FINALLY, IT IS READY

Unfortunately, the changes to the Finnish gambling system have kept me so busy this year that I haven’t had time to write blogs. However, here is a new text that I wrote on behalf of http://www.finnplay.com.

When the Finnish government submitted a proposal for new gambling legislation to Parliament in early April, it was hoped that Parliament would make the decision before the summer holidays. However, this did not happen, and the discussion of the matter was postponed to the autumn. At times, it appeared the Parliament’s decision would be made before the summer holidays, but in 2026 rather than 2025. However, the discussion is complete, and the law’s official approval is a formality. The President’s signature will be required to confirm the law later this year, but it is just a standard part of the process. Fortunately, the postponement of the decision-making did not directly affect the planned schedules.

The delay in the parliamentary process was primarily due to a few potential constitutional issues and disagreements over the timetable for the law’s implementation. There was no significant political debate over the need to change the gambling system, but the parties’ views on the emphasis on responsible gambling and on business opportunities differed as expected. The current right-wing government places a slightly higher emphasis on business than the left, which emphasises responsibility. This is also reflected in the two dissenting opinions: the Left Alliance proposed starting the legislative preparation from scratch, and the Greens proposed adding several elements of responsibility to the legal text. The Parliament voted by a clear margin (153-21) in favour of the Administrative Committee’s report, which clearly illustrates the parties’ unanimity on the matter.

The law will take effect on January 1, 2026, and the application process for gambling licenses will begin on March 1, 2026. The most significant change concerns the timing of the practical transition from the current gambling system to license-based operations. Initially, this was scheduled for the beginning of 2027, but the go-live date has now been moved to July 1, 2027. At the same time, it was decided to move the introduction of the gambling software license (B2B license) to July 1, 2028. The schedule change will also affect the start date of the new supervisory authority. The current supervisory authority, the National Police Board, will oversee the licensing process and serve as the regulator until the end of June 2027. After that, the new Licensing and Supervision Authority, which operates under the Ministry of Finance, will become the supervisory authority.

Finland is an interesting market for gambling operators

The legislation aims to establish a system in which the channelisation rate is maximised (approximately 90%). This should be done in a way that does not increase gambling problems and allows gambling companies to conduct reasonable business in Finland. In my opinion, the creation of this entity was at least sufficiently successful. At least the Finnish Gambling Industry Association, PAF, and the current monopoly company, Veikkaus, seem reasonably satisfied with the outcome. There has been more criticism from smaller operators, but at this stage, there is no compelling reason to critique the system.

I have already discussed the content of the upcoming law in my previous blogs, and there were no significant changes to matters that would affect business opportunities during the parliamentary debate. If you want to learn more about the content of the law, you can read the blog post I wrote at the beginning of April. At this stage, however, the most significant change to the bill concerns the authorisation for search engine marketing. Games and the gambling license holder that operates them may be marketed in online search engines when the search term is directly related to the license holder or the game it operates. In practice, this enables, for example, the use of Google Ads as a marketing tool.

Finns spend more money on gambling per capita than most countries. I don’t know Finland’s exact ranking on that statistic at the moment, but we have been among the top 3 countries and are likely still in the top 10. So, the market is attractive to gambling companies. The new legislation enables a wide range of products to be sold through digital channels, and betting products can also be sold in retail channels. In addition, marketing opportunities are strong, particularly in mass media, where brand-level advertising can be conducted relatively freely. The same applies to sponsorship. The volume of gambling is not restricted; customers are required to set deposit limits for each operator they use, but there is no upper limit on these limits. I believe that, given these opportunities, we will see a surge in gambling marketing, at least in the first year of the new system’s operation. However, based on experience in other countries, it can be assumed that advertising volume will plateau at a level significantly lower than during the initial boom.

Although the business opportunities appear favourable to gambling companies, there are also risks to their operations. There is a risk that marketing will become so extensive that public opinion will turn against gambling. At present, Finns have a reasonably favourable attitude towards gambling. It is crucial for the entire gambling industry that operations ensure Finns are satisfied and that the climate remains positive. One of the most significant threats is related to the supervision of gambling activities. To achieve the most critical goals of the reform, the supervisory authority must make every effort to prevent companies operating outside Finland’s license-based system from doing so. In Sweden, the regulator has, in practice, focused on supervising only the operations of licensed companies, which is why “black market” operators have captured an increasing share of the digital casino market. The same must not happen in Finland.

We are on the threshold of a significant change. Finland is an interesting gambling market, but one with its own special characteristics. Finnish customers are not the same as those in Sweden, for example. Therefore, gambling companies should not copy the operating model directly from Sweden. A better approach is to develop a Finland-specific model that accounts for customer behaviour, partner networks, and specific technical operating requirements.

One size doesn’t fit all

I have written this text for http://www.lotterydaily.com, and Conor Porter has partly edited it.

