We’ll finally get the new government here in Finland 7½ weeks after the Parliament election. It has taken more time than normally to establish that government than we are used to have. I believe that there are two main reasons for that. The first one was EU Parliament election. Parties weren’t willing to announce the new government program before EU election. The other reason has been quite strange result of Parliament election. The biggest party got just a little more than 17 % of votes (for the first time under 20 % ever) and there was no clear winner at all.
Anyhow now it seems to be sure that the new government will be there soon. We shall face strong movement from the “right side” to the “left side”. There will be four former opposition parties in the government and just one party will continue in that new government too. That will mean that many things will probably change in next four years. I’m keen on seeing what it will mean for gambling business.
As you know we have monopoly system in whole gambling business here in Finland. My company Veikkaus is taking care of all possible gambling businesses. As far as I know all big parties have supported that system at the principle level. So, new parliament and government won’t necessarily mean anything from gambling system point of view. But there is more and more discussion about our system anyhow and I’ll now give just my personal estimation/guess what might happen in next few years.
The Ministry of Interior Affairs is responsible for the gambling legislation and regulation. Civil servants of that ministry have made study about what kind of needs our gambling legislation would need. The published a memo about that last week and you could find it here: http://julkaisut.valtioneuvosto.fi/handle/10024/161645 (only in Finnish). That memo describes well how our regulator sees gambling business. Civil servants are not the final decision makers, but they will have lots of influence towards politicians.
The Finnish Lotteries Act (= gambling law) is a little bit strange. Veikkaus has monopoly in all gambling verticals (lottery, casino, sports & horse betting) and it’s the only company which has right to market it’s gambling product but not all of them. From customer point of view it’s anyhow legal to use services of other gambling operators and the Finns are doing that more than ever. Those offshore companies are not allowed to have any marketing & sales actions in Finland, but regulator can’t control that in online channels. Finland is not using any kind of blocking to prevent gambling abroad. Now discussion about need of blocking is increasing and something might happen in that area.
The Ministry of Interior Affairs has now analyzed if blocking could restrict gambling abroad and at the same time reduce gambling harms caused by those operators. They have found out that blocking could reduce total gambling and gambling problems. They also say that if there would be blocking then Veikkaus doesn’t need to market its gambling products and doesn’t have to develop games that attract players to gamble. I believe that it might be the case in short term but in long term that would mean big problems. The Finnish customers would be forced to use worse products than the other ones could have, and they would know that. What that would mean for the reputation and acceptance of gambling monopoly and Veikkaus as the best lottery company in the world? What would happen then when the monopoly system will anyhow change to licensed system – how Veikkaus could be ready in that situation?
The main purpose of monopoly system is to reduce gambling problems and whole gambling. The regulator doesn’t think about the gambling profits at all but politicians do. It would be easy to reduce gambling – make it illegal and stop it totally. That would mean “some” financial challenges – the total amount of money to the Finnish State from gambling business is over 1,2 B per year. It has been quite interesting situation where the state has at the same time required Veikkaus to slow down its operations and make at least the same amount of profit as before. Veikkaus must take responsible gaming really seriously and there will be more and more changes in that area. Maybe the biggest change will be mandatory identification in slot machine gambling from the beginning of 2022. I’m not expert in that business but I would say that it will mean 100 – 200 M€ less profit.
Veikkaus has nowadays international business co-operation in lottery and horse betting businesses. Eurojackpot and Vikinglotto are popular products in Finland! Common horse betting pools with the Swedish ATG have big share of the whole horse betting in Finland. There has been discussion could we continue that kind of co-operation. According to the study it seems to be possible to continue that kind of existing co-operation, but civil servants are skeptic to let Veikkaus to have more than kind of operation. Veikkaus would like to have more international B2B businesses but would it be possible?
I try to guess what the new government might decide about those four main themes in that study of the Ministry of Interior Affairs.
- Blocking – it would be easy to decide that we should have blocking system also in Finland if I think about that from the principle ideology of government parties. But I don’t believe that there would be any kind of blocking due (or thanks) to RKP (small Swedish speaking party). Blocking would have serious effect on PAF and RKP won’t let that happen.
- Responsible gambling – every parties is willing to take that even more serious and I guess that balance will move to that direction. I won’t be surprised if we’ll have mandatory identification in whole gambling business in next four years or at least the decision about that.
- Money – the government program sees to be maybe too positive about financial future and I’m afraid that they will realize that quite soon. So, there will be need for that 1,2 B€ also in the future. The challenge will be the balance between responsible gaming and gambling profits. I guess that the new government will accept some hundred million decline of gambling profits and take responsible gaming more seriously.
- International business co-operation – Veikkaus could continue the current international co-operation and could get permission for some other new areas if the will be channeling reasons for that. I believe that due to previous point – there should be some ways to get more gambling revenues from “not so dangerous” business verticals (lottery and other pool-based games).
As a joker I would like to guess what the new government will decide about the gambling system. As you probably have already noticed from my previous blogs I have though that we should ask “when Finland will move to licensed system?” instead of asking “is Finland going to move to licensed system?”. I still believe on that but now I would say that the gambling system won’t change during the next four years. The new government will try to make Veikkaus monopoly even stronger!