Finnish gambling reform – first regulatory steps towards liberalization

Introduction

The landscape of online gambling in Finland is poised for significant transformation as discussions surrounding the long-standing state monopoly intensify. Currently Finland has one of the last remaining gambling monopolies in Europe and only the state-owned gambling operator can operate lawfully. Private operators offering gambling services online or in person are excluded from the Finnish market, meaning that licenses to provide B2C or B2B gambling services in Finland are currently not granted at all.

Although the Finnish gambling monopoly has been strongly defended over the years, developments in the igaming sector enhanced by digitalisation have shifted the political approach, opening up debates on alternative options for managing gambling in the country. It is hoped these alternatives will generate more income than the state monopoly, reduce unregulated gambling, and potentially reduce negative effects on public health.

The Finnish gambling reform officially began in October 2023, when a working group in the Ministry of the Interior started drafting a government proposal to reform the existing state-owned monopoly system operated by Veikkaus Oy (“Veikkaus”). This marked an exceptional shift, as the Finnish government that had previously supported and implemented measures which strengthened the state operator’s position was now exploring alternative options to the state monopoly.

At the time of writing, the latest development in the reform is the second draft of the gambling act (“Draft Act”) published on 1 November 2024 and submitted to the European Commission and other member states for comments. The proposed law aims to establish a licensing system for gambling activities and their oversight in Finland. The new system allows private gambling companies to apply for a license to operate in the country. While the proposal is still a draft, it is not expected to undergo additional changes unless such are proposed by the Commission or other member states. According to the Draft Act, private operators could enter the Finnish market as early as July 2026 but by January 2027 at the latest.

This article explores the recent reforms aimed at liberalising the online gambling market, examining the shift from a defended monopoly to a more regulated and competitive framework. Key developments include the establishment of a new Licensing and Supervisory Authority, proposed licensing structures for both business-to-consumer (B2C) and business-to-business (B2B) operations, and stringent marketing restrictions. As Finland navigates these changes, the focus remains on protecting consumers while fostering a responsible gambling environment in the digital age.

Liberalizing online gambling in Finland: from defended monopoly to market liberalisation

The gambling industry remains unharmonised within the EU, allowing member states to regulate their gambling markets independently — either by liberalising them or restricting access fully or partially, provided they can show sufficient justification with general interest objectives under EU law. Even if the existence of a gambling monopoly is supported by EU law, for example, to prevent the negative effects of gambling, such justification requires the implementation of measures — typically strict and effective supervision of gambling activities — to ensure compliance with the stated objectives.

The Finnish gambling monopoly has faced several challenges in the past, particularly from the European Commission. The debate has centred around whether the measures implemented by the legislation and adapted by the authorities have been sufficient to prevent the negative effects of gambling. In 2006, the Commission launched infringement proceedings against Finland concerning the cross-border provision and marketing of sports betting services, with the intention of assessing the compatibility of the Finnish monopoly-based gambling policy with EU law. The Commission found that Finnish legislation at the time did not consistently meet general interest objectives, such as the protection of consumers. In response, the Finnish Lotteries Act was amended in 2010 and 2012 with measures aimed at better preventing the negative effects of gambling, aligning the system with EU requirements. In 2013, the Commission concluded that the amended law allowed Finland to maintain its monopoly in accordance with EU standards, noting that Finland had implemented a structure to control the growth of gambling, while preventing the monopoly from inciting or encouraging participation.

However, in 2021, the Finnish Competition and Consumer Authority (FCCA) reported that the gambling monopoly had not sufficiently curbed the negative effects of gambling, which was a key condition for its existence. Consequently, the FCCA proposed amendments to the Lotteries Act to reinforce Veikkaus’s monopoly position and reduce harmful gambling effects. A legislative initiative followed in 2020 to strengthen Veikkaus’s monopoly and implement the FCCA’s proposals. The 2022 reform of the Lotteries Act introduced several significant changes, including expanded mandatory identification, the introduction of payment blocks, enhanced authority for the National Police Board to regulate unauthorised gambling marketing, and the allocation of gambling revenues to the state budget.9

Despite these efforts, Veikkaus struggled to improve its channelisation rate, particularly due to the growing popularity of online gambling. When the online channelisation rate dropped to nearly 50 percent in 2022, Veikkaus itself suggested that alternative models to the state monopoly should be explored.10 In early 2023, the Ministry of the Interior initiated an inquiry into alternatives to the monopoly system, specifically concerning online gambling.

2024The inquiry culminated in a report in April 2023, leading to a section in the new government programme on the abolition of the monopoly and the subsequent launch of a legislative project in October 2023 to draft a new gambling act. The final version, giving the official form for the Finnish Gambling Act, is expected in February 2025, with the new law anticipated to take effect in January 2026.

