Finnish government stake in Veikkaus online business categorised as conflict of interest

Finnish Gambling Consultants (FGC) partner Vähänen suggests the Finnish government should therefore sell off its ownership of the Veikkaus monopoly. The ministry of finance is to form a new regulator for the re-regulated market and Vähänen believes this dual role as operator and authority creates a conflict of interest.

The Finnish government released draft regulations to legalise online gambling in June. It opened a consultation period requesting stakeholders’ feedback by 18 August.

“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,” FGC’s response said.

Vähänen says this has also been flagged by Finland’s chancellor of justice and its competition and consumer authority in their proposal responses.

When the draft regulations were released, the ministry of the interior hinted at the possibility of selling off its Veikkaus stake.

“The state would have the opportunity to give up part of its ownership in Veikkaus, if this was considered justified in the future from the perspective of the development of the state’s shareholder value,” the ministry said at the time.

Will Veikkaus’ licensed business have access to its legacy database?

Vähänen believes Veikkaus’ legacy player database and tech stack would give it an unfair advantage against licensed online competitors. These competitors can legally move into licensed Finnish gambling markets in 2027.

Under the new rules, Veikkaus will be split into separate operating units, including its monopoly arm, B2B operation Fennica Gaming and a licensed online gaming business. The set up will be similar to Sweden’s former monopoly operator Svenska Spel or Denmark’s Danske Spil.

The monopoly will maintain exclusivity over lottery, toto games (lottery-based sports betting), land-based slot machines and scratchcards and will be required to pay an annual fee for exclusivity rights.  

However for the online business there is a lack of clarity as to how it will be separated from the monopoly operations, Vähänen says. He spent seven years in various positions at Veikkaus between 2013 and 2020.

He estimates Veikkaus’ customer base is worth hundreds of millions of euros and has called for a clear policy on whether Veikkaus’s current customers can be transferred to its licensed business.

“A company operating in a competitive market may not use the same resources as a monopoly company from the same group in a way that distorts competition,” Vähänen said.

Online and monopoly businesses should use different technologies

Veikkaus establishing an in-house technology business could present another competitive advantage, due to omnichannel marketing opportunities across retail and online slot players.

“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,” Vähänen said.

“The monopoly should not be able to supply the same games as the online licensed business.”

Vähänen has advised against Veikkaus’ monopoly over pool-based horse betting and digital instant win games, arguing no credible justifications have been presented for keeping these under state control.

“Based on the proposed law, the monopoly would mainly be in those product groups that cause little or no gambling problems. Only physical casino and slot machine operations are an exception in this respect,” he said.

“The inclusion of lottery game operations in the scope of monopoly cannot be credibly justified with these arguments.”

License affiliates for higher channelisation

Elsewhere, the filing advised against banning bonusing and affiliates, as was set out in the draft, as it would damage channelisation rates.

Vähänen advised: “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.

“An alternative to be considered could be, for example, the Romanian model, where affiliate operators are required to have a separate business license, which could be part of the proposed supplier license.”