Legal Alerts / 25 Oct 2019

Does the Finnish Gambling Monopoly have the Consumers’ Best Interest at Heart?

The Finnish Competition and Consumer Authority (FCCA) has published the first part of its report series (only available in Finnish) concerning gambling services on 24 October 2019. In the light of the report, the benefits of a gambling monopoly as it stands today as opposed to a licensing system can hardly be justified by referring to better consumer protection and more efficient combating of the negative effects of gambling.

Key findings of the report

The main point of the FCCA’s report concerns the current gambling monopoly that is in place in Finland and especially the rather fragmented supervisory system. The report finds that the supervision of the gambling monopoly in Finland is inefficient. In Finland, instead of the supervision of gambling services being centralised to one supervisory body, several bodies are responsible for the supervision with partially overlapping responsibilities. The other countries compared in the report have a single supervisory authority for the gambling sector. The report finds that the supervisory system should be reformed.

Additionally, the report states that it is problematic that the beneficiaries of the funds gained from gambling participate in the regulation of gambling. In Finland, the beneficiaries hold key positions in certain bodies which decide on gambling related policies, e.g. the Advisory board on gambling, which operates under the Ministry of the Interior, and the supervisory board of Veikkaus Oy. Such conflicts of interests may act as a barrier for efficient and unbiased supervision. The beneficiaries might have an interest in maximising profits rather than combatting the negative effects of gambling.

The report also points out that there are consumer protection issues related to how the risks of gambling are presented to the public in Finland. In the FCCA’s opinion, the risks related to excessive gambling are not presented in a transparent manner and it seems that gambling addiction is not taken seriously enough in policy conversation. The report points out that in Sweden, gambling addiction has been contrasted with alcohol and drug addiction in social services legislation. In Denmark, on the other hand, the availability of certain especially harmful games has been limited.

The conclusion of the report is that gambling regulation in Finland should be centralised and the focus should be on increasing efficiency. The report states that only after seeing the outcome of implementing these changes and finding out whether the changes are successful in combating the negative effects of gambling, can it be reviewed whether it is necessary to reform the entire system that is in place.

Background

In our legal alert of 4 June 2019, we discussed the new government’s task to complete the amendment of the Finnish Lotteries Act as well as the Government Programme that included a promise to explore measures to restrict foreign gambling.

Finland has a gambling monopoly in place and all marketing of gambling services performed by any party other than Veikkaus Oy is prohibited. According to the FCCA’s report, aside from Finland, only Norway has a similar gambling monopoly within Europe. Most European countries have implemented either a licensing system for gambling or a hybrid system, which is a mix of a licensing system and a monopoly.

A gambling monopoly is allowed within the EU when it is the best solution for a Member State to ensure public order, public safety and public health and to prevent the negative effects of gambling. The Court of Justice of the European Union has made it clear in its case law that a gambling monopoly cannot be justified by the use of the gained funds for the public benefit; instead, the goal must be controlling the negative effects of gambling as well as efficient supervision. EU legislation requires that in order to ensure the fulfilment of these goals, a gambling monopoly must be supervised systematically, efficiently and strictly.

The FCCA’s report also provides an overview of e.g. Swedish and Danish gambling legislation as a point of comparison for the Finnish system. Sweden used to have a gambling monopoly in place, but it was repealed at the beginning of 2019 and replaced by a licensing system. The reason behind the reform in Sweden was that a strict licensing system is considered to control the negative effects of gambling more efficiently than the gambling monopoly and it was held that a licensing system would offer better consumer protection  as the licensees are required to commit to various corporate responsibility actions. The other option for Sweden would have been to implement an even stricter monopoly, which they did not opt for. Denmark has also had a partially licence based system in place since the reform of the gambling legislation in 2012.

Further reports in the series will be published during the autumn and a final report is expected at the beginning of 2020.

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