Tag: #licensebased

The result of my prediction and other notes on the content of gambling legislation

I wrote this text at the beginning of April for the http://www.finnplay.com.

In my blog, published on February 27, 2024, I made predictions about the content of Finland’s future gambling legislation. At that time, I promised to assess the success of my predictions once the bill had been passed. Parliament began considering the legislative package on March 25, so now is the right time to return to the matter, although the content of the law may still change in Parliament, at least in some details.
Toward the end of this blog, I will discuss the planned schedule for our new gambling system and highlight a few content issues that I will not cover in my assessment of my prediction skills.
So here are my guesses about 1 year and 1 month ago and my assessment of their success.

  1. License-based system games: online casino, and sports and horse betting in both sales channels. The government program states that at least online casino games and digital channel betting will be transferred to the license-based system. However, I believe sports and horse betting will be transferred to the licensed side. It is crucial for the system to function correctly that the license entitles the operator to operate games in the retail and digital channels.
    My prediction was correct. The gambling license allows for providing fixed-odds and variable-odds sports and horse betting in digital and retail channels. Licensed companies can also offer digital bingo games, online casino games (e.g., roulette, card and dice games), and digital slot games. The exclusive licenses granted for ten years, which effectively constitute a monopoly, cover scratch cards and lottery games in both channels and slot machines and casino operations in a physical environment.
  2. License: Separate licenses for casino games and betting (including fixed-odds, pool-based sports and horse betting), with a license price of approximately 50000€. I support a system where one license would allow all games within the license-based system to be operated.
    The prediction was incorrect, but the solution is a model I announced that I support. A gambling license granted for five years at a time will enable the provision of all games that have moved to the multi-license system, meaning that there will be no separate licenses for betting and digital casino games. The license application fee has not yet been published but is presumably low. The license system will include an annual supervision fee, the price of which is tied to the gambling company’s annual GGR. The minimum price is 4000€ (GGR under 100k€) and the maximum is 434 000€ (GGR over 50M€).
  3. Tax rate: 20 – 25% of GGR. I would create a system where the tax rate varies depending on how dangerous the games are. With this logic, online casino games would have the highest tax rate, fixed-odds betting a slightly lower rate, and pool-based sports and horse betting the lowest.
    My prediction was correct, but the model I saw as the best solution did not come true. The proposed tax rate is 22 % of the GGR (i.e., the money lost by customers). In addition, gambling companies operating under a Finnish license will also have to pay income tax to Finland, like other companies.
  4. Marketing: Only brand advertising (company and product) is allowed. It is possible to advertise casino games on radio, TV, and other streaming channels for a limited time. Bonuses will be strictly restricted. Affiliate activities will be restricted. Sports sponsorship is allowed, but visibility for children and young people will be minimized.
    The prediction was reasonably, but not wholly, correct. Gambling companies can advertise in mass media (TV, radio, print newspapers) reasonably freely. Still, there will be a long list of restrictions on the marketing content. In addition, advertising must include certain specified elements, such as an age limit for gambling. Marketing is also allowed in outdoor advertising and sports sponsorship, where only the operator’s brand but not products may be visible. Affiliate marketing and the use of influencers are completely prohibited, according to the bill. License holders are allowed to advertise on social media. Still, the advertising may not be interactive, meaning customers may not have the opportunity to comment, and third parties are not allowed to share those texts. Bonuses may only be given to existing customers; even then, the bonuses may not be based on gambling activity or volume. Welcome bonuses may not be used at all.
  5. Gambling limits: Initially, a company-specific deposit limit applies to casino games if Finland ends up with separate casino and betting licenses. The deposit limit may also apply to betting games. If this happens, customers can apply for a higher deposit limit based on their income or other assets. In the coming years, the company-specific deposit limit may be replaced by a customer-specific limit when the monitoring system allows this. I think that a deposit limit is a better solution than a gambling or loss limit.
