Finland should review its role in online gambling to avoid conflicts of interest
Date: 2024-08-12 Author: Robert Beloved Categories: EVENTS
The Finnish government plans to legalize online gambling by 2027, which could give state-owned Veikkaus a significant competitive advantage, warns local expert Jari Vähänen. In this regard, Vähänen, a partner at Finnish Gambling Consultants (FGC), suggests that the Finnish government consider selling its stake in the Veikkaus monopoly. He believes that combining the functions of operator and regulator would create significant risks of conflict of interest.
In June, the Finnish government presented draft regulations for the legalization of online gambling and opened a consultation period, calling on stakeholders to provide feedback by August 18.
"The Finnish state aims to maintain a dual role: controlling the legislation and supervision of gambling, while also owning the company that participates in these games. This model carries a high risk of conflict of interest," the FGC said in its response to the draft law.
Vähänen notes that similar concerns have also been expressed by the Finnish Chancellor of Justice and the Competition Authority in their responses to the draft law.
When the draft law was published, the Finnish Ministry of the Interior hinted at the possibility of selling its stake in Veikkaus.
"The state could give up part of its stake in Veikkaus if this is deemed appropriate in terms of shareholder value development in the future," the ministry said.
Access to the Veikkaus database: an inequality of competitors?
Vähänen believes that Veikkaus's legacy player database and its technical resources will give the company an unfair advantage over licensed online competitors, who will only be able to legally enter the Finnish market in 2027.
Under the new rules, Veikkaus will be split into several operating units, including a monopoly operation, a B2B operation called Fennica Gaming, and a licensed online gambling business. The approach will be similar to the model used by the former monopolies in Sweden (Svenska Spel) and Denmark (Danske Spil).
The monopoly will retain exclusive rights to lotteries, betting, land-based slot machines, and instant lotteries, for which it will be required to pay an annual fee. However, Vähänen is concerned about how the online operations will be separated from the monopoly operations.
He estimates Veikkaus' customer base to be in the hundreds of millions of euros, and insists on a clear policy on whether Veikkaus' current customers can be transferred to the licensed business.
"A company operating in a competitive market should not use the same resources as a monopoly company in the same group if this distorts competition," Vähänen emphasizes.
Technology and Marketing: Differences for Different Sectors
In addition, Veikkaus' creation of its own technology company could be another factor contributing to its competitive advantage, thanks to the omnichannel marketing opportunities among retail and online players.
"These slot machines could become a significant marketing channel for the respective games, which would give the licensed company Veikkaus a significant competitive advantage," warns Vähänen.
Vähänen also advises abandoning monopoly control over betting and digital instant games, as there are no convincing arguments in favor of keeping these areas under state control.
In conclusion, Vähänen believes that it is necessary to reconsider the ban on bonuses and affiliate programs specified in the draft law, as this will negatively affect the level of legalization of the industry.
