A major overhaul on the horizon: Finland’s regulatory framework for online gambling
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In Finland, significant changes to the gambling regulatory landscape are on the horizon, which will especially impact online gambling and online casinos. At present, Finland has a monopoly system for all forms of gambling, which is controlled by a centralized state-owned entity. But with a growing concern of the effectiveness of the system has made the government develop a new licensing framework, which is expected to introduce competition and increase oversight. This will have wide consequences for online casinos, making platforms such as Trustly kasinot more crucial than ever, as more consumers will have to navigate the variety of online casinos operating on the market.
The shortcomings of the current monopoly system
Finland has been operating with a strict monopoly system for decades. This has consisted of a single entity, Veikkaus, controlling the gambling sector, including lotteries, sports betting, and online casino games. The motivation for this structure was to mitigate problem gambling, while channeling revenue to socially beneficial causes. However, the structure has faced increasing criticism, especially related to the issue of market leakage. In this, large portions of Finnish gamblers turned to international operators which offered more variety, better odds, and promotions which were not available during the Veikkaus monopoly. Consequently, a big chunk of potential tax revenue was lost, and unregulated gambling flourished.
The Finnish government acknowledged these challenges, and in 2023 they initiated a comprehensive reform. The aim of this reform has been to modernize the system, adopting a licensing model allowing private companies to enter the market under regulated conditions. This would also align Finland with other European Union member states.
The proposed changes to the market: Open licensing system
The major aspect of the proposed regulatory overhaul is the introduction of an open licensing system for online gambling and sports betting. This system is expected to roll out in January 2027, and the system will dismantle Veikkaus’ monopoly on these segments. Instead, it will make it possible for private operators to apply for licenses and offer their services legally within Finland. Veikkaus will remain at the core of some operations, as it will have the exclusive rights over lotteries, land-based casinos, slot machines, and pool betting.
By introducing this hybrid system, the aim is for the system to have societal benefits provided by Veikkaus, and injecting some competition into the digital gambling space. Private operators will be subject to a gross gaming revenue (GGR) tax, which is a standard rate going across multiple EU nations. The reform will also introduce a business-to-business (B2B) software supplier license, which has the aim to encourage both competition and innovation in the online gambling sector in the country.
An aim of enhanced consumer protection
One of the main aims driving the reform is to enhance consumer protection. By introducing strict regulations around anti-money laundering (AML) and responsible gambling, the aim is to address issues of problem gambling. Some of these measures include player identity verification, registration, and residency checks. All of this will be aimed at ensuring players are at the minimum age of 18 years.
The reform is also proposing a centralized self-exclusion system targeting players struggling with gambling addiction. The reform will also tighten marketing regulations, to prevent promotional content for high-risk gambling products. Restriction will apply to using bonuses, affiliate marketing, and influencer endorsements, as there will be an increase focus in ensuring advertising is not targeting vulnerable groups.
Some of the expected benefits and challenges with the reform
By introducing a licensing system, the Finnish government is expecting various benefits to both the Finnish economy and players. The main benefit will be the opportunity to leverage the tax revenues lost to international operators and funnel the tax money back into society. Controlling domestic gambling activities more will ensure the government can profit from online gambling, and that this becomes a part of the state budget for public services. For consumers, a competitive market will offer new choices, better odds, and enhanced gaming experience. The Finnish government will also be able to reduce the risks associated with illegal and unregulated gambling, as the Finnish government will have more control through a regulated, multi-license market.
The transition brought from this reform also has some expected challenges. One is the process of dismantling Veikkaus’ long-held monopoly, while also successfully integrating new operators into the market, as this will all require significant administrative coordination. The rapid influx of new operators is also feared to foster a surge in gambling activity in the country.
The next steps in the process of this reform
At present, the Finnish government has outlined a timeline for the reform process. There is a consultation period going on, where stakeholders have been able to submit inputs. The final proposal is then expected to be submitted to parliament by spring 2025, and if approved, private operators can apply for license starting early 2026. Full-on operations are expected to begin in 2027, and complete full implementation is expected by 2028.
There is no doubt that the new open licensing model will be a departure from the traditional monopoly approach in Finland, which aims to address the inefficiencies of the system and enhance consumer protection. It is expected that Finland will take inspiration from other EU countries, which will ultimately bring Finland’s online gambling market in line with EU standards.