I’m sure you know the t-shirts sold in tourist stores, the size of which is stated as “one size fits all”? I’ve always wondered how stupid people are when they buy shirts that don’t look good on anyone. Similar examples of selling the same product can be seen in all industries. The selling company focuses on lowering the cost level and seeks large economies of scale by keeping production in one or a few products. However, such a business strategy can only produce bulk products that are not of great importance to customers.

I have written several times in my previous columns about how important it is to understand customer needs. With the data collected from customers, companies can offer even better products and services which, in turn, increase business profits. When successful, customized products are an actual win-win situation where the company receives more revenue, but at the same time, customer satisfaction increases.

Lotteries, especially in the field of lottery games, sell their products to such a large number of customers that, at least in theory, one product fits all thinking might even work. Such a product suitable for everyone should be developed with the average customer in mind. If the customer base is large enough, then the average product may be of interest to a sufficiently large customer group. A lotto game focusing on the jackpot could be such a product, for example. The smaller and more heterogeneous the customer base, the more difficult it is to develop a single product that suits everyone.

However, the actual topic of this column is not the products and services that lotteries offer to their customers. Instead, I would like to highlight the challenges of action between gaming technology suppliers and gambling operators. Based on my previous experience with lotteries and now through additional information obtained through consulting, I argue that some kind of “interpreters” would be needed between operators and technology companies to understand each other better. It may be that there should be similar “interpreters” within gambling companies between business and technology people.

I admit that I see the situation perhaps too much through the eyes of the lottery. In any case, it seems that a large percentage of gaming technology companies are looking to sell the same product and the same technology solutions to all gambling operators. Like in the B2C business, customers are different in the B2B business; clients are different and have specific businesses. The understanding seems to be enough for casino companies, betting companies, and lotteries to belong to different series. Instead, it seems surprisingly difficult to understand that lotteries are a completely heterogeneous group of companies. Sure, some lotteries resemble each other more than others, but a business-oriented, stock-listed lottery needs something other than a lottery like a state office.

I’ve talked a lot about the need for lotteries to develop their digital business and, on the other hand, the need to add new product verticals. As such, an excellent digital platform may be too complicated for a company starting a digital gambling business, while the same solution may be far too simple for a lottery that has been running digital operations for years. Technology companies should understand the levels at which different gambling operators are in different areas. Based on this understanding, it could be easier to tailor individual solutions to companies. The situation is thus quite similar to B2C, where the aim is to offer players personalized products and services. In reality, those products are not made individually for each customer, but the goal is to create a feeling for the customer that this is just for me.

Take, for example, the product area of betting. A technology supplier seeking to sell its betting solution to lotteries must understand at least the legal situation in that target country, the current state and strategic importance of sports games in the entire operation of the lottery, and the technology architecture of the gambling company. The legislation affects many issues and may impose specific requirements that make basic solutions impossible in that country. The needs of sports games are different for start-up companies than for a company operating in this product area for a long time. It is also possible that some lotteries just want to offer sports games to serve their customers, while other lotteries strive to make the maximum profit out of sports games as well.

For a lottery that wants to add betting to its product portfolio but still intends to focus on running lottery games, the full-service solution is perfect. The technology must meet the requirements of the country’s legislation, but it does not have to have any specific business specialties. The reliability of technology is a crucial element. In addition to the basic technology, there is also a need for ready-made odds, usually obtained from large companies focused on them through a revenue share agreement. Selling such a total ready-made package to large lottery companies running sports games, on the other hand, is entirely pointless. Many lotteries operate in sports games in the license-based market, where they compete openly against other operators. In a situation like this, you can only succeed by doing things differently, better than your competitors. That requires tailored services and also, at least in some sports, different odds from other companies.

Understanding IT architecture is an exciting area. Traditionally, lotteries have purchased their technology solutions from a single supplier. Lottery technology solutions have been based on a model where the central gaming system has been at the heart of it all. However, the situation has changed, at least for more advanced lotteries. The companies source the best solutions for different areas from different technology suppliers. Therefore, system integrability is of great importance to such companies. Instead, traditionally operating lotteries still want to buy all the technology from one supplier. It goes without saying that it is not worth trying to sell the same solutions to such lotteries.

As more and more lottery companies have switched to a multi-vendor model, technology companies have also changed their operating methods. However, I believe that suppliers still have a lot of opportunities to improve their service if they better understand the situation and needs of their customers. As I said above, the result of such action is, at best, a win-win situation where the technology company gets more sales, and the lottery is even more satisfied. In fact, there is still a third win in this model, as lottery players are also likely to be happier than they are today with better products.

Lotteries’ requirements are growing – operating models must change

I have originally written this text for http://www.lotterydaily.com, and Conor Porter has partly modified the text.

