Monopoly?

To be honest I have always been against monopolies but I have worked last 27 years in monopoly companies. How that could be possible and what I really think about monopoly in gambling business?

I was quite active in politics during college and university times. My ideology is politically from the “right side” and I believe on business rules but also the “Nordic welfare state model” where the State has big role in the society. I have studied economics at the University where my professor Matti Virén taught us among other things how the optimal economy should work and that’s quite far away from monopoly model… Monopoly is only good for the company which has managed to get that kind of position!

But nowadays I understand that there might be reason to have monopoly in some business areas which shouldn’t act based on free business rules. Those exceptions should be possible in businesses which might cause serious problems to customers and where the State would like to have tight control of business. Gambling is good example of that kind of business. It’s a fact that gambling might cause problems to some customers and that’s why the State should control that business. The State could do that in many different ways but gambling shouldn’t be organized without any control of the society as a free trade!

My home country Finland is the member state of European Union and we should follow the laws set by EU. It might be surprise to some of you that there is no common legislation about gambling issues in EU? There have been many court cases in the European Court of Justice (ECJ) where they have decided gambling related issues. Based on those cases EU has required some member states to change their gambling legislation and rules. Finland has been in that kind of process too but some years ago EU decided that the Finnish gambling system is acceptable from their point of view. EU also accepted the new model where we now have all possible gambling business in one monopoly company. EU has let the member state to decide who they are organizing gambling businesses in their own country.

The models are varying very much from country to country. The important thing is that legislation should follow the main principles of free movement of goods, services, capital and persons inside EU. You might think that monopoly is preventing free movement of services and it’s doing that but it’s ok according to ECJ if there reasons to limit that kind of business. ECJ has decided to member states could limit gambling business if the purpose is to prevent problem gambling or other social problems or prevent criminal actions like money laundering or match fixing. ECJ has also decided that also monopoly companies should have opportunity to further develop their products and services and channel the demand of gambling products to their offering. The profit from gambling business to the State can’t be the reason to have monopoly but that profit is not negative feature and there seem to discussion in EU should it be even more.

So it’s possible to organize gambling business with monopoly model as Finland has decided to do. In most of EU countries the lottery business is in model monopoly and other gambling businesses have moved to license model. I’ll tell you more about those other models in next blogs.

I believe that monopoly model as such will prevent problem gambling compared to model where we would have several licenses. There should be correlation between the size of gambling business and the number of problem gamblers – the more customers are playing the more problems there will be. The size of business will increase when business will move from monopoly to free competition in all possible businesses. If monopoly company has possibility and capability to develop its’ products and services and it won’t do too much marketing action it’s the best and most secure gambling system from the customer point of view! Whatever model we have it should work properly otherwise we should make changes to that.