.
I believe gambling companies will apply for a Finnish license if they feel they can do profitable business in Finland. In addition, one significant factor is probably the extent of the bureaucracy and, in general, the ease/difficulty of working with the regulator. Many minor issues exist, such as a possible cooling-off period and technology requirements (e.g., certificates and B2B licenses). I will return to these details during the winter and spring.
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