    The prediction was reasonably accurate. A gambling company-specific deposit limit is coming into effect, which customers must set themselves before they can start gambling. No upper limit has been set for the company-specific deposit limit, at least for now. The bill allows the Government to issue a decree later on, which can tighten the deposit limit policy. Initially, there will be no other limits on gambling. Still, the Ministry of the Interior will have the right to issue a decree, which will later allow it to impose maximum bets and other restrictions on high-risk gambling products.
  6. B2B license: The B2B license will not be implemented immediately, at least not when the system changes. Instead, technology and game suppliers will be set certification requirements that they must meet. The B2B license may be implemented at a later date if, for example, the experiences in Sweden show it to be a good solution.
    The prediction was almost entirely wrong. The new gambling system is expected to come into practice at the beginning of 2027 when companies that have received a gambling license can start operating and marketing gambling activities. Finland will also introduce a gambling software license, the same as the B2B license. This system will be introduced at the beginning of 2028, i.e., with a one-year delay compared to the B2C license. Since 2028, gambling companies with a gambling license may only use gambling technology and products offered by B2B license companies. B2B licensees may not provide their technology and games to operators that have Finnish customers but do not have a Finnish gambling license.
  7. Cooling-off: Finland will not introduce a cooling-off period. Since the gambling system’s practical entry into force seems to have been postponed to early 2027, the risk of using a cooling-off period has increased somewhat. I don’t think Finland will introduce new regulations just for one year, which I believe would be required if the cooling-off period were introduced.
    This prediction is a bit challenging to assess. Officially, there is no cooling-off period coming to Finland, so in that sense, my prediction is correct. On the other hand, the bill states that a gambling license will not be granted to an entity that has been issued a prohibition order or imposed a penalty payment for violating the current Lottery Act after September 1, 2024. The purpose of this procedure is very similar to the cooling-off period, so based on this, I judge my prediction to have been almost wrong.
  8. Supervision & Regulation: A new supervisory authority will be established in Finland. The new authority will probably no longer be under the Ministry of the Interior. It will be established under either the Ministry of Finance or the Ministry of Employment and the Economy. Supervision will require a new technological system and many new officials. The new regulator must be able to intervene more strictly than currently in gambling activities that are carried out without a Finnish license.
    The prediction was correct. The current regulator, the National Police Board, will continue in its role until the end of 2026 and will handle the transition to a license-based system. At the beginning of 2027, a new Licensing and Supervision Authority will start operating under the administration of the Ministry of Finance. The new authority will act as the supervisor of the new gambling system from the very beginning. The pre-bidding for the technical systems required for supervision work has been ongoing since the spring of 2025. I still agree with myself that it is crucial for the functioning of the gambling system that the regulator has the ability and desire to intervene in illegal activities significantly better than in Sweden, for example.
    Gambling products are not allowed to be purchased on credit, so using a credit card to pay for games is prohibited. Instead, payment applications may be used if they are based on debit payment. The use of cryptocurrencies in gambling activities is completely prohibited. Customers must be able to block themselves from all gambling with the click of a button. Blocking a specific gambling company or product group (e.g., digital casino games) must also be possible.
    Regarding the overall legislation, it is essential to note that the bill allows the Government and the Ministry of the Interior to issue decrees (regulations) that can influence practical gambling activities. The Government can, for example, set maximum loss limits for gambling companies. In turn, the Ministry of the Interior can specify maximum bets, maximum winnings, and the possibility of using the autoplay feature for the highest-risk games, for example, digital casino games. The bill does not include payment and IP blocking, but they can be returned if the channelization rate cannot be increased to the desired level.
    The bill is currently being considered by Parliament and is expected to be completed before Parliament goes on summer recess, i.e., by the end of June. The law will enter into force in early 2026 when the supervisory authority will start the gambling license process. The first phase of licenses is expected to be granted by autumn 2026. In practice, gambling operations based on the new legislation are planned to begin in Finland from the beginning of 2027.

