Finnish Veikkaus Is Considering Dismantling Its Monopoly

At the end of August, the Finnish gambling company Veikkaus announced that it was ready to abandon the monopoly system and move to a free licensing model. The news came as a complete surprise to the industry, which until now has been adamantly opposed to the abolition of the monopoly.

The turnaround was hidden in Veikkaus' interim report for the first half of the year. Midway through CEO Olli Sarekoski's foreword, Sarekoski said that Veikkaus' share of the digital market has fallen close to the 50% mark. This threshold has been widely seen as critical.

According to Sarekoski, if the decline cannot be halted, it is worth considering bringing all gambling under the same regulation. In practice, this would also mean licensing and supervising operators other than Veikkaus.

Currently, Veikkaus only accounts for around 51% of online gambling in Finland. The Finnish digital gambling market is estimated to have been worth around €520 million in the first six months of the year.

Of this amount, around €260 million was spent on Veikkaus games and the rest was played to foreign gambling operators. The trend has been the same for several years now, with Veikkaus steadily losing share of the digital casino games market.

Veikkaus has wanted to maintain its monopoly

The mention of the move to an open licensing system in Veikkaus' interim report is a significant change of direction from the company's previous position. Up to now, Veikkaus has done everything in its power to maintain its monopoly position and has not given the green light to a licensing system.

In 2020, a comprehensive reform of the Lotteries Act was proposed in Finland, one of the main purposes of which was to strengthen the role of Veikkaus. Specifically, the aim, according to the Government, was to "combat gambling malpractice, tackle marketing that contravenes the Lotteries Act and channel the demand for gambling into the supply regulated by the Lotteries Act".

The main changes in the amendment were mandatory identification when playing Veikkaus games and a marketing ban on non-Veikkaus games in mainland Finland. This change in the law also caused some grey hairs for social media influencers, among others, who have previously promoted online casino games on their own channels.

In addition, the change in the law will bring with it barriers to money transfers to foreign gambling sites, known as "payment blocks". The aim is to prevent deposits to online casinos that violate the marketing ban by advertising their services in one way or another in Finland.

Sweden moved to an open licensing system earlier

In Sweden, Svenskaspelinspektionen used to have a monopoly, like Veikkaus. However, the company lost so much market share in the digital market that it was decided to switch to a free licensing system instead of a monopoly.

Currently, gambling companies must obtain a Swedish licence to operate in Sweden. If a similar arrangement were introduced in Finland, all operators would have to apply for a licence from the Finnish Gaming Authority.

An open licensing system would bring new ways of collecting revenue. Companies would most likely have to operate from Finland, i.e. taxes would be paid in Finland. At the same time, revenue would also be generated in the form of licence fees and fines. At present, Finns lose around EUR 500 million a year abroad, and no tax is paid on this amount to Finland.

According to Veikkaus CEO Sarekoski, Veikkaus has lost market share even further by introducing increasingly stringent measures to implement responsible gambling. For example, when the total loss limit is reached, many players switch from Veikkaus games to foreign gambling sites.

According to Sarekoski, the faster the transition to the new licensing system, the better. Whatever happens, the Veikkaus monopoly system will not be dismantled for many years.