A company’s mission is to make a profit for its owners. That is also the case for lotteries, although they do not fully follow the way standard business companies operate. Responsible gaming and the restrictions that arise from gaming play a significant impact. Ultimately, lotteries also strive to achieve the biggest possible income flow for their owners and beneficiaries within their operation framework.

Companies that strive for results are constantly thinking about the best ways to run their operations. The goal is to keep up with developments or even be at the forefront. It is also a requirement to do the activity as efficiently as possible. Successful companies must also be better than their competitors in the same market in at least some areas.

Back in the early 2000s, lotteries did not think as described above. The companies have mainly been state-owned or at least have a monopoly position granted by them. That has reduced the pressure of business success and, in many cases, lotteries could be described as government offices rather than successful businesses. From an economic point of view, it is clear that a monopoly company always operates less efficiently than a company involved in the competition.

Most lotteries have not sought and still do not strive to be at the forefront of development. Companies have even had difficulty keeping up reasonably with the changing world around them. However, that has not hampered operations as long as the monopoly position has remained in practice and not just on paper. Attention has been paid to the efficiency of operations, but the starting point has been, above all, saving and not optimizing operations. Nor has the aim been to be the best operator in the market, even in some areas, as quite a few lotteries have been denied competing against anyone.

Of course, the situation is not the same everywhere. As I have already stated in my previous columns, the lotteries are a very heterogeneous group. There are still many state-owned companies among lotteries that are even part of the administration and operate like government offices. On the other hand, there are very business-oriented companies in the lottery world, some of which are owned by private equity investors or are even listed companies. The operating models of the state office and the listed company are not the same.

I do not mean that all lotteries should act as standard business companies do. Instead, I mean, each lotteries’ operating models can’t be the same because their goals are so different. Each company must find the most suitable operating methods for its operating environment and goals. The situation is such that there are no one-size-fits-all solutions.

One exciting area is outsourcing. How much and what companies should do themselves and what aspects they should outsource? It is not just a question of cost efficiency, although companies too often only think about that. By outsourcing operations, a company can achieve cost savings. Yet, it is also essential to focus on what can best improve the way you do business. Outsourcing often helps simplify management.

One of the most commonly outsourced things in the gambling world is technology. Lotteries have traditionally acquired all gambling-related technology from a single supplier. Operating models have differed quite a lot between European and US lotteries, for example. European companies have mostly bought the technology, while US lotteries have outsourced the entire gaming system to technology vendors as well. IGT, Scientific Games, and Intralot have dominated this area for a long time.

However, especially for more advanced lotteries, the situation has changed significantly. The development of digitalization and the expansion of the operation of lotteries have mainly contributed to this. In addition to traditional scratch cards and lottery games in the retail channel, new product areas have emerged, such as sports betting, which is increasingly played on digital channels. That has changed not only the competitive situation but also the technical requirements.

While lotteries continue to operate draw-based games and scratch cards on a monopoly basis, and some companies also have a monopoly in other gaming areas, the shift to digital channels has further tightened competition. There are hundreds, if not thousands, of other gambling companies available to consumers on the internet and mobile world. Customers have also learned to demand better products and services from lotteries.

Traditional technology suppliers have excellently mastered the actual lottery gaming systems and related point-of-sale terminals. The structure of lottery games has been very similar for decades, which is why game development has been handled in collaboration with technology suppliers. However, the digital sales channel requirements and new product areas are different compared to traditional models. That has led to more technology companies entering the market, focusing on smaller specialty areas. Some companies have focused only on systems that operate on digital channels, others only on sports game solutions, and others only on game/content production.

The level of demand for many lotteries has increased with development. Advanced lotteries, in particular, want to take advantage of the best solutions in different areas, which is why buying everything from one technology supplier is no longer a viable model. Today, gambling systems in different product areas and sales channels may all come from different providers. That has caused a significant change in the IT-architecture. Everything no longer revolves around the lottery solution. Today, more and more companies have switched to a model where PAM is at the center of everything because customer data is the same for all game verticals and distribution channels.

So does outsourcing of technology make sense anymore? That is no longer possible for advanced and versatile gambling operators, so the issue is not valid for all lotteries. But the answer is not that simple. In the lottery sector, which still operates under strict state control and offers only traditional lottery products, it may make sense to continue all IT operations to a technology company and focus not only on administration but also on sales and marketing activities. The decision is made above all on what is most important to the company and its basis to achieve the most optimal profit level.

However, it is easy to predict that while the legal monopoly in lottery games may persist for a long time to come, the digitalization of the business will sooner or later drive all lotteries into a real competitive situation. In that world, traditional operating models will no longer succeed, but companies must understand and prepare for a huge change. That does not mean, for example, pushing responsibility out of the way of doing business, but changing companies’ processes, know-how, and management.