Shaping the framework for a licensing system

Overview of the Finnish gambling market

The current gambling trend in Finland shows a shift towards online gambling services. According to a study in 2023, 70 percent of Finns had consumed gambling services in the past year, with 30 percent exclusively online. The state operator holds 60 percent of the overall market and 50 percent of the online market. Additionally, €520-590 million is spent annually on unregulated gambling, with nearly 90 percent of that coming from just six percent of high-risk gamblers.

As the consumption of online gambling keeps growing, particularly on unregulated markets, concerns about Veikkaus’s monopoly and current regulations have sparked discussions on market liberalisation and reforms. This has highlighted the need for regulatory changes to address the risks posed by unregulated gambling and to protect vulnerable players.

Introducing B2C and B2B licenses for online gambling

Unlike the current principal legislative act applying to gambling and lottery related activities, the Finnish Lotteries Act (1047/2001, as amended), the new law will distinguish between online gambling activities and on-site gambling activities. Under the new proposed regime, the provision of gambling services requires would-be operators to apply for and obtain either an exclusive, on-site gambling license or a non-exclusive, online gambling license for the specific gambling activity identified in the license. In addition, an exclusive license may be granted for lotteries and scratch cards. The exclusive licenses will be valid for ten years at a time, while the B2C and B2B licenses will be valid for a maximum of five years.

The exclusive licenses will be granted to one or two operators under governmental control. Under the new proposed regime, Veikkaus – or rather its to-be established affiliate — would retain exclusivity over certain products, such as lotteries, scratch cards, slot machines, and on-site casino games. The new law stipulates a requirement for the separation of operations between the holder of an exclusive license and any legal entity belonging to the same corporate group. Under the proposed regime, the exclusive operator cannot operate in the open market, leading to the establishment of a new corporate structure for Veikkaus Oy. Under this structure, Veikkaus Oy would remain the parent company, owning four subsidiaries — one existing (Fennica Gaming Oy) and three new (Veikkaus Monopoli Oy, Veikkaus Lisenssi Oy, and Veikkaus Tech Oy) — created as business transfers per the government plan.

It is to be noted that the Draft Act has left the door open for the government to divest shares in the exclusive license holders, as the requirement is only that the government holds the voting power in the exclusive license operators.

While Veikkaus will still retain its exclusive right to operate on-site gambling and lotteries, private operators will have the option to seek a non-exclusive B2C license for specific types of betting. Specifically, fixed-odds betting, pool betting, virtual betting, electronic casino games, electronic money bingo, horse betting and electronic slot machine games. The Finnish licensing system will also cover B2B licenses for software used in the provision of gambling services. For instance, operators providing game engines or other betting software, random number generators, software to display gambling results, live stream solutions, gambling monitoring software, or software used for transfers to game accounts, will require B2B licenses to have their software used for gambling in Finland and licensed B2C operators may only use licensed software. However, receiving payments or distributing winnings related to gambling games organized by the holder of an exclusive license or a gambling operation license, as well as providing premises for the use of slot machines or lottery devices, will not require a separate license under the proposed regime.

According to the Draft Act, the licensing system will take effect in two stages: B2C licenses will become applicable starting in 2026, with licensed gambling activities commencing in July 2026 at the earliest and January 2027 at the latest. B2B licenses may be applied for in January 2027, and B2B activities will commence under license in 2028.

Previous infringements likely to preclude license

As Finland moves towards market liberalisation, the National Police Board has expressed concern that illegal marketing has increased. Some gambling operators who had previously stopped their illegal marketing have recently resumed their marketing activities, possibly in anticipation of the system reform. Unlawful marketing of gambling services in Finland under the monopoly system will hinder obtaining a license. Under the new regime, the representative of a B2C or B2B license applicant must meet reliability and suitability requirements, which also apply to significant owners and executive management if the applicant is a legal entity. According to the proposed Draft Act, a license cannot be granted to an applicant who has been sanctioned by the regulator for violating the current Lotteries Act in force until two years have passed or after three years have passed under the new Draft Act.

Concerns regarding the lack of a model against integrity protection

Stopping fraudulent betting on sports events has been an increasing focus of different stakeholders in the gambling industry. Finland is an exceptionally interesting market for suspicious betting, as it is one of the few countries in which football is played during the summer season. The Draft Act addresses integrity protection in terms of obliging the applicants to describe in their license application what measures they are taking to prevent match fixing. The licensed operators should further have measures for monitoring irregular or suspicious betting and means for detecting and preventing such behavior for example in relation to match fixing. In addition, licensed operators should annually provide a report on irregular or suspicious betting in the license holder’s betting events, suspected and confirmed cases of match fixing, and measures taken to prevent match fixing.