Finland has submitted the new Gambling Act for consultation

On Wednesday, July 3, we finally found out what kind of gambling legislation the Finnish government is planning for Finland. The published proposal has more than 400 pages, and I have only been familiar with it for a working day. So, my observations and opinions in this text are only preliminary, but I still want to share them with you. Finland has started the public hearing/consultation process, which will last until August 18. In principle, anyone can express their opinion on the bill during that time. According to the information I have received, this time, based on the consultation process, Finland is still ready to make changes to the gambling legislation. Because of this, it is not yet time to make assessments about how right the guesses I presented at the beginning of the year about the content of the law turned out to be in the end.

The schedule of the process has been specified. After the consultation process, changes are made to the law, after which the bill is sent to the EU notification process. After the EU notification, the proposal will proceed to the Finnish parliament in the spring of 2025, and the law is supposed to be approved during the next year. Part of the content of the bill will enter into force already in 2026, but in practice, Finland will switch to a partial license-based gambling system from the beginning of 2027. Some things will not be implemented until 2028, so there should be enough time for the preparation.

Monopoly and other licenses

In current Finnish legislation, Veikkaus’ gambling monopoly is defined in law. In the new system, monopoly games will be granted an exclusive license for a period of ten years, which can only be given to a company under the direct control of the Finnish state, i.e., Veikkaus in practice. According to the proposal, the product areas covered by the monopoly are scratch cards (including eInstants), lottery games (e.g., lotto products and Keno), slot machines, physical casinos, and pool-based horse betting. The product areas that will be transferred to the license system are fixed odds betting (also includes horse racing), pool-based sports betting/games, digital casino games (roulette, craps, card games – poker), and digital slot machines and digital bingo. A gambling license is granted for five years.

In the list of monopoly products, pool-based horse betting, which accounts for 3-4 percent of all gambling in Finland, is the most surprising. It is not an important matter from the point of view of the whole, and therefore, keeping it within Veikkaus’ monopoly is strange, especially when the horse racing industry would like to transfer the games to the licensing side. I’m sure it will be a hard-fought battle in the coming months. I guess that pool-based horse betting will eventually be moved to the license side, where pool-based sports games already are.

The price of the gambling license is tied to the size of the operator’s gross gaming revenue. The minimum payment is 4000 euros, and the maximum price is 265000 euros if the GGR is over 50 M€/year. The gambling tax will be 22 % of the GGR, which is quite reasonable.

B2B license in 2028

Finland also introduces the “Game software license.” However, this license is not required immediately in connection with the change in the gambling system but from the beginning of 2028. The B2B license application process will be started at some point during 2027, and the license will be valid for five years. A game software license practically means that the license holder is obliged to use only the software and games of the game software license holder. The price of the license will be very affordable, i.e. only 1500 euros.

As a general rule, gambling IT systems must be located in Finland. There are two exceptions when IT systems can be somewhere else. If the supervisory authority of the country of location has a cooperation agreement with the Finnish supervisory authority, or the Finnish authority can verify the gambling IT system and its operation via a remote connection.

The supervising authority will issue all licenses. The current regulator, the National Police Board, is responsible for the legislation’s practical preparation. Still, a new agency, the Finnish Supervisory Agency, will be established under the Ministry of Finance to supervise the new gambling system. The new agency will start operating at the beginning of 2027.

Marketing is allowed but limited

Gambling marketing is allowed, but there are restrictions. The law has a list of prohibited gambling marketing, such as describing gambling as a way to solve financial problems. Sports sponsorship is also allowed, but there will be restrictions related to minors.

Marketing regarding the brand gambling companies and games may only be done by the gambling company itself. The law states that no other entity may do marketing related to gambling. This will significantly complicate the position of affiliate operators. On the other hand, the definition of advertising and communication will be complex, thanks to which, at least in betting, affiliates will also find their place in the Finnish market.

Gambling services and sites must not use interactive marketing. That means companies cannot discuss gambling issues with customers on social media, and operators are not allowed to offer customers the possibility of forwarding the gambling company’s publications.

Customers must give permission for direct marketing on their own initiative. The gambling terms must not automatically contain direct marketing permission, but they do require the active approval of the customers themselves.

The most interesting thing, and certainly one that receives a lot of criticism from current offshore companies, is the banning of bonuses. According to the law, gambling companies may not offer bonuses, either free games or games at a reduced price. In addition, the law has separately stated that using bonuses in all gambling marketing is prohibited.

Some other relevant matters of legislation

There is currently an option for payment blocking in Finland, which targets money transfers from Finland to gambling companies. In the new legislation, payment blocking is possible in both directions. Legislation has also specified that the blocking will also apply to cryptocurrencies, even though cryptocurrencies may not be used to pay for gambling at all. You also cannot pay for gambling with a credit card or buy it as a debt anyway. In addition to payment blocking, Finland can also implement network traffic blocking for gambling companies operating without a Finnish license.

There will be gambling company-specific money transfer limits, which the player must set (day and month) and can change. Those limits mean the amount of money that can be transferred from a bank account to a betting account. The state can set operator-specific maximum loss limits (daily, monthly, and annually) if it wishes, but this is not an automatic assumption.

The customer must have the option to set centralized prevention for all gambling, like Spellpaus in Sweden. In addition, the customer must be able to set himself a prevention for a particular gambling company’s games or part of them (a specific game or group of games).

JARI VÄHÄNEN

jari.vahanen@finnishgc.fi