As Finland prepares to re-regulate its online gambling market, industry experts are raising concerns about potential conflicts of interest in the government’s dual role as both regulator and operator. Vähänen, a partner at Finnish Gambling Consultants (FGC) and former Veikkaus employee, is at the forefront of these discussions, advocating for significant changes to ensure fair competition and effective regulation.
Government Ownership: A Conflict of Interest?
The Finnish government’s draft regulations, released in June, propose the creation of a new regulator under the Ministry of Finance. However, the government’s continued ownership of Veikkaus, the state gambling monopoly, has drawn criticism. FGC’s response to the consultation states:
“The Finnish state wants to maintain a dual role, taking care of the legislation and supervision of gambling activities and, at the same time, owning the company involved in gambling activities. There is a high risk of conflict of interest in such a model.”
This concern has been echoed by Finland’s Chancellor of Justice and its Competition and Consumer Authority in their responses to the proposal.
The Future of Veikkaus
Under the proposed regulations, Veikkaus would be restructured into separate units:
- A monopoly arm
- A B2B operation (Fennica Gaming)
- A licensed online gaming business
This structure mirrors that of former monopolies in Sweden (Svenska Spel) and Denmark (Danske Spil). However, Vähänen points out several potential issues:
Legacy Data Advantage
Vähänen argues that Veikkaus’ extensive customer database, valued at “hundreds of millions of Euros,” could give its licensed business an unfair advantage over new market entrants. He calls for clear policies on customer data transfer between Veikkaus’ monopoly and licensed operations.
Technology and Marketing Synergies
The establishment of an in-house technology business by Veikkaus could create additional competitive advantages. Vähänen explains:
“Those slot machines would be a significant marketing channel for the games in question, from which Veikkaus’s license company would also gain a significant competitive advantage. The monopoly should not be able to supply the same games as the online licensed business.”
Recommendations for Reform
Vähänen and FGC propose several changes to the draft regulations:
- Government Divestment: The Ministry of the Interior has hinted at potentially selling off its Veikkaus stake. Vähänen supports this move to eliminate conflicts of interest.
- Monopoly Scope Reduction: Vähänen questions the justification for maintaining monopoly control over pool-based horse betting and digital instant win games.
- Affiliate Licensing: Rather than banning affiliates, Vähänen suggests licensing them to improve channelization rates. He proposes: “If affiliate activities were allowed in Finland, these companies would have to follow the same marketing regulations as gambling operators and media companies. Affiliate activity should become significantly cleaner compared to the current practically completely unregulated situation.”
- Bonusing Reconsideration: The draft’s proposed ban on bonuses is also criticized as potentially harmful to channelization efforts.
As Finland moves forward with its gambling reform, balancing market liberalization with consumer protection remains a key challenge. The government’s response to these expert recommendations will shape the future of Finnish online gambling for years to come.