Finland Needs Licensing Or More Enforcement Powers, Says Report

April 18, 2023
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Finland's monopoly system is at a “crossroads” and it must consider introducing a licensing system or more measures to prevent unlicensed online gambling, according to a highly anticipated report by the Ministry of the Interior.

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Finland's monopoly system is at a “crossroads” and it must consider introducing a licensing system or more measures to prevent unlicensed online gambling, according to a highly anticipated report by the Ministry of the Interior.

The report, published on Monday (April 17), found that the number of gamblers not using the exclusive rights system has remained stable in recent years at around 5-6 percent; however, the amount of money that is lost is estimated to be about €500m to €550m per year.

“There are no signs” the situation will improve unless measures are taken to prevent it, the ministry said following its three-month research project examining alternatives to Finland's exclusive rights system.

The findings in the report are intended to support future political decision-making.

Recent elections in Finland returned the National Coalition Party (NCP) as the country’s leading party, with NCP officials telling VIXIO GamblingCompliance they are committed to reforms.

But before taking any measures, the report warns the government to evaluate the likely societal benefits and harms.

“Sufficient time should also be reserved for the preparation of the regulation regarding the licence system” as the likely effectiveness of channelisation “is dependent on the regulation and the tax level”.

The National Police Board, which oversees enforcement action, welcomed the report's emphasis on information-based decision-making and agreed with its statement that any reform should be aimed at reducing gambling-related harm and effective intervention against unlicensed gambling.

However, police board chief inspector Mikko Cantell said it would be difficult to assess the effect of recent legislative reforms, which gave the regulator new tools to counter illegal gambling.

Payment blocks, which were introduced at the start of 2023, “in particular have a delayed effect, as they can only be imposed in conjunction with prohibition decisions. The administrative process is designed to protect the rights of those involved who may potentially become the object of heavy interference in economic activities,” Cantell told VIXIO.

When it comes to current monopoly operator Veikkaus, the report says it is possible to organise its ownership and structure in several different ways if a licensing system is adopted.

“In principle, competition and state aid law regulations do not prevent [a competitive online] Veikkaus from operating as part of the Veikkaus Group. The arrangement of Veikkaus' ownership control would ultimately depend on the state owner's strategic goals for Veikkaus,” the report says.

Even if a licensing system is eventually introduced, the report argues that in order for it to best protect consumers it must be supported by restrictions on gambling outside the system.

These comments and report findings are similar to those made by the Finnish Institute for Health and Welfare (THL), which warned the government that any change to the current licensing system must be based on evidence, which it said does not show an increase in problem gambling or gambling outside the monopoly.

The new study examined the gambling systems in Sweden, Denmark, the Netherlands and France, which all have licensing systems in place, and Norway, which has a monopoly system.

The countries that implemented licence systems were deemed to “have succeeded in significantly improving the degree of channelisation of online gambling. On the other hand, varying estimates have been presented during the survey work on the degree of channelisation of the Norwegian exclusive rights system,” according to the report.

Antti Koivula, a partner and legal advisor for Finland-based law firm Legal Gaming, said that according to the report's evaluation of these countries, the only alternative to a licensing system “would be to introduce an even stricter monopoly model”.

The winners of Finland’s recent general election have said they are keen to “give up” the Veikkaus monopoly and move the country to a licence-based system for online gambling.

“At the same time, the NCP also wants to do more about the problems gambling is causing some people,” a spokesperson for the party recently told VIXIO.

“We would like, for example, to move slot machines to separate closed spaces, increase the control of gambling and separate the beneficiaries more clearly from the distribution of the money received from gambling,” the NCP said.

A new government and government programme still need to be formed, with the latter determining the pace and tone of the upcoming change, according to Koivula.

“The report recognises the need to examine several topics more in-depth, and the work in the new study groups should be initiated as soon as possible to avoid any unnecessary delays,” Koivula said.

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