Can Veikkaus survive in Finland's liberalized gambling market?
Date: 2024-09-06 Author: Leon Pierce Categories: EVENTS
Veikkaus, the Finnish gambling monopoly, has been struggling in recent years. According to the company's half-year report published on September 2, 2024, its revenue has decreased by 21% compared to the previous year. CEO Oli Sarekoski attributed this to the decline in the purchasing power of the population and new player protection measures.
Lawyer Antti Koivula claims that Veikkaus has lost its competitiveness, especially after the Lotteries Act was updated in 2022. The company has lost about 40% of its gross revenue over the past five years. This is due to players increasingly preferring unlicensed operators for online casino games and betting.
Despite this, Veikkaus remains optimistic about the upcoming transition to a licensing system, which is scheduled to begin in 2027. The company plans to obtain a license for online casinos and betting, which will allow it to compete with private operators, while lottery games and slot machines will remain under its exclusive control.
Veikkaus is also actively restructuring its business. The company has announced that it may lay off up to 620 employees as part of a strategy to streamline operations. Sarekoski emphasizes that the goal of the company's strategy is not only to maintain its leadership in the Finnish market, but also to expand internationally.
The government's decision to open up the gambling market has sparked controversy. Some believe that the government rushed the new laws to support Veikkaus in the fight against illegal operators. For example, former CEO Jari Vähänen believes that Veikkaus will retain a competitive advantage thanks to its base of 2.5 million active players. He suggests that the government clarify whether the company will be able to use its existing customer base in the new licensed market.
Other market participants are also concerned about the possible privileges for Veikkaus in the new legislation. For example, the significant presence of the Veikkaus brand in Finland could give the company an advantage over new, smaller operators. Slot machines with the Veikkaus logo are ubiquitous in the country, and the brand is recognizable to most residents.
The question of whether the state should sell its stake in Veikkaus after the restructuring remains open. Some experts, including Vähänen, believe that maintaining the state's stake in a company that will operate in a competitive environment could lead to a conflict of interest.
Despite all the challenges, market participants are positive about the proposed legislative changes. Many see it as an opportunity to create a competitive gambling market that combines consumer protection with support for legal operators.
Market liberalisation may put an end to Veikkaus' monopoly, but it is also a chance for the company to stabilise its operations and get back on the growth path.