Although the Draft Act does not pose any direct obligations on the authorities with respect to match fixing, our experience is that responsible operators support market integrity measures, as fraudulent betting leads to operators incurring financial losses. A similar system as has been implemented in several jurisdictions, whereby the licensed operators would be part of a betting integrity monitoring body, would also be called for in Finland.

Marketing of online gambling – restrictions and prohibited methods

Based on the Draft Act, gambling marketing is not proposed to be banned altogether, but as expected, it will face significant restrictions. The new gambling act, which is based largely on the current legislation, regulates gambling marketing to a significant extent through specifying prohibited marketing methods, information requirements for consumers and marketing restrictions.

Following feedback received from public consultation, the second draft has adapted a somewhat looser approach to marketing restrictions than its forerunner. For instance, under the second draft, bonuses are allowed with certain restrictions. Additionally, third-party marketing is not as clearly prohibited as it was in the first draft. Furthermore, the rules for marketing in printed and electronic media have been clarified specifically to cover printed publications and equivalent electronic formats.

Below are some of the proposed main restrictions on marketing along with our insights into their potential impact on the gambling market.

Restrictions on third-party marketing

Unlike in Sweden and Denmark, license holders in Finland are not explicitly allowed to market gambling through third parties, effectively rendering the use of gambling affiliates or influencers unfeasible. The prohibition of third-party marketing is intended to clarify the distinction between licensed operators and illegal ones.

Gambling marketing is generally permitted only when conducted directly by the license holders, with advertisements on various channels required to originate from them. License holders are also expected to control the volume and scope of their marketing to ensure moderation, a requirement more effectively managed through their own channels and media. Affiliate marketing, where third-party websites promote gambling operators in exchange for a commission, is banned entirely.

However, there are certain exceptions for third-party marketing. For example, influencer marketing is not entirely banned. Influencers can be used for gambling marketing conducted on the license holder’s own website and social media channels. Marketing will also be permitted in printed media and electronic publications equivalent to printed media, as well as on TV and radio.

Compared to the rest of the European market, the restrictions on so-called influencer marketing are unusual. Third-party marketing methods, especially affiliate marketing are a common tool used across Europe to direct customer traffic towards an operator’s websites. If the use of affiliates is prohibited, we see a risk that affiliates may continue their activities for unlicensed operators, undermining the goal of achieving a higher channelisation rate. Additionally, from a consumer protection perspective, it would be advisable to ensure that affiliates are included in the legislation and that they are required to adhere to the same marketing rules as the license holders.

Restriction on social media marketing

Interactive marketing, such as two-way conversations on social media and reacting to user comments, including the use of emojis, is prohibited. License holders should ensure that there is no option to discuss or comment on their marketing posts on websites or social media accounts, and that their posts cannot be reposted within the network.

We expect that limiting social media visibility will help prevent the negative effects of gambling and believe that less community-integrated marketing may hinder the creation of deeper connections with consumers, particularly those in more vulnerable positions.

Use of bonuses and benefits– accepted methods

Although the use of bonuses was initially proposed to be banned, they were included in the final draft following significant feedback submitted during the consultation period. Under the proposed regime, bonuses and other benefits will be allowed under strict conditions. Moderate bonus credits can be provided equally to all customers during an established relationship but must not be tied to gambling time or spending. Bonuses cannot be converted into cash, may have a maximum fivefold wagering requirement, and must not compromise player protection obligations. Similarly, benefits, such as discounts and free goods, are allowed during the customer relationship to help maintain it, provided they align with good practice and are of moderate value.

Allowing license holders to use bonuses as part of their offerings is a positive step in maintaining the attractiveness of licensed gambling services, as bonuses are widely used in the industry. We believe that including bonuses as an accepted method can help reduce interest in unregulated grey-market services.

Restriction on sponsorship

Similar to the current legislation, the proposed marketing restrictions prioritise the protection of minors and no gambling marketing of any kind may be directed at minors through any channel, or at events or in content intended to be viewed by them. These restrictions also extend to sponsorship: sponsorship agreements must exclude individuals under 18 and events or content aimed at this age group. License holders must ensure that their logos and product names do not appear on items or services for minors. Sponsorships also cannot involve content created for minors or target products designed for those under 18.

Most European countries are tightening restrictions on sports sponsorship, and we believe this change will have minimum impact on most operators’ marketing strategies. However, the sporting community has widely debated these restrictions. Some argue they are too strict and, suggest that, at a minimum, companies should be allowed to feature their sponsorship endorsement – if not the games themselves – in marketing materials such as athletes’, clubs’ or federations’ websites.

