Finland: Finnish Competition Authority to conduct an extensive assessment on the legitimacy of the Finnish state operated gambling monopoly in 2019

As for background, Finland has traditionally had one of the most stringent gambling regimes in the EU with a legal monopoly in place under the Lottery Act (2001/1047). The legal monopoly for the execution and marketing of physical and remote games resides with Veikkaus Oy Ab, a legal entity owned fully by the Finnish government. The monopoly covers games of chance, betting, toto games, slots machines and casinos. Gambling profits are distributed under the Lottery Act to certain “good social and public causes”. The supervision of the execution and marketing of games resides with the Finnish National Police Board.

The Finnish Competition and Consumer Authority (“KKV”) has launched an assessment procedure in January 2019 concerning the legitimacy of the state monopoly notwithstanding the fact that Finnish legislator has already provided for two general reforms to the Lottery Act in 2008 and 2012 in order to be more aligned with the consistency and proportionality requirements of EU gambling law. The reforms entailed e.g an implementation of marketing restrictions against Veikkaus and extensions to Finnish National Police Board’s supervision jurisdiction as well as new criminal sanctions.

The need for the previous reforms was caused by the EU commission’s infringement proceedings under article 258 of the Treaty on the Functioning of the European Union (“TFEU”) against Finland in 2007 concerning compliance issues under EU gambling law. The EU commission decided, however, in 2013 not to bring the infringement proceedings to the European Court of Justice. The commission argued that the reforms made as well as national mandatory derogations to the fundamental freedom to provide services under TFEU 56 article regarding consumer protection and prevention of problem gambling, money laundering and fraud were proportionate in light of the EU gambling law and while permitting derogations to the freedom to provide services.

Despite of these previous developments the KKV is now of the opinion that Veikkaus’s legal monopoly is still notably inconsistent with EU gambling law. According to the KKV, the marketing operations of Veikkaus have clearly accelerated and diversified in recent years and, combined with a loose placement policy of slots machines, there is a reasonable doubt whether the underlying goal is to maximize state profits (at the expense of the underpriviledged) rather than the prevention of gambling-related problems.

KKV underlines statistically that Finns lost a total of 1.8 billion € to Veikkaus in 2017 which corresponds to 1 % of the country’s GDP. KKV further stresses that even though 1.3 billion € were used for good societal causes, most of the funds are generated by the disadvantaged portion of the people with 5 % of total gamers generating 50 % of the total funds.

Another major problem underlined by the KKV is the decentralization and availability of slots machines e.g in grocery stores and gas stations,. i.e outside exclusive game rooms supervised by Veikkaus. Even though KKV welcomes the scheduled changes to the Lottery Act by 2022 concerning mandatory identification systems for slots machines, it also stresses that these amendments may not be enough in light of the consistent application of EU gambling law, unless slots machines are placed in supervised gaming rooms or alternatively individual gaming restrictions are linked to the identification process.

The assessment will also cover the supposed connection between problem gambling by the underpriviledged and marketing actions for instant loans.

It will be interesting to see whether the results of the assessment will be enough to put sufficient  political pressure on the legislator to finally dismantle the state monopoly at least as regards to remote gambling following the path of several other EU member states.

If you have any questions regarding the Finnish gambling regime, please contact Joonas Dammert: joonas.dammert@dlapiper.com or +358 40 572 8347, DLA Piper Finland.