In Finland, the rules for gambling are strict. The only accepted operator in the Finnish gambling market is the state-owned monopoly Veikkaus and although Finns can gamble online on international websites, marketing such games for Finnish consumers is also prohibited. The government is now preparing another reform of the Lotteries Act, planned to enter into force in 2022. Despite the growing demand to end the monopoly system, it seems that the amendment will set even stricter rules for gambling.
The Finnish Lotteries Act sets out the main provisions on gambling and grants Veikkaus an exclusive right to provide and market gambling services in Finland. This monopoly system is often claimed to be the best way to reduce the risks associated with gambling and promote responsible gambling. The state’s gambling monopoly was established over 80 years ago and has been going strong ever since, although lately the demand to end the monopoly and open the market for private and offshore operators has grown. In the age of the internet, more and more Finns are also spending their money on foreign provider’ games, making cash flow outside Finland, as gambling on international webpages is not as such prohibited. The internet has also brought new opportunities for offshore gambling operators to circumvent the Lotteries Act’s marketing ban.
In Sweden, which Finland often follows when it comes to regulatory reform, the gambling market was opened to private and foreign operators. The Swedish state had a legal monopoly on gambling until January 2019. Since then, dozens of igaming companies have been granted a license to provide gambling services in Sweden.
Ending the monopoly, however, does not seem to be becoming a reality anytime soon in Finland. A majority of lawmakers are not in favour of abolishing the monopoly and feel that ending the monopoly would not solve the current problems. Several charity organizations also depend on the funds received from Veikkaus, and it is often argued that ending the monopoly system could have a negative impact on those organizations.
Current provisions and the issues with illegal marketing
The rules are quite simple: gambling services can be provided and advertised in Finland only by Veikkaus. Marketing has to be done responsibly, meaning that ads cannot be directed at children or portray frequent gaming as a good or positive thing. Marketing other gambling services than those provided by Veikkaus is prohibited. This includes all foreign online gambling providers.
Although the freedom to provide services is one of the four freedoms of the European Union single market, some restrictions have been approved by the Court of Justice of the European Union. Member states are allowed to limit gambling operations to ensure public order, health and safety and prevent the negative effects associated with gambling. In countries where gambling operations have been limited by legislation, it is also allowed to restrict the marketing of gambling.
Still, several international gambling operators are trying to circumvent the regulation and promote their products to Finnish customers in the Finnish language. Marketing is mainly on the internet as website advertising, e.g. via banners, and indirectly through influencer marketing on social media platforms, mainly on Instagram. Gambling companies are able to advertise on popular Finnish websites, since these sites usually sell advertising space through programmatic buying. For programmatic buying, the sale and purchase of an advertising site is targeted at a single user’s individual visit to each website and takes place through an automated auction. Content management is based on e.g. blocking lists, which allow the provider of advertising space to prohibit certain categories of advertising, such as gambling advertising. There is a lack of control over the lists as companies can themselves set in which category their services are listed and hence the advertisements can be found and listed in a permitted category instead of under gambling advertising and hence be found on sites where these advertisements should not be found.
Influencer marketing has become an increasingly popular form of marketing, where private individuals share links to gambling sites or websites marketing gambling sites, share videos of their gambling, highlight their winnings and increase awareness of gambling companies in other way to their social media followers. This is usually done using Instagram stories as a platform for the marketing, since the stories disappear within 24 hours. The authorities have been lacking proper tools to tackle this kind of marketing carried out by private persons.
In addition, marketing of gambling also occurs in various foreign TV channels airing TV shows in Finland. TV channel operators can lose their programme licence, if they violate the Lotteries Act, but the licence only applies to antenna networks, while cable television is excluded from the scope. In addition, the Audiovisual Media Services Directive is based on a country of origin principle, meaning that the provider of audiovisual content service shall be governed by the law of the Member State in which it is deemed to be established. Thus, as the foreign TV channels broadcast their programs from abroad, it makes it easy to circumvent the advertising regulations, since it is difficult for the Finnish authorities to intervene with foreign TV channel operators’ activities.
It seems that the problems are being addressed by tightening the law as the draft proposal for the reform of the Lotteries Act contains several provisions that tighten the surveillance and may give the National Police Board more tools to tackle marketing and gambling in Finland.
Expanding mandatory authentication to all gambling: Compulsory identification would expand from slot machines to all gambling games. The obligation for mandatory identification would apply to other games from the beginning of 2023 and expand to scratch cards in 2024.
Slot machine placing: Slot machines would have to be placed so that gambling can be supervised uninterruptedly by staff to prevent children and other vulnerable persons from gambling.
Stricter rules on marketing: More detailed provisions on the prohibition of marketing may be added. As already provided for in the Lotteries Act currently in force, only Veikkaus Oy would be allowed to promote its gambling games. In the future, Veikkaus would have to take the protection of children and vulnerable people even more into consideration.
In addition, the proposed regulation would give the National Police Board better tools to combat the marketing of gambling operating outside the exclusive rights system and those trying to circumvent the provisions of the Lotteries Act. In the future, the National Police Board could e.g. impose an administrative penalty on a natural person who has violated the Lotteries Act, meaning that in the future the National Police Board can intervene when social media influencers posting gambling-related content aimed at Finnish viewers.
Blocking of payment transactions: A system for preventing gambling-related payment transactions outside the system of exclusive rights would be introduced. The aim of this new provision is to limit the availability of gambling services marketed to Finnish people by foreign companies. Furthermore, the National Police Board would maintain a so-called block list where companies that violate the Lotteries Act with their marketing would end up. Banks and payment service providers would have to prevent gambling-related payment transactions for those companies. This provision is quite controversial and will definitely be debated.
New B2B operations: New provisions would allow Veikkaus Oy to establish a subsidiary for B2B purposes. According to the proposal, the B2B operations would be providing digital gaming products and services to other companies and not to the public.
Stricter rules = safer gambling?
As mentioned above, the monopoly system has been justified, if it has been deemed to be the best option to protect consumers from the risks associated with gaming. Although the number of gambling Finns has increased during recent years, the number of people suffering from problems related to gambling has remained approximately at the same level, at 3 %. When compared with other European countries with more open approach to gambling, the number is actually quite high, when the European average is somewhere between 0,5-2 %. The figures thus contradict the claim that a monopoly system would be the best option for consumer protection.
Since there are no laws that can effectively prevent offshore gambling, even when it comes to the proposed amendments, Finnish gamblers can look for gambling games outside of the scope of Veikkaus’ services. This poses a risk to players, as modern technology provides for several ways to circumvent blocking of websites and payment providers. And when Finns gamble on foreign websites, the Finnish state loses a significant amount of taxable revenue, which could be used to e.g. prevent the negative effects of gambling.
Although the amendment gives the authorities more tools to take action to combat illegal marketing under Finnish law, the proposed measures may fall extremely short of that goal. In a non-monopoly system it could be easier to control advertising if illegal advertising would result in the loss of a gaming license and large fines, which would encourage all operators to promote their gambling games within the legal framework.
Stricter rules are not the best solution. The existing problems and how to combat them, should be assessed more thoroughly and the current system should be reviewed objectively.
Text and additional information:
Juuso Turtiainen, Associate, +358 40 764 8910, [email protected]
Anni Kaarento, Legal Trainee, [email protected]