Restrictions on direct marketing

The proposed regulation introduces restrictions on direct marketing for gambling services. Consent for direct marketing must be given explicitly and cannot be automatically included in customer agreements. Direct marketing through phone calls, SMS, emails, or postal mail is prohibited without clear consent.

We suspect that this restriction will not significantly challenge operators’ marketing strategies.

Since the proposed restrictions align with the principles of the current gambling legislation, they may not effectively advance the objectives of the new legislation, such as improving channelling rates and preventing gambling-related harms.

Notable changes in the upcoming regime

The upcoming reform in Finland’s gambling regulation marks a significant shift in oversight and enforcement. Key changes include the establishment of a new regulatory authority, updated enforcement measures, and a new consumer protection system.

One of the major changes is the transfer of gambling supervision from the National Police Board to a new regulator to-be established, the Licensing and Supervisory Authority, which will grant licenses starting in 2027. The new regulator will also continue the current responsibilities of the National Police Board, including enforcing compliance by prohibiting unlawful (unlicensed) gambling services, implementing measures to restrict such activities, and monitoring the gambling market. As with current laws, the new legislation continues to restrict the unauthorised provision and marketing of gambling services in Finland.

Furthermore, a national self-exclusion system will be introduced, akin to those in Sweden and Denmark, allowing individuals to ban themselves voluntarily from all gambling activities or limit their exclusions to specific operators or games.

What is the cost of operating in Finland?

Operating in Finland entails several costs, including supervision (licensing) fees and tax. License holders must pay an annual supervision fee, scaled according to their game margins, which adjusts based on the profitability of their activities. The fee ranges from 4,000 to 434,000 euros annually. Based on feedback received during the consultation period, the second draft also introduces the possibility of fee reductions. The authority must lower the supervision fee for license holders if the surplus is expected to exceed five percent of the costs approved in the authority’s budget. Additionally, licensed operators will also face a tax of 22 percent on their Gross Gaming Revenue, which is in line with the current Swedish tax percentage.

What to expect next

The first version of the draft of the Finnish Gambling Act was published in July 2024, and followed with a round of consultation where all stakeholders had the opportunity to comment on the initial draft. A total of 81 statements were submitted by various organisations and communities regarding the government proposal. These statements came from a wide range of stakeholders, including governmental bodies, private sector organisations and associations, offering diverse expertise and perspectives.

Based on feedback submitted during the consultation period, the Draft Act was amended and published on 1 November 2024. The second draft has been notified to the European Commission and Member States for review, to assess whether the reform could hinder the free movement of services. They are expected to provide feedback by February 2025. After their review, any necessary changes will be incorporated into the Draft Act, with the final proposal for the Finnish Gambling Act anticipated to be submitted to Parliament by February 2025. The Finnish Gambling Act is expected to take effect in January 2026.

As the final amendments to the Draft Act have already been published, the final form of the regime is now becoming clear, and any new significant changes are unlikely.

Conclusions

We view the liberalisation of the Finnish online gambling market positively. State monopolies are ill-suited to the current, digitalised society, and it is increasingly challenging to meet the criteria to justify a monopoly under EU law. In our view, it was only a matter of time before market liberalisation became necessary, as restricting fundamental EU freedoms — such as the freedom of establishment and the free movement of services — is difficult to justify on public health grounds, especially when there is a significant need for state revenue accrued from gambling.

Aiming to attract operators and indirectly bring tax revenues to Finland, the Finnish online gambling market must be attractive to private operators. This requires some adaptation to market practices and acceptance of certain measures that have traditionally been viewed negatively in Finland. If the new regime is too strict on elements commonly used in online gambling, consumers may continue playing more appealing games on the grey market, directing their payments to unlicensed operators. This would ultimately divert income away from Finland and reduce the channelisation rate of licensed operators.

For example, prohibition of affiliate marketing goes against common market practices and raises concerns as to whether it would negatively impact channelisation. If only unregulated operators are allowed on affiliate websites, it could undermine the effectiveness of the regulated market. Additionally, bonuses are standard features in online gambling. If, as proposed by the first draft, bonuses were not allowed in the regulated market, licensed operators might have faced challenges in retaining Finnish consumers on their regulated platforms.

Due to the tight schedule for establishing the new regime, we are concerned that relevant comments provided during the consultation round may have been overlooked at this stage, potentially leaving the law incomplete in certain areas, such as match-fixing and affiliate marketing. As a result, this may lead to inadequate legislation that does not serve the purposes of Finnish iGaming reform. Namely, creating a licensing system that encourages operators to seek a license in the Finnish market, while ensuring that the system minimises potential harm to players.