Finnish Gambling Sector Is Evolving into a Unique Model for Other Nations

For starters, Finland's state-directed gambling sector is highly successful. In an age when economists tend to downplay the role of nationalized industries, Veikkaus has managed to create an efficient, popular, and socially responsible role.

Based on the latest H2GC reports, Finns are enthusiastic gamblers. The total revenue of the state monopoly now consisting of RAY, Veikkaus and Fintoto is a whopping 3.2 billion Euro per year, 340 million of which was from the national lottery.

The limited stakes involved and the way that revenues are funneled to good causes means that the industry has a much more constructive influence than in other countries. The Helsinki Casino prides itself on its website that “It is the only casino in the world where all the revenue goes to charity.”

Just look at the UK, where the mounting losses of players on Fixed-Odds Betting Terminals at high street betting shops has led to knee-jerk legislation and conflict.

MIXING BRICK-AND-MORTAR CASINOS WITH A FLUID ONLINE GAMBLING MARKET

Finland remains a place where you are unlikely to pass a physical casino. According to H2GC, there are only 16 Veikkaus-managed locations across the country, compared with 140 in the UK (and 24 in London alone). So, you would think that slots are a minority interest. But you would be wrong.

The Veikkaus’ revenue report shows an increase in the share of the digital activities. The company’s digital revenue increased by 10% from last year and in Q1 comprised 44% of the total revenues generated. The number of weekly active online customers stands at 626,000, which is an 11% increase. This shows that the monopoly is coping successfully with international providers, which might give the regulators less incentive to liberalize the market. Veikkaus claims to have captured 90% of the online market and furthermore, plans to “renew the company’s strategy in 2018 to respond to the strong change in the operating environment.”

The types of Malta (EU) licensed casinos offer a Finnish site and Finnish customer service. And these casino operators are also referred to as a Finnish casino (suomalainen nettikasino) in everyday speech as well. The only difference is where the company is registered.

The main operators are based in other EU countries, with Malta being particularly popular. The Mediterranean island now harbors hundreds of Finns, who work on Finnish content and help to market their companies to players back home or work in customer support.

It is a strange situation and shows how the European Union has allowed multinational markets to co-exist with traditional state-led economies. But what does this mean for Finnish gambling in general? Can this balance of internationalized online casinos and domestic regulation really last or will Finland follow Sweden, that re-regulated the gambling market and lifted the monopoly in the beginning of 2019.

PROGNOSIS FOR THE FINNISH GAMBLING SECTOR

Veikkaus, which is a Finnish state-owned company, has a monopoly over all gambling activities in the country. The company provides a wide array of games, including the Finnish national lottery, fixed odd betting, football pools, scratch tickets and so on. In total, there are 20 different kinds of games organized by the company. 

Note: Despite the European Union urging free trade for all market players several times, Finland does not ban a state gambling cartel.

Most of its revenues are derived from the national lottery, which is extremely popular among the Finnish population. Interestingly, Veikkaus is managed by the Finnish Ministry of Education and the proceeds from its operation are channeled back to it. In 2010, these profits amounted to 463 million euros. The rules of the games, on the other hand, are controlled by the Ministry of Internal Affairs.

This model of regulating gambling activities in the country has been ubiquitous in the Nordic countries, but recently a new trend of liberalization has emerged. The national monopolies are having a harder time maintaining a customer base as people are switching to the online casinos, which are more difficult for the authorities to keep away. 

Internationally licensed online gambling providers are still able to reach the customers in countries where it is illegal for privately owned companies to provide these services. Some countries have tried to employ the banking sector in order to limit the power of such companies to process transactions for the customers. There has been a case of resorting to Apple devices in order to remove some gambling applications from the App Store as well.

As stated by the editor of the Finnish website Netti-casino, it is interesting to see what path Finland will take when it comes to liberalizing the gambling market. There is a precedent for both liberalization as well as toughening of the regulations.

Sweden and Denmark are already accepting applications from private companies for gambling licenses, while Norway is trying to strengthen the hold of its national monopoly over the market. There are no signs as to which direction Finland will follow yet. 

There are some obvious advantages to be had with liberalization. The government is not able to collect taxes from underground markets, which emerge when activities that are in demand are banned by regulators. With a regulated market, it could see a surge in tax revenues.

Notwithstanding, there is the core problem facing online companies and the government going forward: how to reform the monopoly model to retain the good aspects (reliable brick and mortar casinos, revenues for charity, strong licenses) and avoid either total liberalization or prohibition.

Supporters of online casinos are optimistic, but one serious issue remains. As a recent National Institute of Health and Welfare (THI) report found, the country has a challenge regarding problem gamblers. But perhaps online casino operator and the Finnish state could help to curb the development. As in Sweden where there is a national register, spelpaus.se, where you can block yourself from all gambling sites with a Swedish gambling license.

There are at least 124,000 people with gambling problems in Finland. According to the latest stats from THL, men are playing less, but women are catching up. Most of the problem gamblers are affected by online gambling. Finns lost 300 million to foreign online casinos last year.

Finland is not the kind of country to let people waste their lives or suffer unnecessarily, so the government will act to help addicts. If the online casino community can work in tandem with the state to help screen problem gamblers, it should be able to emerge in a stronger position.

In the process, we may well see a totally new national model - one where dynamic new online casinos operate responsibly while entertaining their audience, and where the social effects are taken seriously. If anywhere can achieve this, it is Finland!